Choosing a Credit Card

[CathyCA]

I'm tired of my current credit card provider. They don't give me anything for being their loyal customer and for paying off my entire balance every month.

I'd like to switch to a rewards card that will give me airline miles because that's where I tend to spend most of my money.

Can someone give me a cost benefits analysis of the following two cards?

Card Type
Rewards 2 miles per dollar on every purchase

One-time bonus of 10,000 miles once you spend $1,000 in the first 3 months
Purchase APR 11.9%–19.9% variable APR
Transfer Info 11.9%–19.9% variable APR; No Transfer Fee
Annual Fee $59 (waived for the first year)
Additional Rates & Disclosures

and
Card Type
Rewards 1.25 miles per dollar on every purchase
Purchase APR 0% intro APR until April 2012; 11.9%–19.9% variable APR after that
Transfer Info 11.9%–19.9% variable APR; No Transfer Fee
Annual Fee $0
Additional Rates & Disclosures


Thank you in advance!

[OZZIE4DUKE]

I've got several cards, all of which "give me something" or I don't use them. Only one of them charges me to have it, and I question why I keep it if I can't talk my way out of the fee, which I can sometimes do.

I have a Chase Rewards card, no cost to have. I get 1% back on every purchase, and they have a rotating 5% rebate that changes every 2 or 3 months. You have to call or go on line to "activate" the bonus rebate, and there is a limit to how much in purchases they give the 5% rebates on, but it's reasonable, like $1500 over the quarter. Right now the rebates are on home improvement stores (Lowe's, Home Depot), lawn and garden stores and home furnishings. Previous quarters it has been restaurants, travel, and my favorite, gasoline. I think gasoline comes up again in July (it does for Discover, which I also have). They actually give you points, which convert one for one to cents and they will send you a check in $50.00 increments for 5000 points. I've gotten several in the last year. If you want merchandise or gift cards, you can do that too, but I prefer rebate checks.

I have a Discover card. Their base rebate is only 1/4 percent, but they too have the rotating 5% categories and usually line up with the Chase card categories. Their "limit" is usually much lower than Chases for a category. Last Nov. - Feb. when it was gasoline, you max'd out the rebate on only $300 worth of purchases. Sometimes the limit is higher. When the available rebate reaches $50, they will direct deposit the rebate into my checking account.

I have a Shell Mastercard that gives me a 5% rebate on Shell gas purchases. I think Shell gas (with it's Nitrogen enriched detergent formula) is as good a gas as you can buy. And there are some stations (S Saunders St. inside the beltline in Raleigh) where it isn't overpriced. The card used to also give a 1% rebate on all purchases, but they dropped it to 1/2 %, so I stopped using it for other purchases when they changed the terms, and I tell them about it every chance I get. I have a Hess Visa that is similar. Both of these apply their rebates directly to my balance when the rebate reaches $25.00, but not until that point.

I'm going to get a BP Visa from Chase. Just picked up the application from my local station - it offers the 5% rebate on BP gasoline (10% for the first 60 days!) and a 2% rebate on travel and dining and 1% rebate on everything else, all also doubled for the first 60 days! This could become my new main card. BP gas with its "Nvigorate" cleaning agent - N for Nitrogen? - should be just as good as the Shell gas. Exxon and Mobil have also jumped on the detergent gasoline advertising bandwagon over the last few months, other brands have not.

I also have a Costco Amex card (it's free with my Costco membership) which gives me an annual rebate on everything purchased - 1% on all purchases, 2% on dining and 4% on gasoline (EXCEPT at Sam's club or BJ's gas stations, where it would only be 1%).

I also have an Air Miles card through my bank, but since I don't fly much (at all) any more, I'd rather get the cash and book flights on Southwest directly. I just had a $100 certificate expire on the 16th (I called while I was typing this paragraph to find out.) Bummer.

So that is my learned advice.

[lawgrad91]

It really boils down to the fee, IMHO. Since you pay the card off every month, the introductory APR is immaterial. The 10,000 bonus miles won't last you long. So, setting that aside, the question is whether the $59 fee is worth the extra three-quarters of a mile per dollar that you spend, and/or if you can talk the company out of the fee.

I think I would take the card with the fee, which is waived for the first year, and after the first year, threaten to cancel the card and see if you can get another fee waiver. If not, there will probably be a new and improved card out there for you at that time.

[CathyCA]

My question is: of the two cards I've listed, which one is the better deal?

I don't carry credit card debt. I use credit cards for purchasing airline tickets, and then I pay them off. I would like to earn airline miles with a credit card, and these two allow me to purchase airline miles.

Which one is going to be the "best buy" for earning airline miles? Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

[wilson]

Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

Depends entirely on how much you're going to spend annually. I would deem a rough estimate of this pretty much necessary to figure out which is the better card for you.

[OZZIE4DUKE]

My question is: of the two cards I've listed, which one is the better deal?

I don't carry credit card debt. I use credit cards for purchasing airline tickets, and then I pay them off. I would like to earn airline miles with a credit card, and these two allow me to purchase airline miles.

Which one is going to be the "best buy" for earning airline miles? Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

How many miles does it take to get a free flight? Are there restrictions on the flights you can get for those miles? Is it on just one airline or is it on any airline?

When I flew on Southwest two years ago, I got one of their cards from a handout at their kiosk a the airport. After the first use (I think I spent $7 to get my car washed, the only time I've ever used the card), I got enough points to get a free round trip on SWA, which was pretty sweet! I did use the free round trip before it expired.

With the bank miles card I have through First Citizens Bank, I've been getting a $100 certificate for every $7000 in spending, which is roughly 1.428%. (Years ago it was 6000 miles for a certificate.) For 4 certificates, you can book any round trip domestic coach flight 2 weeks in advance through their travel service, regardless of the cost of the ticket, or book any flight paying for the trip with certificates at whatever the lowest fare they can find is, as long as they can book it online. That's what I've always done, usually using 2 or 3 certs to pay for a round trip flight costing between $200 and $350 on AA or Southwest, whatever flights I found online, then calling the bank's travel service with the flight numbers and the cost in hand and they booked it at the same rates or within pennies. I'd use the cert to pay for most of the cost and pay for the difference on the credit card, or waste the excess of a cert if it was just a few dollars - if you only use part of a $100 certificate, you lose the unused portion. This card has an annual fee of $39. The certificates expire 2 years after date of issue.

[CathyCA]

More info on how the rewards card works:

How Do I Redeem My Rewards For Travel?
There are two ways to redeem your miles:

1) You can contact our Rewards Center toll free to book your travel. Or,

2) You can purchase your travel (anywhere you choose–online, in person, or over the phone) with your No Hassle Rewards card. You’ll then have 90 days from the date your travel purchase posts to your account to call our Rewards Center or redeem your miles online at http://www.capitalone.com/nohasslerewards to get reimbursed for the cost of the travel purchase.

The number of miles you need for travel varies, and depends on the cost of the travel purchase. Here’s how it works:

Simply multiply the cost of your travel purchases by 100. For example, if your ticket costs $200, you’d multiply that by 100 to determine you need 20,000 miles to redeem.

Can I Redeem My Rewards For Something Other Than Travel?
You can also redeem your miles for cash, gift cards, brand-name merchandise and more. Rates for these other redemption options vary and are subject to change without notice. If you received this offer in the mail, you can call the application number provided for additional information regarding these redemption rates. If you are reviewing this offer online, you can call the phone number provided to get additional information regarding these redemption rates. As an Account holder, you can visit http://www.capitalone.com to register your account and see a complete description of current redemption offers.

[CathyCA]

Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

Depends entirely on how much you're going to spend annually. I would deem a rough estimate of this pretty much necessary to figure out which is the better card for you.

$1578.72 per month on average.

[wilson]

Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

Depends entirely on how much you're going to spend annually. I would deem a rough estimate of this pretty much necessary to figure out which is the better card for you.

$1578.72 per month on average.

OK, so that would work out to a yearly average of $18,944.64.
This would give you 23,680.8 annual miles on the 1.25 mile-per-dollar, 0 annual fee card.
37,889.28 annual miles on the 2 mile-per-dollar card with the $59 annual fee.
This means that, for an extra $59 a year, you could almost fly two additional New York-to-Paris round trips with your miles.
Seems to me that the fee is well worth it.

[Miles]

Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

Depends entirely on how much you're going to spend annually. I would deem a rough estimate of this pretty much necessary to figure out which is the better card for you.

$1578.72 per month on average.

EDIT: Wilson beat me to it, but here's what I was thinking...

The difference between bonus miles negates the $59 yearly fee.
1580 x 12 = $18960/year
<b>Card One:</b> 18960 x 2 = 37,860 miles per year
<b>Card Two:</b> 18960 x 1.25 = 23,700 miles per year

Selecting card one gives you 14160 more miles per year. That means you'll need to spend an additional $11,328 per year with Card Two to receive the same benefits from Card One.

It's been a few years since I was a frequent flyer, and since I've redeemed miles for flights, so I could be wrong or a bit outdate, but I'm sure either card is a very good deal <i>solely</i> for miles bonuses. You should be able to get a much better deal from an airline through their membership program. Here's a few things to look out for:
- Under United Mileage Plus, I earned ~4,100 miles (San Diego to Charlotte) at a cost between $300 - $400. It's going to cost you twice as much money to earn those miles. Note: this purchase wasn't even on a miles credit card, just the miles earned in the air.
- Under the same Mileage Plus plan, I cashed in 25,000 miles for the same flight San Diego to Charlotte. Your plans will cost you 40,000 miles.

Unless something has changed in the past 5 years, I think you could probably do better with a different card. My recommendation is to check with the major hubs flying near you, and then see what credit cards those airlines offer. In most cases, they'll have similar return plans for 2 miles per $1 and then other perks like anniversary miles, discounts on seat upgrades (I bet Sam would love business class or first class), priority seating/upgrades, access to membership clubs, and most of the airline sponsored cards will still give you 1:1 miles on everyday purchases.

Good thread CathyCA. Take your time and do some research, you could save big!

[CathyCA]

Miles, if I chose just one airline affinity card, then I would be limited to that airline. Sometimes I like to fly Southwest. Other times, I like to fly American. Sometimes Continental has the better flight schedule. There are times that Delta is a better choice.

If I chose the Capital One card, then I'm not limited to any particular airline when I redeem the miles, so I could use the miles on Southwest, American, Continental, Delta or even Frontier.

That's why I'm hesitant to go with any one airline's card.

[YmoBeThere]

Being an ex-employee of American Express, I will state with confidence that when you spend more than about 10K or more on a card, they will have the best deal(the benefit of owning the credit card system the transactions are processed on). I had this all in a spreadsheet a few years ago for cash-back cards, not really hard to do, an Excel exercise. As Wilson quickly got to, it all depends on the $ you spend and also on how you want to use the miles. If you don't fly Delta, you won't really want AmEx's card. AmEx also gives bonuses for more $ charged beyond the base amount depending upon which level of card you have. So, if you get the Platinum, and then drop down to the Gold, you can take advantage of those offers and then get the cheaper card the next year. I used to get my card for free so it didn't matter to me.

Ultimately, I switched to free Delta Options card. I mainly use a Blue Cash card for most of my spending, a Discover when a merchant won't take that, and a Mastercard when nothing else will work. I pay my balances every month(not really balances, monthly spending) so interest rates don't really matter at all.

[devildeac]

Does the annual fee of $59 which kicks in during year 2 make the [2 miles for 1 dollar spent] card any less attractive than the [no fee but 1.25 miles for 1 dollar spent] card?

Depends entirely on how much you're going to spend annually. I would deem a rough estimate of this pretty much necessary to figure out which is the better card for you.

$1578.72 per month on average.

Serious question: Can you submit your $59 annual fee to your law practice and have them reimburse you for your annual fee for "entertainment purposes?"

We have a Marriott Rewards Visa card and get 1:1 points for all $ spent and sometimes 2:1 and always 3:1 for any Marriott properties at which we stay. Plus, at various times during the year, we get sent a $100 certificate for use toward any Marriott stay. Plus. the perks of early check-in, late check out and some upgrades. It ends up being about 1.5%, maybe even as high as 1.8%. I think this fee is $35/year.

We also have a Citibank American Airlines Master Card that we use a lot less now that we do not have any kids at home and fly a lot less, with or without them. Frequent flier miles are a lot tougher to use these days. I think the last time was about a year ago but we got about $1600 worth of tix round trip to Vail for a meeting/vacation for 25K points. But, when you do this, you pay $25 or $35/bag to fly. Each way. If we paid for the tix, the bags would have flown free. This card is $50/year. I count both these cards as business expenses so the fees are reimbursed with pre-tax $, but I have a different situation than you.

I like Ozzie's idea of the BP/Amoco card for gas which is a 10% discount for the first 60 days or so and then 5% thereafter. That's almost $.20/gallon now. I keep asking Mrs. DD if she has applied for this yet. I really don't give a damn which gas I buy, though the Kroger/Shell card is also tempting at a 10% discount, too.

I'd give you both card #s but EarlJam is using them now.

[Miles]

Miles, if I chose just one airline affinity card, then I would be limited to that airline. Sometimes I like to fly Southwest. Other times, I like to fly American. Sometimes Continental has the better flight schedule. There are times that Delta is a better choice.

If I chose the Capital One card, then I'm not limited to any particular airline when I redeem the miles, so I could use the miles on Southwest, American, Continental, Delta or even Frontier.

That's why I'm hesitant to go with any one airline's card.

Totally true, but loyalty has it's rewards and is worth considering if you want the best deal.