Posts tagged airline miles
Pitting Airline Against Hotel Rewards
Sep 8th
If you’ve ever hesitated before redeeming your airline miles and wondered if you’re getting a good deal, you’re in good company. Redeeming reward flights is akin to transacting in a foreign currency where you have no idea what the exchange rate is, which is never an advantageous position. To give you a leg up, NerdWallet has put together a comprehensive airline rewards infographic for valuing your miles so that you can comfortably decide whether to redeem them or simply use a cash rewards card instead.
Extracting every last drop of value out of your airline miles can be hard work because so many variables are at play. As you’re planning your trip, factors such as when you travel, how close you are to your travel date, your flexibility around dates of travel, whether you have elite status with your airline, and plain old random chance can all affect the value you’re getting. After analyzing hundreds of flights, we found that mile values can vary anywhere from one-tenth of a cent (or less) to 2 cents per mile. In other words, if you had 100,000 miles lying around in your account, those miles could be worth anywhere from $100 to $2,000 towards your airfare, depending on when you use them.
We also believe the future for miles is looking decidedly bleak. According to IdeaWorks, reward seat availabilities currently range from 11% to 99%. However, even Southwest Airlines, the industry leader in reward seat availability, may not be able to keep its performance up as the overall number of seats decline. "There are about 17% fewer seats now available than there were a year and a half ago," says BudgetTravel.com senior editor, Sean O’Neill.
To top it all off, airlines are charging fees for everything from bags to blankets. These fees can make a substantial difference in the cost of your flight and are often overlooked by consumers when choosing airlines. Southwest and JetBlue are the last two major airlines that allow passengers at least one free bag. While most airlines will make you pay handsomely for that third, fourth, or tenth bag (to the tune of $100 or more per bag), Virgin America has an unusual but potentially valuable offering with its $25 per bag for up to ten bags policy. If you are planning a cross-country move or simply have trouble traveling light, Virgin America might offer the best value for you.
So should you write-off all those miles you’ve carefully earned over the years? We don’t think so. While we believe travel rewards go-getters are better off spending future dollars towards earning points in a hotel rewards program such as Starwood’s Preferred Guest program, savvy consumers can follow a few simple steps to get the most value out of miles already banked.
First, identify the lowest price of the itinerary you’re looking for, before taxes and fees, using a site like Kayak. Then check the site of your own rewards program to find out how many miles it costs to fly a similar itinerary on your airline, as well as on any partners in your airline’s alliance. Lastly, compare the dollar cost on the other airline to the rewards cost on your airline to calculate the cost per mile, and see how that ratio stacks up against the numbers in our infographic. If you’re getting a better-than-average deal on your own airline, cash in those rewards and book it. Otherwise, use your cash rewards card to book the cheaper flight.
Hotel Rewards: Where are you sleeping tonight?
We at NerdWallet also scoured redemption rates at eleven of the world’s largest hotel networks and found that, on average, hotel points offer better value for money than airlines rewards, which we demonstrate in our hotel rewards infographic. And unlike the sickly airline industry, we don’t see an industry-wide decline in the near future for the number of hotel rooms available. On a cents-per-point basis, we found the most value in Starwood’s Preferred Guest program, covering such household names as Sheraton, Westin, and the W. At 2.3 cents per point and no blackout dates or extra point charges on standard rooms, SPG tops our list among all hotel rewards programs.
In addition to offering higher average point values compared to airline mileage programs, hotel rewards programs are also better at showing their appreciation for your loyalty. NerdWallet estimates that consumers can earn a free night with as few as ten nights at chains such as Carlson and Marriott. And Starwood often has "Stay 2 Nights, Get 1 Free" promotions. Plus, let’s face it: When was the last time you associated "service" with the airline industry?
As a caveat, bear in mind that while certain hotel networks may offer higher value per point, they may not necessarily suit your travel profile best. Also, hotel rewards programs tend to be very similar in features, so we believe the best practice is to pick one or two hotel networks that suit your travel habits best and stick with them. In other words, don’t spread your wallet thin with too many hotel programs. Use our infographic to identify the program that suits you best, and let it reward you for your loyalty.
Guest Post Blurb:
This is a guest post by Tim Chen of NerdWallet. Tim was formerly a hedge fund analyst specializing in credit card networks and technology companies, before becoming a victim of the financial meltdown. NerdWallet is the Kayak for credit card search, and seeks to become the number one source for unbiased online credit card information. Here are more resources from NerdWallet:
Are Discounts Coming for Paying in Cash?
Sep 1st
This post is from GRS staff writer April Dykman.
A couple of weeks ago, J.D. highlighted research that showed that rewards cards cost the poor (in higher prices overall) and benefit the rich (who are more likely to use the cards). But what if retailers offered you a discount if you paid in cash?
It might not be so far-fetched. In Will Financial Reform Kill the Rewards Card?, Brett Arends writes that a provision in the financial reform act allows for such a discount.
If competition works its magic, that discount should end up worth as much, or more, as the points you get from a card. We may end up saying goodbye to the rewards card, and go back to old-fashioned money.
The new cash is, er, cash…According to both the Public Interest Research Group and the National Retail Federation, when you pay for a purchase by credit card, it costs the retailer about 2% in transaction fees. So, logically, that’s about how much they can afford to discount if you pay cash instead.
Arends points out that the value of your rewards can be difficult to determine, especially with points for purchasing items or airline miles.
…experts explained that the average card user is doing really well if they get back about 1½ cents on the dollar. That’s why cash-back cards paying 2% seemed like the best deal for most people.
But why wait to get 2% back if you can never part with it in the first place?
Getting More for Your Money
Paying with cash could yield even bigger discounts, since the new law allows retailers to offer other benefits, like vouchers and gifts, in lieu of cash back.
Stores, naturally, sell products at a profit. So they may be able to offer you $2.50 worth of goods, say, as a bonus for settling your $100 bill in cash. You effectively get rewards worth 2.5%. But it may only cost them 1.8%. (At a high-margin retailer like Tiffany, the deal could be even better. Tiffany’s gross markup was about 75% last year. So the company could give you, in theory, gift vouchers worth $35 in return for settling a $1,000 bill in cash.)
Coming Soon to a Store Near You?
It’ll probably take time before cash discounts are offered by retailers and restaurants, but there’s interest. Before, it was difficult to implement such an offer since the law was unclear and credit card companies employed lawyers to make it harder.
But does this mean rewards might be a thing of the past if the rewards lose their allure?
Store Discounts Could Cost You
Arends is decisively anti-credit card, and that’s not a viewpoint I share for those who use them responsibly. Personally, I haven’t paid interest on a credit card purchase in years, nor have I paid late fees. I have, however, racked up some serious rewards.
For me, it’s worthwhile. But I had to ask myself, given the opportunity to get an instant discount, would I take it? Maybe. But only if I actually got cash back. With vouchers and discounts, it’s easy to feel like you’re getting a good deal, when really you’re just spending more money. In Learning to Discount All Those Juicy Discount Offers, Karen Blumenthal reports that stores that offer discounts through loyalty programs count on people not redeeming their rewards:
…we are likely to spend more to qualify for a coupon or earn cash back—and then forget to spend it. All loyalty programs count on a certain percentage of consumers not redeeming,’ Prof. Nunes notes. In addition, he says, ‘once you get closer and closer to a reward, you want it more and more’ and may spend more to get it.
Second, vouchers are a bigger win for the merchant, or else the programs wouldn’t exist. Take the example of Tiffany’s that Arends gives to show how higher markups can mean bigger rewards. How many things can you buy in Tiffany’s with a $35 voucher? Not much. The cheapest thing I could find on their website was a sterling silver ring for $100. You’re still shelling out $65 to use your voucher. If you were going to buy the item anyway, it might be a good deal. If the discount found you looking for something else to purchase, you aren’t coming out ahead.
So readers, what do you think? If you use a rewards card, would you trade in the rewards for an instant discount? Would you trade them in for vouchers or gifts?
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Related Articles at Get Rich Slowly:
- Ten Ways to Drive Down Your Car Insurance
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- Save on Groceries with ‘Strike-Point Shopping’
- A Rough Guide to Repaying Student Loans
- Save on Cell Phones with Employee and Student Discounts
Why Should People Have Various Kinds Of Credit Card
Aug 30th
There are cases when people apply for credit cards just for the sake of getting a credit card. If they have many credit cards, then they can spend large sums of money. But there are people who apply for specific cards to get the most out of them. For instance, the credit cards offering airline miles. People, who are much of travellers and spend much of credit card goes hand in hand. The main principle is the more money you spend, the more airline miles you get. Yes you can collect them, but take into account that some of your credit cards will be blocked. Summer is the most difficult time to travel, because so many people flight on their vacations. Airlines will not present you free trips, when the tickets are so expensive.
Then you can always find the cards which are called rewards cards. These are cards offering free gas or free Amazon.com gift certificate when you get enough point. As opposed to airline miles these points are more difficult to get, the principle is the more you spend, the more points you get. Let’s say, if you have a Chase credit card, you are offered a reward that if you gathered 2500 points then you get an Amazon.com $25 gift certificate. The same is with gas cards, you need many points and this will take much time to get the rewards. But for some people it is suitable. The key is to spend the credit to get the points but you should cover the balance down as well.
There are credit cards with low interest rate when you transfer the balance. It is great if you get a high balance on a high interest card. Check if low balance remains a low balance and after 6 months the rate increases. Do not forget to read the fine print because all offers provide some details about interest rate. You will save money.
Students maybe get the best deals on credit cards. There is no student who will turn down a credit card. So, they offer students low apr`s and then the students sign the application and soon they get their credit card. Usually student credit cards offer money back or money towards their tuition. But you should check how many credit card issuing companies offer the types of rewards and which ones offer the most suitable interest rate.
The best thing about credit is that even though you get bad credit and you can still apply for credit cards. These cards begin with a low balance and as you pay more and more of the balance they will boost your credit. It is an excellent way to perform credit repair and re-establish your credit at the same time. Today there is a wide range of credit cards to choose from, but be wise and select only those cards that cards that really make the whole difference to you. Choose a card with great rewards and low interest rate. Take into account that in some organisations you have to spend more to get more then you have to pay more just to keep up with the balance so you do not have any problems. Make sure to choose the most suitable option for you.
Looking for offers which are worth filling out credit card applications? This is not an easy task.
We seriously recommend you to read this credit cards blog before you get down to credit card applications. Read what is wise and what is stupid to do on this market. Everybody can fill out online form, but not everybody is capable of finding a provider with really great offers.
Nowadays we live in the world where info quickly enhances the quality of our life.
Due to this if you are properly armed with the knowledge in your sphere of interest you can be sure that you will in any case find the way out from any bad situation. So, please make sure to get back to this site on a regular basis or – best of all – sign up to its RSS. Thus you will have a direct shortcut to the freshest informational updates about credit cards, small business grants and other helpful topics here.
Airline Miles Credit Cards: The Benefits
Jul 31st
Many people dread the thought of having a credit card. They think that with one in hand they could spend on things they never imagined they would buy but with a tendency of going over bound.
SPG AmEx Card Promotion: 30,000 Bonus Points Worth $600
Jul 6th
American Express is having a promotion for its Starwood Preferred Guest credit card. If you apply for this card and charge $1,000 during the first three months, you will get 30,000 bonus points in the Starwood Preferred Guest (SPG) program. Starwood operates hotels under Four Points, Sheraton, Westin, W, and few other brands. SPG points can be redeemed for free nights at those hotels. At a value of at least $0.02 for each SPG point, the 30,000 bonus points are worth $600 or more. I applied and received an instant approval. The promotion ends on July 6.
This is not a sponsored post. American Express or anyone else doesn’t pay me anything if you apply. I’m just passing along the deal.
I knew about this card for some time. I didn’t apply until now because of its $45 annual fee (waived in the first year). Now the signup bonus will cover the annual fee for the next 10-15 years.
Purchases on the SPG AmEx card earn one SPG point per dollar spent. Again, at a value of $0.02 per SPG point, it’s at least as good as the Schwab Visa card (no longer accepting new applications).
Given that you can get a Fidelity AmEx card any day with 2% cashback and no annual fee, the SPG points you earn have to be worth more than $0.02 per point to make the SPG AmEx card worthwhile. At the price point I usually spend on a hotel room, Starwood’s Category 2 hotels are a very good value for 3,000-4,000 points a night. If I were to pay for a room in cash, I’d have to pay about $100 a night including all taxes. That makes a SPG point worth 2.5 to 3.5 cents. Instead of getting a 2% reward in cash, I’ll get a 2.5%-3.5% reward in hotel points.
Hotel points are much easier to use than airline miles – it seems airlines never let me use miles on the dates I want. However, I never had any problem with finding a room when I wanted to redeem hotel points. SPG specifically advertises no blackout dates.
Unlike booking through Priceline or Hotwire, you can cancel a hotel room booked with SPG points, usually up to the date of arrival or the previous day. You also know for sure which hotel you will be staying at, versus taking a chance with having a bad one assigned to you by Priceline or Hotwire.
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Software picked, likely related articles at The Finance Buff:
- Fidelity mySmart Cash $100 Bonus Received
- Best Credit Card for Everything Except Grocery, Gas, and Drugstore Purchases
- Best Credit Card for Grocery, Gas, and Drugstore Purchases
Making the Most of Your Credit Card Overseas
May 11th
Credit cards are a great addition to any trip, especially when traveling overseas. They offer some of the best exchange rates and the convenience and security of carrying around as little cash as possible. Using a credit card also ensures that you won’t be stuck with left over foreign currency at the end of your trip.
Knowing this, imagine that you go on a trip to Europe and spend $3,000. You use your credit card for most of your purchases because, in addition to the advantages above, you earn rewards in the form of extra cash or airline miles for every purchase you make. At each point of sale, the merchant asks if you would like to convert your transaction from the local currency into U.S. dollars. You say yes every time, and are satisfied with seeing your transaction in a currency that you are familiar with.
When you get home and receive your credit card bill, however, you are astonished to find that while you were in Europe you were charged almost $300 more than the value of the things you bought. When you closely examine the receipts, you see that there is almost a 10 percent mark up on all of your transactions.
This extra 10 percent is due to a combination of two things: foreign transaction fees and Dynamic Currency Conversion fees. A foreign transaction fee is fairly typical, and is assessed by most credit card companies when you make purchases abroad – this is usually around 2- 3 percent of your purchase. To keep your costs down while traveling, it may be worth applying for a no foreign fee credit card before you go. Capital One offers the most no foreign transaction fee credit cards of any other issuer.
Dynamic Currency Conversion on the other hand, is a technique that merchants use to make extra cash on electronic transactions made by travelers. They offer to convert your transaction into your home currency, but in doing so charge a fee as high as 7 percent of your purchase to do the conversion, then pocket the difference. This can be easily avoided by simply insisting that your transactions are in the local currency every time.
Another thing you should consider when traveling with a credit card, is which credit card networks are accepted in the country to which you are traveling. The credit cards most accepted worldwide, by a large margin, are credit cards on the VISA and MasterCard networks. American Express also has a global network, but acceptance varies greatly based on the country. The more developed the country, the more American Express is on par with VISA and MasterCard. Discover Card is the least useful card overseas, as it is rarely accepted outside the U.S.
If you’re traveling in Europe, you will notice that most European countries use chip-and-PIN technology for their credit cards. These are smart cards with embedded microchips that are authenticated automatically using a PIN. They are much more secure than the magnetic stripe credit cards that we use in the U.S., so most merchants will want to see your passport for identification purposes before they will allow you to use your magnetic stripe card. Therefore, be sure to carry it with you at all times.
Finally, to avoid any unnecessary headache while on your trip, make sure to notify your credit card company of your travel plans before you leave. The last thing you want is to be without a means of spending, and this will assure that they will not suspend your credit card due to suspicious charges made outside the country.
Now that you have the information you need, a credit card will provide you with a hassle-free trip. Because of credit cards favorable exchange rates, you can rest easy knowing that you’re getting the most for your money – especially if you’re using a no foreign transaction fee credit card and always doing your transactions in the local currency. Make sure you compare credit card offers to get a credit card that not only has no foreign fee, but also gives you the most in terms of rewards. If you know what to look out for and plan accordingly, there is no better way to go.
Disclosure: CardHub.com, is owned by the same parent company as this blog.
Take Our Survey for Chance to Win $500 Amazon Gift Card
Apr 9th
Yes, that’s right, a $500 Amazon Gift Card. We are giving one away to one lucky winner. To enter, all you have to do is leave a comment below answering a simple 10-question survey. So let’s first take a look at the survey, and then we’ll provide a few more contest details.
Credit Card Survey
When the Credit Card Act passed last year, I predicted that credit card rewards and other perks would become a thing of the past. I was dead wrong. In fact, after most of the Act’s provisions went into effect in February of this year, many credit cards brought back favorable terms and conditions that had not been seen since 2008. Here are a few examples:
- Citi brought back the 0% balance transfer for up to 15 months
- Discover More card added a $50 cash bonus for new card members
- Chase Sapphire(SM) kept its 10,000 bonus points offer (worth $100)
The list could go on, but you get the idea. But the point is that far from taking card benefits away, credit card companies have actually been increasing many of the rewards and introductory interest rate offers. And so it occurred to me that I’d like to know what readers of the Dough Roller want in a credit card. I have my own ideas on this, of course, but I’d like to hear from you. So I put together the following 10-question survey:
1. What would you consider the best credit card feature?
- no fees charged (over limit, no increase in APR)
- cash back
- airline miles
- points for various rewards
- low introductory offer
2. What would you prefer to see in a credit card?
- stable APR along with no fees
- cash back for making purchases
3. Rank the following statement – I will always apply for a credit card with a brand name I trust
- Strongly Agree
- Somewhat Agree
- Agree
- Disagree
4. I think a no or low annual fee is very important
- True
- False
5. Which one of the below best describes you?
- I pay my balance off each month – I use my credit card to get something back
- I pay the minimum each month and look for a card with minimal fees or to transfer my balance
6. The ideal customer experience from a credit card company includes:
- Automated touch tone service
- Automated touch tone service with the ability to speak to a rep at any moment
- No automation, I want direct to rep experience
7. Which of these perks would you like to receive from your credit card provider:
- Access to concierge service
- Free credit score and alerts
- Discounts at local merchants
- Statement credits for paying your card on time
8. Visa vs. MasterCard–Does it matter?
- Yes, I prefer a Visa card
- Yes, I prefer MasterCard
- No, it doesn’t matter
9. What feature do you value most with balance transfers
- Length of the 0% introductory offer
- Low balance transfer fee
- Low regular APR after the introductory rate ends
- Other card features such as cash back, miles or points
- Balance transfer offers aren’t important to me
10. How many credit cards do you have?
- 0
- 1-3
- 4-7
- 8+
$500 Amazon Gift Card
So how do you enter the $500 Amazon Gift Card Giveaway? It’s simple. Leave a comment below answering each of the above 10 questions. You can just list the letters that correspond with your answers, so the survey should only take a minute or two. If you have other thoughts on what you value in a credit card, feel free to leave additional comments below your survey answers.
When you leave your comment, be sure to include a valid e-mail address in the box provided. Your e-mail won’t be visible by others, but it’s how I’ll contact the winner. And rest assured that I hate spam as much as you do; your e-mail address will not be used for any purpose other than to contact you if you’re the lucky winner. The winner will be chosen at random. I’ll keep the survey and contest open through April 14, 2010 and contact the winner on tax day.
Good luck!
Get the book–99 Painless Ways to Save Serious Money!
Sometimes, "Too Good To Be True" Is Not True
Mar 4th
By Paul Michael
How many times have you heard people say “if it look’s too good to be true, stay away from it” or words to that effect? Well, I know I’ve said them often myself. But sometimes, rarely, there really is a deal that’s a steal. Case in point — pudding cups and airline miles.
You may have heard the story before, or perhaps recall the plotline from Punch Drunk Love. It’s a real story, and it’s completely accurate. For those of you not in the know, here’s the rundown.
Davis Phillips, a civil engineer, was walking through the supermarket when he spotted a promotion that seemed too good to be true: “Buy 10 Healthy Choice products and get 500 airline miles — or 1000 miles for purchases made before June 1999.”
David spotted the cheapest Healthy Choice product, chocolate-fudge pudding cups, and figures that at 25 cents each, $62.50 worth would net him 25,000 miles.
However, what if he bought all the pudding he could get his hands on? What would that net him? $3000 and 12,150 pudding cups later, he had his answer. He arranged for a local charity to pull the bar codes off the pudding cups, and in return he donated the puddings to the charity. David wanted the miles, not the desserts. And as this was a donation, he got an $800 tax break. That makes $2200 for over 1.25 million air miles! Not too shabby.
I checked Snopes and it’s 100% true. David Phillips pulled it off, but he wasn’t done there. He spotted a deal called Latin Pass, which offered 1 million miles for flying 10 Latin American airlines and completing several other requirements by July 1. "It almost pencils out to a better value than the pudding," said Phillips.
Now, is this the only instance of an amazing offer that really was an amazing offer? No, not at all. Sometimes, they require you to jump through hoops or do the seemingly impossible (“boss, no one would ever buy 12,000 pudding cups!”) or they’re counting on you not to get off your butt and do something.
Sometimes, it’s a fatal miscalculation. Case in point, several years ago there was a Hoover promotion that was also in the “too good to be true” category. Hoover was giving away free round-trip tickets to Europe (and later, the USA) for purchases of one hundred pounds or more. After checking the small print, people realized it was a genuine offer. Hoover hadn’t figured on savvy customers buying a vacuum cleaner just for the deal, which was worth way more than the product itself. In this case, Hoover did not make good on its promise, as too many people took them up on the offer. It resulted in legal battles, 50 million pounds in legal fees, and Hoover eventually being sold to Candy. All because the promotions department couldn’t do the math.
So, what is the moral of this story? Should you now let down your guard at every amazing offer? Well, no. But you should also listen to your gut instinct now and again. David realized, on the spot, that this was a deal that would give him money for nothing. But he didn’t run head-first to the ATM, drawing out his cash and buying the pudding before doing any more calculations. He checked the rules, did the math, and made sure he was eligible for the miles. Then he pounced.
I urge you to do the same. When your gut tells you to pay attention to a deal, do it. You may spend a few minutes wasting your time in a glut of fine print. But you may also find a loophole that nets you a cool 1.25 million air miles.
Go on. Get lucky.
Permalink | 2 comments | Paul Michael's blog | Channel: Life Hacks, Consumer Affairs
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