Three essential credit cards for those turning 40

Having turned 40 in 2022, I've found myself checking a new age box on forms and reevaluating my credit and credit card approach.

If you've reached the big 4-0 like I have (or are approaching it), you likely began understanding credit years ago. By now, you should know the importance of saving money and managing your credit card payments wisely, hopefully resulting in a strong credit score. If that's the case, well done—maintaining good credit requires years of commitment.

Yet, good credit only matters if you actively use it rather than letting it gather dust. This could be the ideal moment to reassess your credit card strategy and evaluate the benefits you're receiving. If you find yourself missing out on points, miles, or cash-back offers, it might be time for a change.

Let’s discuss the three essential types of credit cards every 40-year-old should consider.

A travel rewards card

If you don’t already possess a solid travel rewards credit card — or if your current card isn’t delivering enough value — it might be time to apply for a new one. Travel rewards cards can provide more than just a generous sign-up bonus; they often come with ongoing perks, benefits, points, and miles that can lead to (almost) free travel or enhance your daily life.

Keep in mind, though, that travel rewards cards frequently come with an annual fee — sometimes quite steep. For instance, The Platinum Card® from American Express charges a $695 annual fee (see rates and fees).

For many, the advantages of premium travel rewards cards can justify the expense. Additionally, welcome offers for new cardholders can significantly enhance the value during the first year.

For instance, the Platinum Card currently offers a welcome bonus of 80,000 bonus Membership Rewards points after spending $8,000 within the first six months of holding the card. According to TPG's August 2024 valuations, this bonus is valued at $1,600.

If the annual fee is a concern, there are many more affordable travel cards to consider. Here are some alternatives worth looking into:

* Bonus value is derived from TPG's August 2024 valuations and not from the card issuer.

Every 40-year-old should consider having a travel rewards credit card that earns bonus points at their preferred spending locations, while also providing perks that enhance travel quality and ideally improve daily life as well.

**Upon enrollment, available via the Capital One website or mobile app, eligible cardholders will maintain their upgraded status until December 31, 2024. Please note that enrolling through the standard Hertz Gold Plus Rewards process (e.g., at Hertz.com) won't automatically recognize a cardholder as eligible, nor will it guarantee an upgrade to the relevant status tier. Additional terms apply.

A cash-back card

While using an effective travel rewards card strategy can yield impressive rewards, managing points and miles—especially across several credit cards—can be overwhelming for some. Moreover, cash can be used for purchases where points and miles can't be redeemed.

If you relate to this scenario, a dependable cash-back credit card might suit you well. The Citi Double Cash® Card (see rates and fees) is an excellent choice. It features no annual fee and allows cardholders to earn 2% cash back on all purchases. This is achieved by earning 1 ThankYou Rewards point for every dollar spent and another point for each dollar paid off. You can redeem these points for cash at a value of 1 cent each or use them for other options, such as gift cards or travel.

Conversely, some cash-back cards offer the flexibility to select bonus categories, which can be beneficial if you frequently shop in specific areas. For instance, the Bank of America® Customized Cash Rewards credit card lets cardholders choose one of six categories to earn 3% cash back, with 2% back on additional categories. However, the bonus rate is capped at the first $2,500 spent in these categories each quarter, after which the earning rate drops to 1% until the next quarter begins.

It's important to remember that cash-back cards might not provide the highest value, particularly since other rewards cards can offer up to 5 points per dollar on popular categories like dining and travel. However, a straightforward cash-back card can simplify the understanding and management of your rewards.

If you’re thinking about adding a cash-back card to your wallet, here are some of the best options currently available:

* Bonus value is an estimated figure based on TPG's August 2024 valuations and not from the card issuer.

The information for the U.S. Bank Cash+ Visa Signature card has been independently gathered by Dinogo. The details on this page have not been reviewed or endorsed by the card issuer.

A co-branded credit card

Do you often travel with a specific airline? Is there a particular hotel chain that you prefer over others? If so, a co-branded airline or hotel credit card could be an excellent addition to your wallet.

It’s crucial to recognize that not all co-branded cards are equal. Often, a premium travel card like the Chase Sapphire Reserve will outperform a co-branded card in terms of point-earning potential and perks. However, it would be a mistake to think that this is always true; there are instances where spending on a co-branded credit card offers better value.

One example is the Hilton Honors American Express Aspire Card, which earns you 14 points per dollar on purchases at Hilton hotels and resorts. This translates to an 8.4% return on spending, according to TPG's August 2024 valuations. In contrast, the Chase Sapphire Reserve only offers 3 points per dollar on the same purchase, resulting in a 6.15% return. While 6.15% is certainly good, it's not the maximum value you could achieve in this scenario.

The information regarding the Amex Hilton Aspire card has been independently gathered by Dinogo. The details on this page have not been reviewed or provided by the card issuer.

Signing up for a co-branded card with every airline or hotel chain is likely not the best approach. However, if you have a few favorite brands that you use more frequently, obtaining a co-branded card—especially one offering an enticing welcome bonus or other annual benefits—could be financially advantageous.

It would be impractical to compare all the available co-branded credit cards here. Instead, here are some resources for further reading on hotel credit cards:

• How to select the ideal Hilton credit card for your needs
• Major updates to IHG's credit card offerings — key changes you should know
• Which Marriott Bonvoy credit card suits you best?
• Credit card comparison: World of Hyatt card vs. World of Hyatt Business card
• Which Wyndham Rewards credit card fits your lifestyle?

And here are some links for airline credit cards:

• Credit card comparison: Alaska Airlines Visa Signature vs. Alaska Airlines Business Visa
• Top credit cards for American Airlines travelers
• The best Delta credit cards available
• Optimal credit cards for JetBlue passengers
• Comparing the Southwest Rapid Rewards Priority, Premier, and Plus credit cards
• Best credit cards for United Airlines customers

Final thoughts

There isn’t a one-size-fits-all credit card strategy that suits every 40-year-old across the country. You’ll need to determine which cards align with your spending habits and which rewards best enhance your lifestyle.

That said, having at least one solid credit card from the three mentioned categories can be beneficial for most individuals. If you’re concerned about keeping track of your rewards, the TPG app can assist you in managing your cards, loyalty accounts, and available rewards (including how to utilize them).

Lastly, remember to manage your credit cards wisely by making timely payments and paying off your full statement balance each month. Properly handling your credit cards (and other accounts) is crucial for building excellent credit — the most valuable reward of all.