Frequent Flier Credit Card Fees
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Posted: Wed Sep 29, 2004 9:00 am
Post subject: Frequent Flier Credit Card Fees
Jennifer
Date: 2/10/2001 3:56 pm CDT
Any advice on how to calculate if paying for a Frequent Flyer credit card is worth the fee? How many dollars would I have to charge annually to make it worth the annual fee?
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Posted: Wed Sep 29, 2004 9:01 am
Post subject: Frequent Flier Credit Card Fees
Eugene
Date: 2/11/2001 5:57 am CDT
First, choose a destination (or destinations) you are likely to fly to in the future. How much is the ticket there in the season you are likely to fly? Then ask the airmiles card issuer how many miles you need to collect to get a ticket there, and how much you have to charge to get those miles. See how many years it will take you to charge that much. If you want to make it simple, it's worth it only if the ticket price is lower than the annual fee multiplied by the number of years.
If you want to complicate things a bit, but make the estimation more precise, note this:
1. Shop around for the lowest price of the ticket. If you take the first price you find, your calculations are not good (unless this is how you really buy tickets .
2. See if the card you are considering gives you most miles per amount spent on an airline you are likely to fly with. In other words, shop around for the card, as well. (Some cards give you miles you can use on many airlines, not just on one).
3. Think whether you like the bank that issues the card. If you've had bad personal experience with them, or heard too many complaints about them on the web, even the best airmiles program might not be worth your possible future frustration.
4. If you are really into calculations, estimate the lost interest from annual fees. For example, if the annual fee is $70, your money earns 6% APY in the bank, and it takes you two full years to earn a ticket, you don't just loose $140, you also loose $12.60 in interest.
It's also very important to study the airmile program restrictions closely. Read that fine print from the perspective I can best describe with these two questions:
1. Are there cases in which I think I would qualify for a free ticket or upgrade, but in fact I will not or might not?
2. Is it possible that I will experience more inconveniences using my miles than bying the ticket?
I can tell you right now, there are and it is. There are restrictions in the number of free-milers per flight airlines impose (this means you might have to book your ticket well in advance, and it may still be not available). Also, miles are not transferable, so if it turns out that only your husband can fly to your niece's wedding, he might have to reach out for cash, even if he is an authorised user and charges more than you (the account holder) did. I am sure there are other "gotcha" scenarios, I am just not "experty" enough to spot them.
If you decide airmile cards are not for you, you can choose to use other rewards cards if you could use their rewards. Cash back cards might look attractive if nothing else does. And of course, all rewards cards are good only if you pay in full every month. If you don't, choose a low APR card instead.
I hope I have not forgotten anything.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Wed Sep 29, 2004 9:00 am
Post subject: Frequent Flier Credit Card Fees
Jennifer
Date: 2/10/2001 3:56 pm CDT
Any advice on how to calculate if paying for a Frequent Flyer credit card is worth the fee? How many dollars would I have to charge annually to make it worth the annual fee?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
archive
Posted: Wed Sep 29, 2004 9:01 am
Post subject: Frequent Flier Credit Card Fees
Eugene
Date: 2/11/2001 5:57 am CDT
First, choose a destination (or destinations) you are likely to fly to in the future. How much is the ticket there in the season you are likely to fly? Then ask the airmiles card issuer how many miles you need to collect to get a ticket there, and how much you have to charge to get those miles. See how many years it will take you to charge that much. If you want to make it simple, it's worth it only if the ticket price is lower than the annual fee multiplied by the number of years.
If you want to complicate things a bit, but make the estimation more precise, note this:
1. Shop around for the lowest price of the ticket. If you take the first price you find, your calculations are not good (unless this is how you really buy tickets .
2. See if the card you are considering gives you most miles per amount spent on an airline you are likely to fly with. In other words, shop around for the card, as well. (Some cards give you miles you can use on many airlines, not just on one).
3. Think whether you like the bank that issues the card. If you've had bad personal experience with them, or heard too many complaints about them on the web, even the best airmiles program might not be worth your possible future frustration.
4. If you are really into calculations, estimate the lost interest from annual fees. For example, if the annual fee is $70, your money earns 6% APY in the bank, and it takes you two full years to earn a ticket, you don't just loose $140, you also loose $12.60 in interest.
It's also very important to study the airmile program restrictions closely. Read that fine print from the perspective I can best describe with these two questions:
1. Are there cases in which I think I would qualify for a free ticket or upgrade, but in fact I will not or might not?
2. Is it possible that I will experience more inconveniences using my miles than bying the ticket?
I can tell you right now, there are and it is. There are restrictions in the number of free-milers per flight airlines impose (this means you might have to book your ticket well in advance, and it may still be not available). Also, miles are not transferable, so if it turns out that only your husband can fly to your niece's wedding, he might have to reach out for cash, even if he is an authorised user and charges more than you (the account holder) did. I am sure there are other "gotcha" scenarios, I am just not "experty" enough to spot them.
If you decide airmile cards are not for you, you can choose to use other rewards cards if you could use their rewards. Cash back cards might look attractive if nothing else does. And of course, all rewards cards are good only if you pay in full every month. If you don't, choose a low APR card instead.
I hope I have not forgotten anything.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 12:48 PM
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