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Keith Alexander offers this fantastic example of the potential frequent flyer mileage you can earn with a credit card:

Ann Scharpf of Huntingtown, Md., scouted around for about 40 friends, neighbors and co-workers who were willing to help her pump her American Airlines Citibank card. She would use her card to cover their groceries and other necessities if they would reimburse her.
Within two months, Scharpf was paying co-workers’ car insurance. And on Saturday mornings, she would buy grocery-store gift cards on her credit card totaling $100 to $800, then hand them over and collect the money from her friends and co-workers. Next, she would deposit the cash and pay off the balance on her card. Once, a Citibank representative called her to inquire why in one day she had bought $1,500 at a Food Lion and then $3,500 at the Giant Food across the street.

Ann Scharpf, I salute you! You just entered the frequent flyer hall of fame in my book. Paying co-workers’ car insurance?!? Hard-freakin’-core. And I thought I was doing well by charging all of my OWN expenses to the card…

At the same time, Alexander cites oft-heard complaints that finding awards you want is hard, and that the “annual credit card fees of $60 to $85, depending on the airline and the credit card, also make the cards less attractive.”

I agree that, if you pay an annual fee for a credit card, you’d better be getting your money’s worth. And you’d better not carry a balance, because the airline-linked cards carry high rates.

Let’s assign an overly conservative value of 1 cent per mile to the miles you earn. If you’re paying a $50 annual fee for your credit card, you’re not breaking even until you’ve earned 5000 miles with your card. If you’re paying $85, the break-even threshold is 8500 miles, etc.

But AFTER you cross that point, I contend the cards are still worth it. (And my 1 cent/mile standard is too tough.) True, hoarding miles is stupid, since miles don’t earn interest and are a devaluing currency, but their value isn’t fixed, either: You can get 1 cent per mile if you cash in your points for a ticket you could buy with cash during a fare sale, or you could get 8 or even 10 cents per mile when you redeem an international premium-class award. (Unsure if it’s better to spend money or miles? Run through the Miles or Buy tutorial.)

Plus, the bonuses you can earn with mileage credit cards are sometimes nutty, and annual-fee waiver offers come around, too. At the low end of bonuses, there’s the Northwest WorldPerks Visa Signature: One current offer gives you 7500 bonus miles with a $90 annual fee, or 5000 bonus miles with a $55 fee, which frankly isn’t great. At the upper end, there’s a United Mileage Plus Visa Signature with the first year’s fee waived and 20,000 bonus miles. And that’s before you spend anything on the card! Even the low-bonus card might be worth it if it earns you sufficient miles through your usage.

Plus, cards are constantly offering bonuses, such as “spend $300 on groceries this month and get double miles,” bonus miles for buying from specific merchants, or annual “anniversary” bonuses. If you tally it up at the end of the year, and you’re not earning more than 1 mile per dollar charged to the card, it may be time for a new card.

Also, some airlines and banks have agreements to offer annual fee rebates to top tier elites. Even better!

Ditch my mileage card? No way. Now if only I could find some trustworthy suckers who will let me charge their car insurance and reimburse me…

(image)
tags: travel | frequent flyer miles | credit cards

Lost privacy
If you’ve used hotels.com to book a room, your credit card information may have been stolen. The company should be contacting you if you’re affected. Yay.

Lost kids
Parents’ nightmare: United Airlines put an unaccompanied child on the wrong flight (sent him to South Bend instead of Taiwan), and left the South Bend-bound child at O’Hare. No word on whether their bags arrived in the proper city.

Lost marbles
Singapore cab driver converts his vehicle into a mobile karaoke unit. I wonder if his repertoire includes Sammy Hagar’s “I Can’t Drive 55.”

Lost fight
Virgin America says it won’t start flying until 2007, because Continental keeps filing objections with the Department of Transportation. Virgin promises fares 30 to 50 percent less than competitors on cross-country flights. Where have we seen this before?…

Lost lunch
Nervous about flying? Ever frightened when you’re coming in for a landing during serious crosswinds? This video of Boeing 777s and 747SPs doing test landings somewhere in Brazil might make you feel better about the ability of airliners to land safely in less than ideal conditions. Or it might just make you shout “holy crap!” repeatedly, like I did last night.

(image: ABC, via Honolulu Star-Bulletin, which describes how a former Eastern (and later Delta) L-1011 was destroyed in order to serve as a set piece for the TV series “Lost”)
tags: travel

If the airlines are going to charge for meals, drinks, headphones, and what-not, then it’s high time they made it easier to pay for the stuff, rather than having the flight attendants state that “exact change is appreciated.” Finally, in a country where everyone seems to use credit cards for everything, onboard use of credit cards is finally hitting the airline mainstream. American Airlines began accepting plastic on board many of its planes this week, with a promise to accept cards on all flights by June.

While credit cards have been accepted on international flights for some time (for duty free purchases), domestic U.S. flights have been oddly credit-card-free.

American Express Co. will provide the airline with portable electronic terminals. We’ve seen similar machines before — if memory serves correctly, United had them briefly a few years ago, but they were unreliable and were pulled after a few weeks. Alternatively, Continental has made it possible to buy “Continental Currency” using credit or debit cards at the self-check-in kiosks. These certificates could be exchanged onboard for alcoholic beverages or headsets. A good start, but still an additional layer of planning for the customer.

Making it easier to buy stuff onboard is in the interest of both the airlines and the flying public. For business travelers on an expense account, having a receipt or charging it to the company card reduces hassle tremendously.

Of course, I’d rather not have to pay for every little thing in the first place, but if I am shelling out the cash, I’d like the option of using my card. Which earns me more frequent flyer miles, after all…

(Update: ATA has also begun accepting credit cards in flight, but goes a step further: not accepting cash. Via USAT.)

tags: travel | air travel | credit+cards | American Express | American Airlines | Continental Airlines

Death. Taxes. Mileage points.

While all of these may be inevitable, blending the last two don’t go together (actually, blending the first one with anything isn’t such a hot idea either).

According to a story in the NY Times business section, it’s becoming increasingly popular to pay your tax bills with plastic. Why? The miles of course.

But it turns out that 1.57 million people might be wrong. “Jim Tehan, a spokesman for Myvesta.org, a credit counseling Web site, summed up the feeling of most credit counselors on this point: ‘It’s absolutely ludicrous to use your credit card for taxes to rack up points.’”

The rub is that the IRS charges a 2.49 percent “convenience fee” for processing the credit card. According to Miles or Buy, that’s WAY too high a price to pay for miles.

So when you render unto Caesar today, take out the checkbook and resist this opportunity to turn it into a mileage run.

–Dr. Vino

tags: travel | air travel | mileage points | taxes

Another week, another new fee… Qantas has instituted a new fee for customers buying their tickets with a credit card:

Flat fees of $4.40 on domestic flights and $12 on international tickets will replace a charge of 1per cent of the ticket price from May 24. The fees will be charged per passenger per booking.

Fees for using your credit card are nothing new to Qantas fliers, or to many European travelers. In the U.S., though, such fees are nowhere to be seen. Not even when buying a ticket on Qantas. Yet.

I am no expert on the contracts that merchants sign with credit card processing companies, like this sample contract, but would such a fee be legal in the United States? Would it be considered prejudicial to charge extra?

And even if it were legal, would the airlines want to do it? If anything, airlines have been running promotions that offer bonus miles or elite-qualifying miles if tickets are purchased with a particular credit card.

Discouraging credit card use also discourages sales, period. With Americans’ spend-spend-spend consumer habits, I wonder how many people even have enough cash in their accounts to cover their plane tickets at the time of purchase.

As a traveler, I like paying for my ticket with the credit card, for several reasons. Obviously, the miles. But more importantly, the various forms of insurance that come with the card. Trip delay insurance, lost baggage insurance, and the peace of mind of knowing that the charge could be reversed if the airline goes under.

This is one class of fees I hope to avoid.