Category Archives: Credit Cards

Thieves might kill the latest scheme

Frequent Miler, who brought us the whole Office Depot 5X Ultimate Rewards AMEX prepaid bonanza, is now also reporting an experience that I recently had at Office Depot.  When I went to refill my gift card last weekend with $1000 worth of reload cards, the cashier at first told me that I had to pay with a debit card.  I mentioned to her that I would prefer a credit card, and I’ve bought these in the past with no issue, so she made a call over her walkie talkie to the manager.  After a nervous 10 seconds, she went ahead and processed my purchase using my trusty Ink Bold card with no further issues.

So I asked her why they had started asking for debit cards, and she said something vague about bad people buying a lot of these cards.  I’d been informed by a friend of mine (knowledgeable on these issues), that these types of prepaid gift cards were used in money laundering schemes, because they can’t really be tracked if someone pays in cash.  So I figured it was something along those lines.  Well, according to Frequent Miler, it’s worse than that, people are just basically stealing these cards out right.

For once, maybe the blame won’t be on bloggers for killing the deal?

Latest Credit Card Churn

Since I’m on the topic of credit cards, I figured I would share my last credit card churn (about 2 months late).  In the last round, I applied for the following cards:

Citi Hilton card – 40,000 Hilton points for spending $1,000 in 4 months

Chase Hyatt Visa card – 2 free nights after spending $1000 in 3 months (this spend requirement has since been dropped on this card)

Virgin Atlantic Card from Bank of America – 20,000 Virgin Atlantic points after first purchase, additional 25,000 for spending $2500 in 3 months

Barclay’s US Airways Business Card – 25,000 US Airways miles after first purchase

This churn was motivated mainly by the fact that I decided to take advantage of the Hyatt promotion this quarter, to get a ton of Hyatt points and get Hyatt Diamond status.  The Chase Hyatt card was required to get an extra 25% bonus miles under the promotion.

The others were honestly just fill-in cards from banks that I haven’t applied for many cards from.  You can actually earn up to 60,000 points or so on the Virgin Atlantic card if you’re willing to put $25,000 of spending on the card in a year, but I highly doubt I will be using the card to that extent (nor do I find the points worth it).  This churn could be a bit of a Hilton bonanza.  If I transfer the Virgin Atlantic miles to Hilton, the 45,000 points would be come 90,000 Hilton points, which is somewhat tempting.

Anyway, on the whole, while thus churn has some gems, I think most people would agree that it’s the churn of someone who’s exhausted most of the good offers out there.  I already have the Chase Sapphire Preferred and Ink Bold (with an application for another one out there), I have an AMEX Premier Rewards Gold and an AMEX Business Gold, as well as the AMEX Starwood Preferred Guest card.  I’m probably gonna slow down a bit on the applying for new cards, and the only other one I’m really targeting this year is the AMEX SPG Business card.

Oh no! The Chase Ink Bold spend is increasing :(

Well, actually this has already happened on most public ads, but now it’s going to happen for all links (via One Mile at a Time.   But anyway, the card will require $10000 in spend over 3 months (fairly unreasonable for me), as opposed to the current $5000 in 3 month (pretty manageable).  This is sort of convenient, because I was going to apply for it tonight anyway, but now I can link to other posts instead 🙂  Frequent Miler has put together a great guide for applying for this card.  Here’s the application link.

I’m also planning to put in an application for the Alaska Airlines Visa, which just increased it’s signup bonus.

Happy Credit Card applying!

UPDATE: It appears the links for the Alaska Airlines card with the 35,000 bonus is already dead 🙁  so now i’m on the fence about that card…

Membership Rewards Priority Club transfers ending July 1

Sorry for the lack of posts…I’ve been busy with taxes and working on a website 🙂

Anyway, I got the following email this morning:

As a valued Priority Club® Rewards member we want to inform you of an important change to the program. Effective July 1, 2012, Priority Club will no longer participate in the Membership Rewards® program from American Express.

Get closer to your dream vacation by transferring
Membership Rewards points to Priority Club points now through June 30, 2012.

I doubt many people use this transfer option, so this can probably be filed under “don’t care”, but it hurts a bit to lose one transfer option.  (For example, as Mommy Points mentioned, PC points were at least good for a US Airways hit, and if you were rich on AMEX MR points, it’s not a terrible option to transfer some points for a hit).  Hopefully AMEX starts adding some valuable transfer partners soon, because it seems over the past year, they’ve just been losing partners, and not really adding partners that provide much value.

Apply NOW – Chase Sapphire Preferred 50k bonus now a “Limited Time Offer”

Unlike the Europe fare sale, I’m gonna report on this one early :).  The Chase Sapphire Preferred card has been sitting with a 50k bonus (at times 100k last year) for like…forever.  But all good things must come to an end (or at least a rumored end).  Spreading like wildfire, several blogs have posted tonight that they have been instructed to edit their Chase Sapphire Preferred 50k points offer to be a “Limited Time Offer,” which means that this deal might be coming to an end soon.  This card, even with a $95 fee, is probably one of your best values for collecting points, particularly for travel and dining expenses, as well as the Chase Ultimate Rewards Mall.

Don’t miss out on applying for this card!

Effect of Cancelling Credit Card on Credit Score

On my previous credit card post, I received the following question:

“Do you cancel your credit cards before the yearly fees kick in? If yes, have you noticed any hits to your credit score?”

Thanks for the question Donnie, I thought it’d be useful to provide the answer as a post, as it might be useful to everyone.

To answer your questions, I do generally cancel credit cards before the yearly fee kicks in, if I’m not actively using the card for spending or other benefits.  I prefer to keep my credit lines to as few as possible.  Truthfully, I do not pay close enough attention to the effect of individual card cancellations on my credit score, but in theory it could hurt your score, as I’ll explain below.  My take on this is that your score may drop a few points (as it does with each inquiry/pull when you apply for a new card), but as long as you’re paying your bills on time and spacing out your applications/cancellations, your score should recover over time.

What is the possible effect of cancelling your card on your credit score?  Your credit score is calculated based on a large number of factors.  A full list is here, but cancelling a credit card is most likely to affect this factor (possibly others too):

  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)

Cancelling a card means you no longer have the credit line associated with that card, which in turn increase your proportion of credit lines used (because your total credit lines have no decreased).  So cancelling a card does potentially have an adverse effect on your credit score.   However, as noted on the myfico page, your credit score is based on all of the factors listed, and not just a single one, so the impact is unlikely to be large.

However, you do have several options when it comes to cancelling cards, to avoid decreasing your credit lines.  Obviously, YMMV depending on the specific cards, banks/credit card companies, and your personal history, but I’ll outline my experiences.

First of all, when you call to cancel, there is a good chance the credit card issue will try to incentivize you to keep a credit card.  This can come in various forms.  Sometimes they will waive/or credit the fee (and possibly require you to spend a certain amount or make a certain number of transactions).  Some companies are known to offer your bonus miles or points to retain the card.  It’s always worth asking about any possible retention bonuses.  You could even take the bonus, but reconsider and close the card later (though the card company might not be thrilled by that).

Failing that, if there’s nothing worthwhile offered, many credit card providers can consolidate your credit line with that of another card, and then cancel the card.  By doing that, your total credit limit remains the same, or almost the same, and you would not incur as much of a hit on your credit score.  Another option is try and convert your fee paying card to a non-fee card, which most companies will let you do.  I don’t personally like this approach, unless there’s a non-fee card that I might actually find useful, because then I still have to deal with another open line of credit.  While I prefer to not voluntarily close credit lines, I would rather not deal with having too many open lines to keep track of, and it’s likely I can apply for more credit down the road and get my credit lines to where they used to be.

In summary, when faced with a credit card with an upcoming annual renewal fee:

  1. Call the credit card company and say that you’re thinking about cancelling the card, but you want to see if there are any retention bonuses available.
  2. In the absence of a worthwhile bonus, attempt to combine the credit line on the card you want to cancel with another credit line you have with that provider
  3. If you’re willing to maintain an open credit card, attempt to convert the card to one without an annual fee.

 

Recent credit card posts – Time to Get in the Game!

There’s been a plethora of posts by various people over the past few days.  This seems like a natural time to assess the past year if you’ve been in the game, and to plan out next year’s strategy (or in some of your cases, first plunge).  Generally, everyone has focused on the Chase Sapphire Preferred, AMEX Premier Rewards Gold card, and the AMEX SPG card as part of their past and future strategies.  Enjoy the links below, they all contain very useful and valuable information!  As always, with any of these promotions and/or credit cards, do your research, and feel free to send me questions or post on flyertalk/milepoint in the appropriate places.

 

Wow I think that’s it…I didn’t quite realize how many links there would be to post.  I think with all the information being generated, the main message is to review all of the credit cards and spending strategies that are popular now, and then to start applying and get in the game!  It’s a New Year’s resolution for all of you without one thus far 🙂

Earning miles with credit cards

There’s a couple of posts about credit cards today.  View from the Wing writes about how the American Express Starwood Preferred Guest (SPG) card has been a long time favorite and Million Mile Secrets writes about the United MileagePlus Explorer card and the Continental OnePass card, specifically what your strategy should be right now for applying/cancelling the cards.

I highly recommend the View from the Wing article, because it is the same credit card strategy that I follow, and that I think most people would agree with.  The AMEX SPG card was actually the first affinity program card that I applied for, my ‘gateway drug’ into collecting miles if you will.  When I applied for it, I decided that I wanted a good hotel chain credit card, because I’d noticed that whenever I take vacations, my biggest spending generally seemed to be hotels, rather than airfare.  While airfare to international destinations can be quite expensive, and it is great to earn miles to get that for free, staying at hotels can add up to be much more than the airfare.  So I decided it made sense to start collecting hotel points, and I had heard the SPG card was considered one of the best all around travel cards.

Interestingly enough, I soon learned that it wasn’t considered a great card just because you could use the points to stay at Starwood (Westin, Sheraton, W, St. Regis, Le Meridien properties, among others, are all under Starwood).  I mean, there are great redemption options, even for a hotel program.  You can often get 2 cents of value from each SPG point just redeeming for rooms, but they also offer points and cash rewards, where you use fewer points but pay a co pay (typically $25-$50), and various free nights promotions if you use points for so many consecutive nights.  However, you can also transfer your SPG points to over 30 different airline frequent flyer programs (generally at a 1:1 ratio, with some exceptions such as United/Continental), and for every 20000 SPG points that you transfer, you get a 25% bonus.  Now the card only earn 1 points per dollar, except at SPG properties, but it is still considered one of the best values for general credit card spending.

The programs that offer flexible award redemptions are currently “in”, as you can see from the View from the Wing post.  The other cards that he uses/recommends are the Chase Sapphire Preferred card, which is linked to the Chase Ultimate Rewards program (which allows transfer to United, BA, Hyatt, Priority Club, among others), and the American Premier Rewards Gold (or Business Rewards Gold) card, which is linked to the American Express Membership Rewards program.  The Amex cards generally come with steep fees, (the gold card has a $175 fee which is waived for the first year), but I think they are worth it for access to Membership Rewards, and in the case of the gold card, the 4X points on airfare, if you book a lot of airfare on your own credit cards.

At any rate, I recommend reading through both of the linked posts, and applying for some of these cards if you haven’t already!  As long as you can make the minimum spend (of there is one), it’s perfectly acceptable to apply for both an American Express and Chase card simultaneously to jump start your mileage accounts.  Not only that you could apply for the business versions of any cards that you apply for, and your applications will be considered (and approved if you are creditworthy).

On a side note…I decided over the weekend to go “all in” on the AA DEQM (TEQM for IL/TX and CA flights).  I’ll make a separate post about that, but the gist is, I’ve booked 9 roundtrip flights on AA in the month of January, all on weekends no less!  it’s gonna be one hellish month of flying, but hopefully i’ll get 70-80k for EQM on AA, and be well on my way to executive platinum status with them.

Credit card spend requirements

Often credit cards have a minimum spend requirement to get the signup bonus.  For example, my latest credit card churn involved applying for four credit cards in one day of which three had significant spend requirements to get the signup bonus.  One of the cards had a requirement to spend $1000 within four months, another card required spending $3000 within three months, and another card (with a very substantial signup bonus) requires me to spend $10,000 within five months to get the bonus (only fourth card gave the bonus after the first purchase with no minimum spend).

Now I would never spend that much money on credit cards in such a short period of time based on normal spending patterns.  But there are several strategies that can be used to increase credit card spending without actually buying extra things you don’t need just to spend the money.  Here are a few:

1)  Buying gift cards:  If time is running out to meet the minimum spend requirement, consider buying gift cards.  You can buy Amex or Visa gift cards with your credit card at no extra cost (you pay $100 for a $100 gift card).  You obviously will eventually have to buy something with the gift cards, but you can use this strategy to meet the minimum spend requirement before the deadline and then use the gift cards whenever it is convenient.  You can also buy gift cards to a store that you might shop, such Amazon.com or Costco.

2)  Kiva loans:  Kiva is a great charitable organization that allows people to lend money via the internet to micro-finance institutions in developing countries around the world.  The loans are used to provide funding to entrepreneurs and small businesses that do not have access to traditional banking systems.  The loans will not earn you any interest, and they are not guaranteed, but the historical repayment rate is almost 99%.  You can choose which entrepreneur/business you want to support, and you can see the repayment timeline before you decide to lend.  Loans can be made with a credit card using Paypal, with no credit card fees charged to the donor or recipient of the loan.

3) Paying taxes:  In my jurisdiction, I can pay my property taxes (which are about $6000/year) using a Visa or MasterCard for a convenience fee of 1.9% (This may vary depending on where you live; for me works out to about $110 when charging $6000).    This isn’t bad when you consider the miles you will be earning from the signup bonus (essentially, you’re paying $110 for 50,000+ miles).  In fact, I think you could extend this logic to any type of large one-off bills that accept a credit card but charge a fee.  The fee is worth paying to help meet a large minimum spend, because (depending on how you value miles), the fee should be more than offset by the miles and/or bonus miles that you get.

4) Sending money:  There are online services out there that will allow you to send money (generally up to $1000 per month) to friends/relatives using a credit card with no fees.  I won’t publish the names of these services here, but email questions@frequentflyercollector.com if you are interested in learning more.

5)  Paying ordinary bills:  If you are paying bills with debit cards, checks, or automatic withdrawal from your bank account, you should check to see if credit cards can be used.  I’ve found that many (but not all) regular bills can be paid with credit cards.  I pay my electric bill, cable bill, auto insurance, homeowner’s insurance, and cell phone bills with credit cards.

Note that you may have heard about dollar coins, specifically frequently flyers using them to gain hundreds of thousands of essentially free miles.  Until a few months ago, you could buy dollar coins at face value (free shipping) with your credit card from the U.S. mint.  The Mint allowed this because they were trying to put coins into circulation, but eventually they realized that many people were abusing the system by purchasing tens of thousands of coins just to earn credit card points and then taking them straight to the bank without even unrolling them. Unfortunately for us, the Mint finally put a stop to this, and you can no longer purchase dollar coins with a credit card.  NPR wrote an article about this practice, and it was shortly after this article that the program was quashed.

This is one of the reasons that certain deals in this community are intentionally not well publicized.  It’s important that with credit cards and other promotions, moderation is always good, because you start drawing the wrong kind of attention if you overly exploit any good promotion.

 

In case you didn’t get enough about credit cards…

Today’s Friday Rookie Travel Trips post at Frugal Travel Guy covers some credit card basics.  It discusses what factors affect your credit card score and gives a sample credit card churn and what you can net from it in terms of points and miles.  Enjoy!

Also, hot off the press, in the non-rookie section of Frugal Travel Guy, is a post that illustrates, first of all, some of the crazy lengths we go to to get our miles and status, and also the value (in business class trips) you can get out of all this.