Newsstand - Airline frequent flyer credit cards are a bad deal

http://money.cnn.com/2006/03/31/pf/goodlife_fortune_travel/

NEW YORK (FORTUNE) - Open up your wallet and look through your credit cards. Now take out a pair of scissors and cut up the ones with the name of an airline on it.

Yes, that's right. Forget all you think you know about getting free travel rewards and listen up: Airline frequent flyer credit cards are a bad deal. And that's not only because of high interest rates and annual fees.

While the piece is dead-on in recommending the SPG Amex, the author still believes that Diners Club gives two billing cycles to pay :rolleyes:

For a lot of the mom and pops it doesn't make too much sense, but with my status I do have an airline credit card that has no annual limit on the accrual of points (as some airline credit cards have).

I run a 5 figure monthly bill on the card (inventory) and walk about a happy camper at the end of the year.

http://money.cnn.com/2006/03/31/pf/goodlife_fortune_travel/
And that's not only because of high interest rates and annual fees.

"For example: Four nights at the Westin Maui Resort and Spa costs for $415 per night for a standard room in May."

I am so glad that Fortune magazine pays its writers enough to afford $415 per night hotel rooms, either on company paid per diem or on his vacation.

Reality check for Barney Gimbel, FORTUNE senior writer, probably in New York. I am sure I am not the only one here at FT land who can make a simple claim: I have never paid anywhere close to $415 per night for a room in my life, either on the company expense account or my own. It may surprise Barney Gimbel, FORTUNE senior writer, to learn that working people out here in real America do not make the kinds of bucks New York Fortune Senior Writers obviously make. And our companies pay no more than published US government per diem rates. Even in a high rate area like Hawaii, I know without looking it up it does not include $415 for hotel.

"For some reason people seem to forget they spend more on an average hotel stay than they do on their airline fare to get there," says Randy Peterson, editor of Inside Flyer Magazine.

I beg to differ with the host, but in my business travel world the discounted air fare is almost always more than the average hotel bill for that trip.

As for "because of high interest rates and annual fees", wrong again. I almost always refuse to use any card with an annual fee. There are enough out there with no annual fee. I have an airline card with no annual fee. The day they try to charge me a fee, it gets cancelled. As for high interest, surprise, I carry no balance and pay it in full each month. Result: No interest.

No annual fee, no interest. 1 mile per $2 is a free bonus. You got a problem with that, then you just have a problem. Better get thee to a $415 Maui Spa and work it out of your system. :)

"For example: Four nights at the Westin Maui Resort and Spa costs for $415 per night for a standard room in May."

I am so glad that Fortune magazine pays its writers enough to afford $415 per night hotel rooms, either on company paid per diem or on his vacation.
The article doesn't say that the writer stayed there or paid that much.

Reality check for Barney Gimbel, FORTUNE senior writer, probably in New York. I am sure I am not the only one here at FT land who can make a simple claim: I have never paid anywhere close to $415 per night for a room in my life, either on the company expense account or my own. It may surprise Barney Gimbel, FORTUNE senior writer, to learn that working people out here in real America do not make the kinds of bucks New York Fortune Senior Writers obviously make.

Look, I have paid > $400/night for hotel rooms .. but it made sense to do. Different companies and different employees/positions have different needs, and different hotel stays and trips have different purposes, it helps not to universalize one's own position.

But what does that have to do with the price of fish?

The great thing about rewards points is that they let you access experiential rewards -- the kinds of things that you wouldn't pay money for you get to experience for free courtesy of loyalty programs.


"For some reason people seem to forget they spend more on an average hotel stay than they do on their airline fare to get there," says Randy Peterson, editor of Inside Flyer Magazine.

I beg to differ with the host, but in my business travel world the discounted air fare is almost always more than the average hotel bill for that trip.
Spend more than a couple nights on a trip and even your hotel bills would likely exceed your airfare...

I almost always refuse to use any card with an annual fee. There are enough out there with no annual fee. I have an airline card with no annual fee. The day they try to charge me a fee, it gets cancelled. As for high interest, surprise, I carry no balance and pay it in full each month. Result: No interest.

No annual fee, no interest. 1 mile per $2 is a free bonus. You got a problem with that, then you just have a problem. Better get thee to a $415 Maui Spa and work it out of your system. :)
You need to do the math.

Calculate your total spending, see how many points (in what currency) you get from your free card. Then calculate the number of points in another currency you get from the alternate card. The question is, does the latter provide you incremental value that exceeds the annual fee (assuming you can't get that fee waived)?

That the SPG Amex is worth the $30 annual fee is a no-brainer with the annual spend I put on it. (And every time I've kvetched to Amex about anything they've given me tons of bonus points, too... the last time I got a mid five-figure bonus.. that alone was worth the price of admission.)

See also The "What Credit Card Should I Choose?" Master Thread (http://www.flyertalk.com/forum/showthread.php?t=457077).

Well when they wanted me to charge 1200 dollars (Sing) for yearly membership I said no but with free 80,000 miles it was a great buy.
Shop around every year for the deal. This year was AMEX card in Singapore,