Genuine Curiosity

Author Dwayne Melancon is always on the lookout for new things to learn. An ecclectic collection of postings on personal productivity, travel, good books, gadgets, leadership & management, and many other things.


Paypal or rewarding credit cards?

Slackmaster Bren has some Paypal tricks to share, along with the reasons he like to use Paypal. For example, he likes to use Paypal to buy stuff on iTunes.

While I like Paypal, I tend to use it only for eBay purchases. In most other cases, I use credit cards that earn some kind of reward points. I don't carry a balance so I don't mind putting things on a card just so I can earn points or air miles Just as Bren's earned a few things about Paypal, I'd like to share a few observations on the rewards points side of the equation.

Air Miles Cards - Air Miles cards are a great way to earn miles that you can later cash in for "free" airline tickets, upgrades, etc. Some considerations:

  • Bulk up the easy way. These cards can be especially lucrative if you take advantage with the associated airline's "specials." Many airlines will offer bonus miles for things like booking online with the card, dining out at specific restaurants, shopping at certain stores, etc. - if you plan to spend the money anyway, this is an easy way to get more miles.
  • Use the card enough to offset the fee. If you are going to keep the card in your wallet and not spend much on it, these "loyalty" cards may not be a good deal for you since they often have higher annual fees than non-air miles cards. You'll need to earn (and use) the miles to offset the fee.
  • Elites can "waive" goodbye to their fees. Many airline cards will waive your annual fee if you reach one of their elite levels in their mileage program. This is a nice perk - look for it.
  • Airline hoppers may get diminishing returns. If you fly several different airlines (or a different airline for business and leisure) a loyalty card that is tied to a specific airline may be a pain. If, for example, you fly United a lot for business but always go on vacation to a city where United doesn't fly, you may have a tough time using your airmiles to reduce your vacation travel costs. Note: If the two airlines you frequent are partners, you may be able to transfer miles from one to the other, but look before you leap.
  • Beware the mileage cap. Last year, I favored my United Mileage Plus Visa, but I found out I missed out on something like 40,000 air miles because I hit their annual cap on earning miles around September because I was operating under the mistaken assumption that the mileage cap didn't apply to "United 1K 100,000 mile" members. I didn't realize my mistake until end of November. This year, I'm using a Rewards Point card instead.

Rewards Points Cards - These earn "points" for purchases that you can redeem for merchandise, gift certificates, and can even be transferred into airline accounts to become air miles Some considerations:

  • Use the card enough to offset the fee. Like Air Miles cards, Rewards Cards often have higher annual fees than other cards. These are typically not good cards for occasional card users, for that reason.
  • Charge cards are not the same as credit cards. Some cards are "charge cards" which must be paid off in full each month (though American Express now has a feature you can enable that lets you carry a balance on travel-related items over a certain dollar amount). In contrast, credit cards let you carry a balance over each month, as long as you pay the minimum payment when your bill's due.

Cashback Cards - These cards give you a rebate at the end of each year, based on the amount you charged on your card.

  • Don't pay late - you could lose your rebate. Most of these cards have a stipulation that causes you to lose your rebate (or a portion of it) if you have a late payment. When I used to use these cards, I was sometimes a few days late and didn't lose anything so I suspect it needs to be more than 30 days late for this to kick in.
  • The cash back may not be all that compelling. Sure, you get a percent or two back at the end of the year, but a) it isn't really cash - it's a credit to your account; b) it probably won't cover the cost of an airline ticket to anyplace exciting.
  • There are a ton of these that have no annual fee. This is the good part of these card - you can often get the cashback bonus without paying an annual fee.

A note about Hotel Miles credit cards: I don't use Hotel Miles credit cards personally, though I know lots of people who swear by them. They have some of the same limitations as Air Miles cards (limited applicability outside of a specific brand, limits on transfers, etc.) but if you go on road trips, like to stay at posh resorts (where a couple of free nights may save you more than a free flight to get there), Hotel Miles cards are a great option.

  • Are you a Hotel Miles expert? If so, share your mojo through comments here, or via a post on your blog with a trackback.

This list is by no means exhaustive, and it's all my opinion, of course. Got stuff to share? I'd love to hear any of your own observations, tips, and tricks about any of these loyalty / rewards cards.

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