tikiboy

Just wondering...sometime when I pay a high-ticket item (taxes, college tuition), there is a "convenience fee" for using a credit card.

I am trying to decide if it's worth paying 2.5% to earn miles and hit spending thresholds that can earn elite or bonus miles.

What's it worth to you?

Ragnarok

That depends on whether or not you are able to hit the spending threshold without having to spend on those big ticket items and the value you place on the miles / points earned.

longhorn11

This, but also how do you value your miles? Would I take a 2.5% convenience fee to get SWA points? No. Would I for United/AA miles? Maybe. It all depends on how you plan to redeem or as Ragnarok said, whether you can meet the minimum spend.

tikiboy

Let me add an example:
I can open a new Amex Delta Card and put $25K on it for a 10K MQM spending threshold bonus and then pay the $25K with my HELOC.
The convenience fee is $625 and the 10K-MQM would go towards rollover status.
I have a little time to decide and/or wait for a good bonus offer.

uszkanni

In addition to the 2.5% convenience fee won't you also have to pay interest on the HELOC? And if you could just pay off the $25K HELOC, why not just pay the CC?

How much sooner will the 10K MQMs get you to "status?" If you wouldn't achieve it without the 10K then maybe you're not flying enough to warrant spending much on it. If you'd get it shortly anyway, it's not worth spending much on it. Maybe it's worth it if you get status quickly and plan to fly a lot afterwards. In any case, it's a pretty straight-forward cost/benefit analysis, but one that only you can judge.

tikiboy

The HELOC is deductible...credit card interest isn't.
My flying has dropped and I'm not sure if I'll make the status I want the "old fashioned" way.

Ragnarok

Even if redeeming for First Class travel via United, a 2.5% fee is quite high to obtain the mileage, unless you are just a few thousand miles short and you need to travel before your normal spend net you those miles.

Ragnarok

Open a AMEX Business Gold Charge card instead.

There is a 75K MR bonus after $10K spend offer, today is the last day.

Put $10K on it, costing $250 in fees, you get 75K MR points, not a bad deal in my opinion.

longhorn11

Albiet I'm not as familiar with United as AA, BA, or SWA, but from what I've seen biz and first saver awards give you a better return than 2.5%. May not be worth it to some but as you pointed out, if you're short and in a bind it's decent option.

OP is looking to retain his Delta status, not get extra points.

redtop43

I look at it this way:

It would be very hard to get less than 1 cent per point value from reward points, and fairly hard to get more than 3 cents. (If you value business and first class international tickets at their full cash price, and place no value on the time needed to find the rewards, maybe you could get more than 3%.)

So a 2.5% fee would be quite high if it didn't get you some other benefit, like meeting a threshold.

A few months ago I paid $1000 in estimated taxes on a card that had a $1000 spend requirement. It possibly freed up spending on another card to make a year-end 15K bonus. It was also a real "convenience" in the sense of having the spend requirement on the card over and done with. So I think I got my money's worth.

If I end up a thousand or two short on the other card for the 15K bonus, of course I'll pay a 2.5% convenience fee.

MrHalliday

I gladly paid about $85 in convenience fee last year,
paying just enough est. tax to put me over
the 10K spend and get the 75K MR.

biggestbopper

IMHO, don't pay anything for Delta miles. I have many hundreds of thousands of the worthless little suckers that I haven't been able to use while my AA and UAL miles are no problem.

I would certainly pay a convenience fee to get to a bonus spend on non-Delta credit cards. In fact, I just did pay the fee to get to the spend on a Chase Sapphire Card. 50000 Ultimate Rewards Points are worth it.

traplake

Tikiboy, perhaps you need to reevaluate the use of your heloc. That money is not interest free. Tax deductible does NOT mean that you get all the interest back via the tax deduction. You get to deduct the interest from your income and thus get "back" only your incremental tax rate on the interest, perhaps 28%, maybe a little more. The rest is money out the door, down the drain, kiss it goodbye, real out of pocket expense.

mia

I would not pay 2.5% if earning only one mile per dollar, but if I can use a card which earns 1.5+ miles per dollar -or- if the spending would achieve a threshold bonus the arithmetic is different. As a practical matter we spend very little on cards which earn only one mile per dollar.

wcj

Are you going to need the status next year,i.e. will your travel be up that much? Are you able to get upgrades on the routes flown? I am unwilling to pay any convenience fees because my personal travel is more than covered by normal credit card spend. I don't care about status because upgrades aren't available on heavy elite routes on Delta anyway (I'm DTW based), so we end up redeeming for first class if we want first class or paying anyway. It sure seems to me that the convenience fee and then interest would end up being similar to buying points or worse yet, carrying a balance. Just a bad use of your money.