Tag Archives: airlines

How to Choose Credit Cards With Rewards to Save Money – Part 2

This is the 2nd part of Mr Credit Card’s guest post. In the previous post, he focused primarily on how to choose a cash back card to save money. In this post, he is going to discuss more about reward cards that let you earn points. His site has lots of information and you can apply for a credit card there.

In this post, I am going to give a few tips on how to choose a credit card to earn reward points. The decision you have to make is what rewards you want to earn with your points. There are a few broad categories of rewards that are available with most credit cards.

Travel Rewards – These include airline tickets, hotel stays, car rentals, cruises etc.

Merchandise – Most credit card reward programs have partnered up with various retailers and brands to offer their products to their card holders who exchange them for reward points. For example, you may exchange a certain amount of points to get, say, a Nikon Digital Camera.

Gift Cards – You can also exchange points for gift cards. A typical example would be to exchange 10,000 points for a $100 Best Buy Gift Card.

Charity – Most reward programs also allow you to donate points (for cash) to charities (though I doubt that is the intention of most reward card holders).

Travel Rewards

Most people looking for a reward credit card want to redeem points for airline tickets. The decision they would have to make us whether to get an airline credit card or a credit card with reward programs.

This dilemma is probably the toughest to resolve in any credit card decision because it involves so many factors. You have to ask yourself the following :

1. How Often Do You Fly?

2. Do You Fly with Just One Airline or Many?

3. Do You Spend A Lot on Your Card?

If You Just Fly on One Airline

If you just fly on one airline, then it make sense just to get a frequent flyer credit card.

If You Have Fly on a Few Airlines

If you fly on a few airlines and are a member of a few frequent flier programs, there are a couple of alternatives. For example, the American Express Membership Rewards allows you to transfer points you earn on Amex charge cards to 17 frequent flier miles. This is very valuable and is the reason why Amex is so popular.

The starwood preferred guest program allows you to convert Starwood points to air miles on a one for one ratio for most frequent flyer programs and you even get a bonus 5,000 miles if you transfer 20,000 points. Many frequent travelers carry the Starwood credit card.

If You Are Not a Frequent Flier But Want to Use Points for Airline Tickets

For those do not travel but want to earn points for an airline ticket for a family vacation, most regular reward credit cards should work. These days, most programs allow you to book your own tickets and use points t0 cover for them. That is the advantage they have over frequent flier programs because there are fewer restrictions like blackout dates, etc. that come with regular frequent flyer programs.

Merchandise

Choosing a reward credit card for merchandise redemption is a little tough because it is very difficult to compare the breadth of products available in their catalogs as they are always changing. Furthermore, some programs require less points for certain items but more for others. But generally speaking, after much research, I’ve found the Membership Rewards from AMEX to have the best selection of merchandise in their catalog.

Gift Cards

For those who want to use points for gift cards, the best card to get is probably the Discover Card as it has over 100 partners. The Discover Cards allow you to earn cash rebates and if you redeem them for gift cards instead, you double the value of the gift cards you redeem for certain merchants.

Donating to Charity

If you are a charitable person and would like to donate to charities by your credit, most reward programs allow you to do that. Some have many partners while others have just a few. The better ones like American Express allow you to set up your card such that you automatically donate to charities every month.

Shopping With Your Credit Card

Most credit cards today have their own shopping site and partnerships with online retailers so that you can actually earn more points or get discounts when you use your card.

For example, Discover has this feature called shopdiscover.com. The way it works is that you can shop at say bestbuy.com (but going through the discover website) and you can earn 5% rebates when you use your Discover card to shop at their site. American Express has a shopping comparison site called shopamex.com, which lets you compare many items with different retailers. You can then shop at the cheapest online store and even use your reward points to shop.

Most card holders do not use this feature. But you should, since you can save quite a bit by doing so.

Other Considerations

When you are researching credit cards, other things to consider are:

1. Do reward points expire

2. Is there a cap to how many points you can earn?

3. How many points you do earn for every dollar that you spend on the card? For most, it will be one point, but many cards lets you earn more points for certain category in spending.

Final Note – While savvy frequent travelers have always used reward cards to their advantage, most credit card holders don’t. To fully take advantage of credit cards (rather than let them take advantage of you), make sure you pay in full, get a card with rewards (whether it be cash back or reward points). You will enjoy savings and perks in many interesting ways.

How to Choose Credit Cards With Rewards to Save Money – Part 1

This is a guest post by Mr Credit Card from www.askmrcreditcard.com. Mr Credit Card reviews credit cards on his site. He also has a blog and you can subscribe to his blog here. Mr Credit Card will post a 2 part series on how to choose a credit card with rewards to save money on your spending.

Hi everyone! Firstly, I would like to thank Adam for the opportunity to guest post on his blog. Friends of mine inevitably ask me what credit card they should get when they find out that I actually run a credit card review site. This is a tough question to answer without first finding out about someone’s spending patterns. But the thing that always makes me shake my head is that fact that folks who pay in full every month carry a “vanilla” Visa or MasterCard. Worse of all, some even pay an annual fee to do so. If you pay your balance in full (or carry only a small balance occasionally), then you should be making money from credit cards by a getting a reward card, instead of letting credit card companies make money from you. It should be a two way street.

But how does one go about doing it? First, you have to be aware that there are two types of rewards. There are cash back credit cards that will pay you a certain percentage of cash rebates for every dollar that you spend on the card. Then there are rewards credit cards. These cards allow you to earn points or miles for every dollar that you spend on the card. You can then redeem your points for things like airline tickets, merchandise, gift cards etc.

Cash Back or Rewards?

The first decision you have to make is whether to choose a cash back card or a reward card. For this, the decision really comes down to preference. What sort of rewards do you prefer? Many travelers who fly frequently prefer to get an airline credit card with their favorite airline. Many folks who do not travel and do not want the hassle of redeeming points prefer to earn cash rebates instead.

How Do You Choose a Cash Back Credit Card?

For the rest of this post, I’m going to focus on explaining how I think one should go about choosing a credit card that pays you cash rebates. In part 2 of this post, I’ll focus on how to choose a reward card instead.

The first thing one has to understand is that different credit cards have different cash rebate formulas. And for someone who is researching it for the first time, it could be rather confusing. But here are the few features you have to be aware of:

Vanilla standard 1% formula – The vast majority of rebate cards fall into this category. They will pay you 1% rebate for every dollar that you spend on the card. While this looks like a decent deal and much better than a standard vanilla card, you can get better deals out there.

More than 1% on certain categories – These are the type of cards you should be looking at although there is less of them these days as credit card issuers cut back on the rewards they give. There are cards out there that pay more than 1% on certain categories that you spend. For example, a card like the American Express Costco Card pays 3% on gas, 2% on travel and restaurant spending and 1% on other regular stuff.

Rebates for online shopping – Some cards like Discover Card allows their card holders to earn between 5% to 20% if they use their card to shop at over 100 online retailers through their site.

Tiered Formula – Some cards also have a tiered formula. That means that you need to spend above a certain amount to earn more rebates. As an example, the Amex Blue Cash lets you earn 1% on gas, supermarket and drugstore spending for the first $6,500 of annual spending. Once you pass that threshold, you earn 5%. Having a tiered formula is not necessarily bad. It just means you have to use your card above a certain amount to fully make use of it.

How to Choose the Right Card For You

1. Figure out how much you spend on your credit card – Yes, go through your credit card bills and figure out how much you actually spend on your credit card.

2. Break down your expenses into different categories – The next step is to breakdown your spending into different categories. You should use the following breakdown as a guide:

Gas
Supermarket
Drugstore
Travel
Restaurant and Dining
Movies
Home Improvement
Others

3. Calculate rebates you can earn on different cards – Now comes the tough part. You have to do some research on the different cards available and use a calculator and figure out how much you will save from using each card. Then, once you are done with this exercise, you will know which is the right card for you. To make your life easier, I have actually created a cash back credit card calculator to save you time. All you have to do is to simply key in your monthly expenses in various categories and the calculator will show you the top 3 cards that will earn you the most rebates.

OK – that’s it for this post. In part 2, I will write about the different types of rewards that are available in reward credit cards, whether you should choose a frequent flier card or a regular reward card and other things to look out for. Remember, you should extract as much benefit as you can from credit cards and not the other way round.

Addicted to Cheap Airfares?

Well, are you? I know I am! In a recent article by MarketWatch, it mentions that our constant craving for a deal is ruining the airline industry. I happen to agree with them on this one. Compared with several years ago, we are paying rather cheap prices for flying.

I am a little too young to remember this but the article talks about the old airline People Express. The had $99 coast-to-coast flights back in the early 80’s. Back then that was thought as extremely cheap. Today, it is not impossible to get a coast-to-coast flight for around $200 (using Southwest’s Ding fares). Accounting for inflation, the $99 flight back in the 80’s should cost about $500 today. Why are the prices so low today?

Deregulation has opened up the business for extreme competition and has driven the prices way down. As you may know, this extreme competition is seriously hurting the airline industry. Will all the airlines eventually join together as one in order to stay around?

The only airline that seems immune is Southwest Airlines (which is what I fly). This is because they hedge their fuel prices and are still paying prices from a few years ago. It won’t last forever and I imagine they will be in trouble in years to come. As I mentioned in a previous post, airlines are also adding more fees to stay afloat. As soon as these fees were mentioned, people cried in outrage. Why should we be outraged when we are already paying historically low prices?

What would you do if the ALL of the airlines decided to raise their prices by 100%? It may come to this if they all start losing large amounts of money.

Would you be happy with ticket prices that fluctuated with the price of fuel? Prices go up when fuel goes up and prices go down when fuel goes down.

Related articles by Your Money Relationship:

Baggage Fees Keeping You Grounded?

If you’re like me, you don’t really like spending extra money on things that were previously free. Last month, several airlines instituted additional fees on checked baggage. American Airlines charges $15 for the first checked bag and then $25 for each additional bag. United’s policy is very similar. Many other airlines still allow at least one checked bag for free and then charge after that.

I typically fly Southwest which allows you to check two bags for free. However, I am attending a conference in Boston (which Southwest doesn’t fly directly into) and had to book a flight with American Airlines. Since they have this new fee schedule it made me think of some ways to avoid it. SmartMoney has a great article on ways to avoid paying baggage fees and I will list some of them as well as some I thought of.

Wear Your Suit
I usually carry a garment bag for my suit so that it stays nice. It’s a hard bag to carry on since it doesn’t fit very nice in the overhead compartments. I am only at my conference for a few days so I can get away with packing all of my regular clothes in a carry on bag but I still need my suit. If I wear my suit on the plane, I can save myself the hassle of checking a garment bag and I can avoid the $15 bag fee. I may be uncomfortable on the plane wearing a suit all day but at least I didn’t have to give my money to American.

Embrace the Middle Seat
The middle seat usually has more space underneath for a purse or a duffel bag that can be squished easily. This will give you more room for your stuff, but you still have the dreaded middle seat. If you’ve ever flown Southwest before you know that the middle seats are the last to go and you desperately try and avoid eye contact so no one sits beside you.

Carry-On
This is kind of a given. In order to avoid the check baggage fees, just don’t check any bags. Make sure that your carry-on bag is within the size limitations. Go to a site called One Bag to learn how to get all of your goodies into a nice tight spot.

Pack Light
When you are packing for your next overnight trip, remember that the hotel will have things like a hair dryer, shampoo, etc. Most hotels will even give you toothpaste. This will lighten your load significantly.

If you have any other suggestions or tips that you have about packing light for a trip, just post a comment for all of us to read!