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Changes for the PRG: Do new benefits justify a higher annual fee?

Posted by CreditCardGuru on

The bad news: The Premier Rewards Gold card from American Express (a CreditCardForum advertising partner) is upping its annual fee from $175 to $195.

The good news: It’s introducing some new benefits.

We took a close look at the changes the card will undergo (on June 1, 2015) – and we’ll try to help you decide whether the card is worth getting or keeping, or whether you’d be better served by another product.

What’s changing?

When cards make changes, it often seems like they’re taking things away. In fact the Premier Rewards Gold card did that itself at the end of 2014 when it took away the annual 15,000-point bonus it gave for $30,000 in spending in a calendar year.

But, while the raised annual fee isn’t ideal, the PRG is giving cardholders some new perks in return:

  • $100 airline fee credit: As with the American Express Platinum, you can now select an airline each year and use the credit to cancel out incidental fees, such as baggage charges and on-board food purchases.
  • 2X Membership Reward points for dining: That’s in addition to the existing reward structure of 3X points on airfares purchased directly from the airlines and 2X points at gas stations and supermarkets.
  • No more foreign transaction fees: For a card that has so many travel benefits, the 2.7 percent foreign transaction fee was a nuisance. Luckily, it’s going away.

Is the fee worth it?

An increase of $20 for a $100 fee credit, extra dining rewards and no more foreign transaction fees may sound like a fair trade. But it’s important to look at the issue holistically: Are the combined benefits worth $195? Let’s look at each in turn:

  • $100 airline fee credit: This is half of the amount you get with the American Express Platinum card (which gives you $200 credit each year) for less than half the annual fee. But there’s a chance you might not use the whole $100. Each year, you have to pick an airline – and you can use the credit only on that airline. If you don’t fly that airline as much as expected (or have status with the airline that gives you free bags anyway), you might not use up the entire $100. That said, if you do use it, it effectively brings down the annual fee to $95.
  • 2X points on restaurants: With this new addition, it seems like this card is an amalgamation of many other cards’ bonus categories – fuel, gas, groceries and (in June) restaurants are all represented. If you frequently dine out, this is going to be a powerhouse of a card for generating Membership Rewards points. And remember: Membership Rewards points can be transferred to various airline and hotel partners, meaning those extra points have a lot of potential.
  • No more foreign transaction fees: So many cards waive foreign transaction fees these days, that it’s possible you were using a different card for foreign purchases anyway – but now you can make those purchases with the Premier Rewards Gold and rack up Membership Rewards points. How much this benefit means to you depends how often you travel and how often you make online purchases from international merchants. It could save you absolutely nothing, or several hundred dollars a year.

In addition to these new benefits, the Premier Rewards Gold card has numerous other perks that add value, including roadside assistance (up to four times a year) and insurance coverage for travelers.

If you make use of the airline fee credit, use the card for purchases abroad, cancel your AAA membership due to the roadside assistance package, and rack up lots more points on dining, you could easily justify the annual fee on this card.

That, however, does not mean there isn’t a card out there that could be a better fit – and an annual-fee increase is a good reason to reassess your options. Here are some other cards to consider:

The Chase Sapphire Preferred ($95 annual fee, waived the first year): This card already offers 2X points on dining and on all travel, not just airfares purchased directly from the airlines. So, if you’re a frequent traveler, you might get more rewards out of this card.

It also offers the ability to transfer points to major airlines and hotels (the lineup differs from the Membership Rewards lineup, however). Its travel insurance benefits are robust. It also offers primary rental car insurance, which kicks in before your regular auto insurance, meaning you won’t have to file a claim with your regular insurer and risk higher premiums. The American Express Premier Rewards Gold, meanwhile, offers secondary insurance, which kicks in only after your regular car insurance pays out.

With an annual fee of $95, this may be the better option if you won’t use the airline fee credit on the Premier Rewards Gold – and if you frequently charge travel expenses that aren’t airfares.

The American Express EveryDay cards ($0 and $95 annual fee): If piling up Membership Rewards points is your goal, look into one of the American Express EveryDay cards (the EveryDay and the EveryDay Preferred), both of which have lower annual fees than the PRG.

The cards both offer bonus points at supermarkets, and the Preferred version offers bonus points on gas. What’s more, if you hit a certain number of purchases per billing period, you’ll start earning bonus points on all purchases. The cards don’t offer some of the more premier benefits the PRG does, but they’re a good way to amass Membership Rewards points at a lower cost.


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Travel reward card strategies for families with kids

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Perhaps the traditional cross-country camping trip doesn’t appeal to your family. But the airfares and hotel stays necessary for more far-flung destinations may be more than you can afford.

We asked two travel bloggers with kids how they use rewards for free (or almost free) family vacations to everywhere from Disney World to Bali – and how they overcome the challenges families face in the rewards game.

barrett family travel rewardsBrad Barrett, with his wife, Laura, runs Richmond Savers, a site that provides free coaching for those new to credit card and travel rewards. The couple has two daughters and, in 2013, managed to take the family unit (along with all four grandparents) to Disney World for five nights for only $200 out of pocket.

“It was all eight of us, a three-generation family trip to Disney,” Barrett says. “It was really phenomenal.”

Burrows family travel rewardsKenny Burrows documents his family’s travels on their site Miles4More. He, his wife and two sons have visited Barbados, Europe and Alaska with points and miles – and have reward trips planned for Bali, Australia and New Zealand later this year.

“We’ve done way more than I would have ever guessed,” Burrows says. “The trip to Europe was what got us into the game, and that was a family trip we couldn’t have afforded otherwise.”

The challenge: Fixed school vacations

If you don’t want to pull your kids out of school, then winter break, spring break and summer vacation are your travel windows. Unfortunately, these are also peak travel times, when reward space on flights is scarce.

“The biggest challenge with travel rewards is that people need flexibility,” Barrett says. “There is a finite number of reward seats on every flight.”

Yet you can also use the school calendar to your advantage, Burrows points out, because schools generally announce their schedules well in advance. That enabled Burrows and his family to book their reward seats to Australia and New Zealand the moment the flights appeared on the airline’s schedule.

“We booked them 335 days out because we knew exactly when we could travel,” he says.

When scheduling trips that far in advance, note your airline’s cancellation and change policies, Burrows recommends. You may need to pay a fee to change your itinerary or have your miles re-deposited if you cancel.

To increase your flexibility, you might consider cards that let you transfer your rewards to a variety of partner airlines. These include the Chase Sapphire Preferred and cards in the Membership Rewards Program from American Express (a CreditCardForum advertising partner). Instead of putting all your hope in a single airline, you can monitor several of your card’s transfer partners and pounce when you find the best deal on reward seats.

“I love the transferable rewards,” Barrett says. “I try to stockpile those.”

The challenge: The family unit can’t split up

Families often aren’t as nimble as single travelers.

“If you have four people, it’s exponentially more difficult to find four reward seats than it is to find two on the same flight,” Barrett says. “Most families don’t want to split up and put two on one flight and two on another.”

Barrett suggests families focus on the “low-hanging fruit” of the travel rewards world – rewards you can harvest without much effort. Southwest, he says, “is the cure-all for a lot of the frustrations families encounter.”

Unlike legacy carriers (such as Delta, American and United), Southwest doesn’t restrict reward space. Because the number of points needed fluctuates with the cash value of the ticket, you may need a lot of points for several reward tickets – but if you have enough, you’ll get on the plane together, assuming the flight isn’t full.

“That’s a huge thing for families and, frankly, just for regular people,” Barrett says. “We’re not travel bloggers flying first class around the world. We’re looking to travel once or twice a year for free if we can.”

For long-haul international itineraries, Burrows suggests this trick: Use programs that allow one-way reward redemptions. If reward space for a good value is open on one airline going one way, and on another going back, mix and match.

“We try to have enough miles for all four of us to do one way on maybe three different airlines,” Burrows says. “So we’re ready to jump on whichever one opens up space. …I can’t remember the last time I booked a round trip on a single airline.”

The challenge: You need a family-friendly place to stay

The lone nomad may be able to couch-surf or crash at whatever hostel has space. Families with children might not want to do that.

Fortunately, hotel rewards can be family friendly, especially for domestic trips, Barrett says. Most chain hotel rewards programs don’t restrict reward space, meaning, if there’s a standard room available for cash, you can book it with points.

“You can fit four people in most of those rooms,” Barrett says. “It’s worked great for us.”

If you’re traveling to a major U.S. city, you also have a lot of options, Barrett says. Families visiting Orlando for a Disney trip, for example, will find most chains well represented, sometimes with multiple budget and luxury properties within the same chain. For families who want to stay on site at Disney, the Swan and Dolphin hotels (luxury hotels at Epcot) are Starwood properties – and where Barrett’s family cashed in their Starwood rewards for their trip.

Families traveling abroad, however, might need a different strategy. “Standard” rooms tend to be smaller (meaning the whole family may not fit), and U.S. chains may be neither plentiful, nor the best deal for families like the Burrowses, who tend to go off the beaten path.

“We like to go to where people are not,” Burrows says.

That’s where cards with generic, flexible travel points come in handy. Cards like the Capital One Venture and Barclaycard Arrival let you earn “miles” that you later use for statement credits against nearly any travel expense (usually at a value of 1 cent each). Booking a non-chain hotel for $100 a night? Use 10,000 generic miles to cancel it out. You might also be able to use your generic points on vacation rentals. Burrows has had success using his points for Airbnb purchases, for example, and for some vacation rentals by owner.

“We’re big fans of Airbnb and vacation-rental-by-owner-type properties,” Burrows says. “You can get a house instead of a hotel room for the same price.”

However, keep in mind the merchant code tied to the purchase must meet the card’s definition of travel – and, if the owner requires you to pay by PayPal, that can put a wrinkle in your redemption plans.

The best part about generic points? You can use them for other travel expenses, too, including cruises, train tickets, taxis — and even attraction tickets. Barrett, for example, bought his family’s Disney World tickets via an authorized re-seller and then used generic travel points to cancel out the cost.

The challenge: Parents + kids = more points needed

If a single person needs a sizeable pile of miles to fly and stay for free, a family of four needs a mountain.

One of the simplest ways to accrue that many rewards is via credit card sign-up bonuses, Barrett says. If both spouses open up each card, those miles will multiply.

“By having the two adults open each card, you really double that whole universe of cards,” he says.

The other part of point accumulation is planning far in advance. There’s some tricky timing required in opening new cards without incurring credit damage. Plus, stockpiling lots of points over time keeps your family agile if a program changes its terms.

“You can’t just start on April 1 and think you’re going to travel to Hawaii in June,” Barrett says. “… You need to be smart about it, you need to be systematic about it. You can’t get four times the points doing it off the cuff.”

In addition to finding ways to get more miles, it’s important to make the most of the miles you have. Burrows got his family to Europe thanks to sign-up bonuses from American Airlines’ co-branded credit cards, but also thanks to off-peak itineraries that required fewer miles to begin with.

Another mile-stretching technique is what Burrows calls “sweet-spot approach” – finding an airline that offers reward seats for a discounted number of miles from your departure city to certain destinations.

“Wherever you live, the sweet spots are going to be different, and every family needs to learn what their sweet spots are” Burrows says.

Utilizing sweet spots sometimes means driving to other cities for departure. It might also mean creative routing – flying from Barbados to Houston via Montreal, for example, in Burrows’s experience.

The fact that routing matters so much causes families to commonly make a mistake, Burrows says – and that’s applying for a credit card without considering the trip destination.

“Families may ask, ‘What’s the best credit card?’ when they should be asking, ‘What’s the best credit card for this specific trip?’ ” Burrows says.

So find your sweet spots and then plan out a “dummy trip” complete with mileage calculations to make sure the cards you’re considering will actually get you there, Burrows recommends.

The challenge: Avoiding credit damage

Don’t get so caught up with your dream family vacation that you destroy what makes all credit card reward strategies possible: your good credit.

“A mistake a lot of people make is that they think they’re OK as long as they pay on time,” Burrows says. Paying on time is important, but just as important is making sure your credit utilization (the amount of credit you’re using compared to the amount of credit you have) stays low. Low credit utilization is vital for an excellent FICO score, and large travel purchases combined with sign-up bonus spending requirements can easily push you into the danger zone.

Barrett, who is a CPA, emphasizes the importance of staying within the parameters of your regular spending and making sure a card’s sign-up bonus won’t require you to stray. While some mega sign-up bonuses may require upwards of $10,000 in spending, there are plenty that offer a substantial number of extra miles for $3,000 in spending or less.

“You can use your normal spending to get thousands of dollars worth of travel,” Barrett says. “Just be responsible.”


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Discover it Miles card review: Should you get Discover’s new travel card?

Posted by CreditCardGuru on

Discover has added a new member of the ‘it’ family — the Discover it Miles card, an alternative to the issuer’s existing cash-back cards (which offer 5 percent back or 2 percent back, depending on the card you have). So does this new addition outshine its older siblings (and similar cards on the market)? Read on so you can decide for yourself.

Getting the card

According to a Discover spokesperson, Discover (as of February 24, 2015) was accepting new applications only for the it Miles card. In other words, you can’t product-change from an existing Discover card yet. If you already have a Discover account and would like to also open the it Miles, keep in mind that you can be the primary cardholder on two Discover cards simultaneously. However, your first account must be open for a minimum of 12 months before you can apply for the second. As these two accounts would be separate, you would have separate rewards balances, not a pooled one.

Benefits and rewards in a nutshell

The card is being marketed to travelers and offers fixed-value “miles,” which you can redeem for a statement credit for recent travel expenses. That puts it in the category of general-purpose travel cards like the Capital One Venture (and Venture One), the Barclaycard Arrival (and Arrival Plus), the BankAmericard Travel Rewards card and the Blue Sky card from American Express (a CreditCardForum advertising partner). You may remember the now-discontinued Miles by Discover card, but this new product is quite different.

Here’s a run-down of the card’s defining features:

  • No annual fee
  • 1.5 miles per dollar spent: Remember, these are generic miles you’ll cash in for statement credits – not miles tied to a specific airline.
  • Double miles after your first year: Following your first 12 consecutive billing periods, you’ll get a bonus equal to all the miles you earned during those billing cycles. Note that this benefit is one-time only – you don’t get it after your first year. There is no cap on the bonus miles you can earn.
  • In-flight Wi-Fi credit: If you purchase Wi-Fi access on a flight with your it Miles card, you’ll get a statement credit to cancel out your purchase within 7 days (up to $30 per year). This benefit renews with every cardholder anniversary.
  • Free FICO score: As with Discover’s other cards, you get free access to your TransUnion FICO score.
  • No foreign transaction fees

How much your miles are worth

Here’s where it gets interesting. For most cards marketed as travel cards, you’re either restricted to redeeming for travel purchases, or you get a better value for you points when you redeem for travel compared to cash back.

For the it Miles card, here’s how it works, according to the card’s terms and conditions:

Discover it Miles redemption

What this boils down to is that you can redeem for statement credits against travel expenses OR for cash back (deposited into an account) and get the same value of 1 cent per mile. Redeeming for statement credits is probably easier and faster. Yet, if you’re willing to link a bank account and wait for the electronic deposit, you don’t have sacrifice value if you want cash.

For reference, the travel expenses eligible for statement credits are: airline tickets, hotels, car rentals, cruises, tour operators, vacation packages (when purchased through airlines, travel agents and travel websites), local transit, ferries, rail tickets, taxis, limos and charter buses.

While some cards have redemption minimums, Discover is more flexible – you can redeem as little as 1 mile at a time.

How it compares

Which card is right for you is a complex decision, and no review will cover all the factors you should weigh. But here are a few things to consider:

Sign-up bonus or lack thereof: The card isn’t advertising any sign-up bonus in the traditional sense right now (as of March 2015). Instead, you get double your miles the first year. How much that will get you depends on how much you spend on the card. Spend $20,000 on the card in the first year? You’ll get 30,000 extra miles (valued at $300).

So, on one hand, the it Miles card gives you complete control over how big a bonus you get – if you can concentrate all your spending on the card, you may well end up with a lot of bonus miles.

On the other hand, other cards in the same field might get you a bonus with a lower spending threshold. For example, a card might give you 20,000 bonus miles/points or $200 cash back if you spend $1,000 in the first three months. Cards with annual fees might give you even more. If you spread out your spending across several cards, that type bonus structure may be a better fit, since you can rack up tens of thousands of points for only $1,000 in spending. Plus, with the it Miles card, you have to wait a full year to receive your bonus, so it may not serve your needs you if you were hoping for pile of bonus miles to use on a trip a few months from now.

The Wi-Fi reimbursement: While $30 a year isn’t much, this is a rare perk among no-annual-fee cards. Assuming you’d buy in-flight Wi-Fi anyway, it saves you money. If you wouldn’t, then you’re getting a small luxury for free.

No bonus categories: That’s good or bad, depending on how you look at it. On one hand, you’re getting a steady, competitive rate of return for a no-annual-fee card — 1.5 percent — without having to keep track of categories. That places this card in between the 1.25 percent you get back with the no-fee VentureOne and the 2 percent you get back with the $59-a-year Venture. The BankAmericard Travel Rewards card is probably the most similar, earning 1.5 percent back on everything (plus a 10 percent bonus on points earned if you bank with BofA).

The no-fee Barclaycard Arrival, meanwhile, gets you 1 percent back on most spending and 2 percent back on travel expenses and restaurants. If you spend a lot on travel and dining, those categories can really help you: a $5,000 travel purchase, for example, would get you 10,000 points with the Arrival and only 7,500 with the it Miles card.

And let’s not forget the regular old Discover it card – that gives you 5 percent back on certain rotating categories for up to $1,500 in purchases each quarter. Discover has a reputation for lucrative bonus categories, from gas, to restaurants, to home improvement and more. To put that in perspective, $1,500 in bonus-category purchases would get you $75 with the regular it and $22.50 with the it Miles.

The verdict

This card isn’t a bad fit if you’re looking for a low-maintenance workhorse of a card. For no annual fee, you’re getting a respectable 1.5 percent back with the flexibility of redeeming for travel or cash.

Just remember that the first-year bonus on this card is tied directly to how much you spend and requires you to wait an entire year. If you can funnel a lot of (if not all) you spending through this card for a whole year, its bonus structure may benefit you. If not, consider cards that reward you a surge of points after just a few months if you satisfy the minimum spending threshold.

If you do decide to go for the it Miles card, a good move might be to pair it with the regular Discover it card. That way, you can use the ‘it’ for bonus-category purchases and switch over to the it Miles for everything else.

However, remember that your existing Discover account must be open for 12 months before you can get a second card. So this strategy would work only for those who are willing to wait a year, or who have been Discover cardmembers for a year already. There are also some complexities with having two Discover cards, as your rewards pools remain separate. That’s a hassle for sure, but if you’re redeeming for cash back and statement credits, this may not matter, especially since Discover doesn’t have a redemption minimum.

Right now, there are two offers for the regular Discover it card:


Updated March 3, 2015


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

How — and when — to cancel a credit card

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Whether the annual fee is no longer worth it, you’re trying to reduce the temptation to overspend, or you’re just mad at your bank, you want a card out of your life.

While cancelling a card won’t necessarily wreak the credit havoc some fear, there are some consequences to consider – and some steps to take to make sure the card is actually closed.

How to cancel a card

Cancelling a card is pretty simple, says Kathryn Moore, a financial counselor at GreenPath Debt Solutions. Just call the customer service number on the back of your card and explain that you want to cancel. Note that cutting up the card with scissors won’t be enough – the account will remain open (even if the card is unusable) until you make the call.

The representative may make a retention offer (bonus points or a waived annual fee) to encourage you to keep the card. If you truly want to close it, though, stand firm.

Then follow up. With data theft an ever-present threat, you want to make sure thieves aren’t racking up charges on a card you thought was closed, Moore says. Your issuer will likely send you a notification that your account has been shut down, and your online account should be updated accordingly. If you want to be absolutely sure, however, check your credit reports. You’re entitled to one free report every year from each of the three credit bureaus, and Moore recommends pulling one report every four months to spread out your free reports.

“That would be the time to look and confirm that the account has actually been closed down,” she says. “It probably was, but you want to double check.”

Here’s what a closed account looks like on a TransUnion credit report:

Closed card on TransUnion credit report

While closing a card is easy, there are still a few issues to be aware of:

  • Rewards: Some cards let you earn frequent flier miles, which will stay safe in your frequent flier account, even after you close the card. Others have proprietary rewards (cards tied to the Chase Ultimate Rewards program, for example), and those points will disappear once the card is closed. If you have such a card, redeem your rewards before closing; some cards even allow you to transfer out to partner programs.
  • Residual interest: If you just paid off your balance (after carrying one for several payment cycles), you could get hit with residual interest charges (sometimes called “phantom interest”). Read about residual interest here.

Reasons to cancel a card

If you just don’t plan to use a card much anymore, you have the option of sock-drawering it – putting it in a safe place until you need one of its benefits. Yet there are good reasons for going the extra step and canceling:

  • Avoiding temptation: Sock-drawering is probably fine for those with discipline. Those lacking it may turn to more drastic measures, such as freezing the card in a block of ice. Taking a pair of scissors to a card is another option, but card information saved in online shopping accounts means over-spenders won’t be cut off completely.

    “If you can’t trust yourself with just putting the card in a drawer or freezing it, calling the creditor to cancel the card is probably best,” Moore says.

    If your card has a balance, you can still close the account — and that may actually be advisable. It can take months or years to pay down a big balance, and closing the account while you do so prevents you from adding to the balance during that time. Spokespeople from Bank of America and Wells Fargo confirmed that they allow cardholders to close an account for future use while they pay down their debt.

    “There’s a lot of confusion about what closing an account means,” Moore says. “You can close it when you have a balance, and some people may not realize that. If you have issues with control, close it down before paying it off.”

  • Simplification: Managing a lot of cards comes with a lot of responsibilities, including keeping your balances low, paying off all your cards on time and combing your statements for fraudulent charges.

    “If you have 10, 15, 20 cards from all these different banks, that might not be realistic,” Moore says. “So getting your cards down to a handful might make it easier.”

Credit consequences

While cancelling a card can affect your credit, it’s often not the grave, credit-annihilating blow it’s often made out to be. The two things you need to consider are:FICO components pie chart utillization

  • Credit utilization: Utilization is the amount you owe compared to how much available credit you have. The lower that ratio is, the better it is for your credit score. Utilization factors into “amounts owed,” which makes up 30 percent of your score. It also happens to be the primary area impacted when you close a card.

    “If you close a revolving account, this will reduce the amount of your available credit,” says FICO spokesman Jeffrey Scott. “If all your other balances remain the same, your credit utilization will increase. This can have a negative impact on the FICO score.”

  • Age of the account: Because length of credit history accounts for 10 percent of your FICO score, there’s some merit to thinking twice about shutting down old accounts, Moore says.

    “It would be a consideration if I were weighing which card to close,” she says. “There’s a lot that would go into that decision, but how old the account is would be one factor I’d consider.”

    Keep in mind that old accounts don’t disappear from your credit reports right after you close them. Accounts with damaging information (like delinquencies) stay on for seven years, while accounts closed in good standing remain for 10. As long as they’re on your reports, they’re counting toward your credit history for FICO-scoring purposes.

    Because other open accounts will continue to age during that time, the closed account eventually falling off may have little effect. However, if your credit history is otherwise thin and you open a couple new accounts right before the drop-off date, the sudden absence of an old account may ding your score slightly.

Your credit score shouldn’t be your only concern, however, and closing an account may still be justified. Someone fretting about the FICO implications of closing cards while continuing to run up high balances is doing not only their credit, but their long-term financial health, a disservice.

“Maybe for that person, building the perfect credit score is not their No. 1 financial priority,” Moore says. “It’s getting that debt paid down.”


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

How to use frequent flier miles without flying

Posted by CreditCardGuru on

Maybe you have some leftover miles after using a big sign-up bonus for a trip. Or perhaps your miles are about to expire, but you have no travel plans. For whatever reason, you want to use your miles without flying.

Unfortunately, airline programs’ alternative redemption options are rarely the best deal – but this guide will help you make the most out of them.

Table of contents

Why redeeming for flights is usually best

Frequent-flier programs are designed for earning free flights – and across the board, this will generally fetch the best value.

Of course, within that generalization, there’s a lot of room for variation. With some programs, your points have a fixed value (for example, Southwest points are worth 1.43 cents each for Wanna Get Away fares as of February 2015). For legacy programs (such as American, United and Delta), points fluctuate in value because you’re redeeming in fixed increments. Booking a $150 flight for 25,000 miles gets you a value of 0.6 cents per mile – but booking a $1,000 flight for 50,000 miles gets you 2 cents per mile.

If you need help calculating the value per mile, read this article. The consensus among those playing the rewards game is that 1 cent per mile or point should be the minimum you settle for. With that in mind, let’s look at how airline programs’ non-flying redemption options stack up.

Gift cards

Bottom line: Your value varies from pretty bad to pretty good, depending on which program you’re using and what kind of gift card you want.

You can’t redeem frequent flier miles for cash back, so gift cards are probably the next best thing. However, your options (and their value) vary tremendously by program. For example, Southwest offers travel-related gift cards at a value of just over 1 cent per point:

Southwest gift card redemptions

United, meanwhile, allows Premier members and those who have a Chase MileagePlus credit card to (for a limited time) use rewards for gift cards for various retailers. Value varies from about 0.6 cents per mile to about 0.8 cents per mile.

American also lets you redeem for gift cards via Points.com, but the value is pretty dismal. For example, a Macy’s gift card will require you to sacrifice your miles at a value of less than 0.4 cents each:

American airlines gift card redemption

Rental cars

Bottom line: You can often get more than 1 cent per mile with this option, whether you’re renting an economy car or a premium one.

Taking a road trip instead of flying? Renting a car with your miles isn’t a bad way to spend them. You can expect your points to be worth 1 cent or more, which fluctuates based on location and the type of car you’re renting.

For example, Southwest allows you to rent an economy car from Alamo at 6,704 points per day.

Southwest rental car redemption

Based on the daily rental price on Alamo’s website, that’s a value of 1.31 cents per point (not too far from the 1.43 cents a point that Southwest points are usually worth for Wanna Get Away fares as of February 2015). Upgrading to a premium car gets you only a slightly lower value of 1.2 cents per point.

Donating miles to charity

Bottom line: It’s hard to attach a monetary value to charitable donations. Instead, the value comes from knowing points you can’t use are helping others. Because the minimum amount you can donate is usually quite low, this is a good way to put points you can’t use for yourself toward a good cause.

Frequent flier programs usually give you the option of giving your points to charities that need them. You can help soldiers get home to visit family, for example, or help children with life-threatening illnesses take their dream trips.

Rules vary by program. American and Delta, for example, require you to donate a minimum of 1,000, and American allows you to donate your entire balance if it’s under 1,000 miles.

Magazine subscriptions

Bottom line: It’s an easy way to get rid of a small number of miles – and get a lot of value (1 cent or far more) out of each mile. Of course, the real value depends on whether you actually read the magazines.

Jet Blue, American, Delta, United and others participate in the Magazines for Miles program.

Magazine redemptions

Digital media

Bottom line: For a small number of miles, you can download a song or a book. While you’ll generally get a value of less than 1 cent per point, what else are you going to do with a couple hundred leftover miles?

United has a robust program for digital media redemptions. Songs generally cost around 160 miles each (placing the per-mile value at about 0.8 cents, based on the cost on iTunes and Amazon). Ebooks, meanwhile, go for about 1,000 and 2,000 miles (putting the per-mile value at about 0.5 cents per mile, based on prices listed on Amazon).

Merchandise

Bottom line: Redeeming for merchandise is rarely the best way to spend rewards – and airline programs are no different. The miles required to redeem for the nicer electronics can usually get you a round-trip flight – so think long and hard before redeeming.

Airline programs allow you to redeem for a wide variety of merchandise, from cooking equipment to electronics. This can be a good opportunity to splurge on something if you have absolutely no other use for your points and don’t want to pay cash for the item. That said, always check the price of the item online and make sure you’ve made your peace with getting a poor value for your points.

For example, United’s program allows you to redeem 45,300 miles for this Keurig system:

United merchandise redemption

That same system happened to be on sale on Amazon at the time this article was written for $143, meaning a value of only 0.3 cents per mile.

Hotels

The bottom line: The value varies by property, date and program, but you can get close to 1 cent per mile in some cases.

Perhaps flying isn’t in your future, but you’d like to take a staycation or book a room for a visiting family member. Several frequent flier programs allow you to use your miles a partner properties.

For example, a one-night stay in March at the Crowne Plaza Times Square will cost you 46,000 AAdvantage miles:

AA hotel redemption

Based on the dollar cost of the room, that’s a value of about 0.6 cents per point. What’s interesting here is that this hotel is an IHG property – and the IHG Rewards Club offers the same room for only 1,000 fewer points per night (45,000). That means you’re getting roughly the same value for your miles as you would within the hotel’s own rewards program. This is only one example, though, and your results (and value) will vary. We checked several other hotels, and value ranged from 0.5 cents per point to almost 1 cent per point.

Easy ways to keep your miles active

If you’re scrambling to redeem because your miles are about to expire, there are some easier ways to keep them active until you can redeem for a flight:

  • Use your airline card (if you have it): If you have the airline’s co-branded card, each transaction earns miles and therefore re-sets the expiration clock.
  • Join the dining program: Don’t want to sign up for an airline card (and an annual fee) just to keep your balance active? Many airline programs have dining programs, which allow you to connect any debit or credit card to your frequent flier account. Any time you use the card to pay at partner restaurants (these are usually chains that are located in many metro areas), the expiration clock re-starts.

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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.