Q: Is the Spirit Airlines credit card a good deal?

A: Founded in 1980, Spirit claims to be “the ultra low cost airline for the Americas.” They’re mostly known for their flights down to Florida and the Caribbean. Personally, I used to fly them all the time because they offered direct flights to and from Detroit/Los Angeles, however they have since ended that route.

Spirit Airlines Credit Card Review:
About a year and a half ago, I decided to apply for the Spirit Airlines card. At the time, it appeared to be a decent way to rake up some rewards since I was a frequent flyer on this airline. Eventually I discovered that the Free Spirit MasterCard is anything but rewarding. Here’s why:

The Worst Customer Service In My Life…
The phone number on the back of the card to book a flight is big, but the number for customer service is so insanely small you can hardly see it. After dealing with them, I understand why they’re apparently not eager for you to talk to their customer service department!

I’ve dealt with many, many foreign call centers and the Spirit credit card service department is by far the worst… ever! Based in India, they just read from a script. It doesn’t matter what you say or what your question is, these people don’t even know English. All the know how to do is read from their script. It’s impossible to communicate with them, let alone have your issue resolved.

Lack of Fraud Protection…
One of the reasons I called them was for a fraudulent charge of approximately $70. They did their “investigation” (which took forever) and only refunded me for approximately $40 of it and told me I am responsible for the rest! I have NEVER heard of any reputable credit card holding a customer partially responsible for fraudulent activity. This is totally outrageous.

Horrendous Rewards…
For me, the only reason I was interested in the Spirit Airlines MasterCard was the rewards. Unfortunately, this credit card definitely falls short. You only earn 1 mile per $1 spent (and 3 miles per $1 spent on Spirit purchases, but that’s worthless since it only made up a tiny percentage of my total annual spending). To add insult to injury, the promotional signup “bonus” was a total joke – they claim it’s enough for free airfare, but afterwards I saw fine print. They use language like “up to” and “off peak.” After I got my card, I didn’t have anywhere close to enough for my ticket. In fact, a year and a half later – plus after spending over $12,000 on the card – I still don’t have enough!

Why Pay The Annual Fee…
The Free Spirit Onyx World MasterCard has a $69.00 annual fee. If they give sub-par rewards and nightmare customer service… what the heck was I paying for?!

Spirit’s Prices Have Skyrocketed…
I check every airline and travel site when booking a trip. The past two years, Spirit has never been the cheaper option for me. In fact, my three most recent flights were cheaper on Delta. Yes that’s right, the legacy airline Delta was cheaper than a self-proclaimed “ultra low cost” airline. On top of that, their seats are much more roomy and they didn’t charge me for a friggin’ cup of water like Spirit does now!

Is it a scam? I’ll let you make your own conclusion. The bottom line is you should stay away from the Free Spirit credit cards. I’m sure tons of others much have these exact same complaints about them, too.

The Best Airline Credit Card (sponsored)
Why settle for only 1 mile per dollar? You can get a whopping 2 miles per dollar spent, plus 25,000 bonus miles redeemable on any airfare purchase (including Spirit airfare) with the Discover Escape card!

CreditCardForum wishes you and your family a very merry Christmas and prosperous new year!

For the vast majority of us, our personal finances are just that… personal. There’s really no rhyme or reason for sharing our personal spending with strangers, but that is exactly what the soon-to-be social network, Blippy, wants to do.

What is it?
Philip Kaplan (founder of AdBrite), is now working full time on Blippy which is slated to launch in 2010. Call it a Twitter for credit card transactions. Basically you link a credit card to your profile on the site. Then every time you make a purchase with that card, the details are broadcast to everyone Twitter-style.

Why is it supposedly useful?
One example Kaplan gives is buying a cup of Joe at Starbucks. When you pay for it with your credit card, everyone else will know you are there. “They can come and see me, or whatever” according to Kaplan.

First of all I don’t know about you, but I go there to get my coffee and get out… not to lounge around “the Starbucks scene.” Why do people even do that? It’s not like it’s a social environment. Everyone secludes themselves – entranced by their laptop or iPhone – never saying a word to each other. Anyway, the point is I’m not there longer than three minutes, so good luck catching me after my purchase.

On that note, purchases are often made at the end of your trip to a store or restaurant. You give the waiter the credit card after you’ve ate. You hand it to the cashier after you’ve picked out what you’re buying. Once you pay, you most likely aren’t going to stick around long.

What would I want to share private info?
First and foremost, this is my biggest issue. Why the heck would I want to share my spending with the world? There’s actually a security issue in doing so too. For example, I have had phone calls with American Express when they ask me about a prior purchases as part of verifying my identity. They may ask something like “You made a purchase on Tuesday for gas, which station was that at?” or “Where did you make your $233.40 purchase last week?” With Blippy, a scammer would easily be able to answer these security questions.

Will the whole concept even work in real time?
Even if you like the idea of advertising your personal spending, I want to know how it’s even possible for this to work in real-time, as the creator seems to imply. Credit card transactions are reported in batches, which sometimes take one to three days to show up on your account. So if I’m at Starbucks, how are my friends going to find out about it in real time? I don’t see how that’s possible for most cards.

What do YOU think?
How do you feel about this idea. Will it be the next big thing or just a dud?

Here at CreditCardForum, we are a huge fan of credit unions. That may seem counter-intuitive since we advertise cards issued by Discover and Amex, but the bottom line is when it comes to interest rates, credit unions frequently beat the big guys. Why? Because CU’s are actually owned by the members/account holders, so they’re not out to maximize profits like Wall Street bankers do.

Suze Orman on Larry King
Last week, Suze Orman was on Larry King for the hour discussing all sorts personal finance issues, including credit cards. Orman talked about the outrageous interest rates some cards charge – like 30% – and how Americans need to put their foot down and stop doing business with the banks that do that. One alternative she discussed was credit union credit cards. When it comes to a standard non-promotional APR on purchases, they usually have the best credit card deals. Reportedly, the maximum APR a chartered credit union will charge is 18%… which is certainly less than the mid to high twenties that some big banks try and charge customers they deem “high risk.”

I’ve Had Great Experiences With Credit Unions
I’ve had excellent experiences with credit unions. I have my auto loan through Pentagon Federal Credit Union. The rate I’m paying is less than half of what the banks were offering at the time. I don’t carry balances on my cards, but if I did, I would almost certainly go with a credit union credit card. The one exception to this is balance transfer promotions – from my experience it seems that the 0% offers are longer with Discover, Amex, etc usually… but not always. As far as the standard (non-promo) purchase APR, usually CU’s win. American Express does give rates on some cards in the 7 to 8% range, but only if you have outstanding credit. Credit Unions are often more lenient in giving reasonable rates to those with less than perfect credit.

About a year and a half ago, the U.S. Mint started selling one dollar coins directly to the public via their website. They also offered free domestic shipping and charged face value for the coins, even if the buyer paid with a credit card. Can you guess how people took advantage of this?

The $800k Coin Purchase…
According to the WSJ, one buyer raked up an astonishing $800,000 in coin purchases. Allegedly, he did this to earn the rewards on the purchases, then turned around and cashed the coins in at a bank. Assuming he earned the typical 1% cash back, that equals out to be an $8,000 profit!

Reportedly, the news of this credit card “deal” spread through online forums and message boards, resulting in tons of people doing it for the exact same reason… easy cash back and miles. Although this scheme wasn’t illegal, it wasn’t exactly what the U.S. Mint intended (they were trying to increase the usage and popularity of the dollar coin).

If You Were Thinking of Trying This…
While reading this post, I bet some of you were thinking it sounds like a good idea! (Off the record, I might have thought the same thing today when I found out about this too, ha!)  However as it turns out, this “deal” no longer works. The mint has now changed its billing so these coin purchases are counted as cash advances instead of purchases. A credit card cash advance doesn’t earn rewards and the interest usually starts accumulating immediately from the time of purchase. So if you were thinking about doing this, think again

Ever since “The Rock” back in the nineties, I’ve been a big fan of Nicolas Cage’s movies (I’m an action movie buff). True… he is the nephew of Francis Ford Coppola so it’s not surprising he “made it” but at the end of the day I think he does a good job in his work. To date he has done over 60 films – now pulling in over $20,000,000 a pop – so how exactly did he get in the financial mess he’s in now?

Mistake #1: Not Knowing Your Money
As the old saying goes “a fool and his money are soon parted.”  You can be a smart person, but if you’re a “fool” when it comes to your money, a disaster is likely sooner or later. While I’m not going to speculate on what exactly did and didn’t happen, what can be said for sure is his money wasn’t not managed properly. Whether it’s his accountant’s fault (like he claims) or Nick’s fault himself (his accountant blames Cage’s “compulsive, self-destructive spending”) we don’t know. But in any case, I think it’s safe to say Cage should have been more hands-on with his money.

Mistake #2: Spending Too Much Income
Like I said, Cage was pulling in $20 million a movie. When you consider that he worked tirelessly and did 2 or 3 a year, that would equal out to be at least $40 to $60 million in revenue. But while the industry pays the A-list big bucks, it also takes a lot from them too…. 10% for agent commission, 15% for talent manager, 5% for publicist, 5% for attorney, and so forth. After that, he’s paying the highest federal tax bracket and state taxes (which are not cheap in California!).

After every one gets their cut, obviously he’s still making an insane amount of money, but is that enough to reportedly have several multi-million dollar mansions, two luxury yachts, a posh Gulfstream 1159A turbojet (which in itself is an estimated $37 million if purchased new), a plethora of high end cars – and last but not least – his very own private island in the Bahamas!

Plus, you have to take into account the upkeep and maintenance on all of the above. Unless you’re making a few hundred million a year, this is living beyond your means! Especially when you consider that in his business, a star can go from making big bucks to nothing at all relatively quickly. No wonder the Nicolas Cage debt story continues to spiral out of control!

Mistake #3: Financial Family Entanglements
For people making as much money as he is, it’s always a good idea to have things in writing with the spouse, or should I say spouses for him! Christina Fulton (who apparently isn’t one of his ex-wives, but rather the mother of his kid) has now filed a lawsuit against Cage for reportedly selling the mansion she lives in. According to her, she alleges that the house was supposedly given to her years ago to raise his child in. In addition, according to her she has $250,000 in unpaid credit card debt (I wonder if her card is an Amex Centurion). Whatever the case, it sounds like things should have been put in clear and concise writing between these parties so this wouldn’t happen.

For the average American, it is often difficult to accumulate sizable credit card rewards in a timely manner. Spending enough to get a free airline ticket may take you a couple years. However if you’re a business and you funnel your purchases through a card, we all know how easy it is to rake up big rewards. The government is the biggest “business” out there, so who’s getting those credit card rewards? Or even if a credit card is not being used, who’s being awarded the frequent flyer miles on those purchases?

Is A Recent CNN Article Evidence of Fraud?
CNN recently ran an article titled World Is Small For Mileage Millionaires. It’s an article about – you guessed it – those whom rake up millions in frequent flyer miles and how they do so. While reading it, this is what really caught my eye…

For Charles Witt, the biggest perk of having accumulated millions of miles is being taken care of while globetrotting, he said. He also likes being able to splurge on travel for himself and his friends.

Witt, 41, who is a U.S. government employee in Washington and travels all over the world on business, gave himself a trip on the Concorde as a birthday present in 1994. He spent 240,000 miles for a special promotion that let him fly first class on a regular plane from Washington to London and return on the supersonic jet.

First of all, so I don’t get sued, I want to be very clear that the above information by itself does NOT mean there’s any fraudulent activity taking place. Obviously much more information would need to be gathered to make that determination.

Here’s My Concern
This is a government employee. The article says he “travels all over the world on business.” Reportedly, he’s accumulated millions of miles. If (and again, that’s an if) those miles are indeed earned through his work-related travel for the government, then why on earth does he “splurge on travel for himself and his friends” with the miles earned?

I mean, let’s be logical here. Whichever party is ultimately paying for the travel should also be the one reaping the rewards. If an employee travels frequently for their government job (and that’s being paid for by the government) then shouldn’t those miles go towards future work-related travel? To me, this doesn’t sound like work-related travel…

This Christmas, he’s planning a first-class trip with his girlfriend to Taipei, Taiwan, purchased with his miles. They’ll spend New Year’s in Tokyo, Japan.

If this first-class New Years extravaganza for him and his girlfriend is being purchased with miles earned through his job, then that is just plain wrong. It may not be illegal (I have no idea what the government’s official policy regarding such is) but I think most would agree it is morally wrong to say the least.