credit card rewards

5 Reasons Not to Use Debit Cards When You Shop Online

Holly Johnson — Sat, 07 Nov 2020 22:45:14 +0000

Many consumers use their debit cards for everything they buy. Using debit instead of paying with a credit card can help you avoid the potential for debt. The money is taken out of your bank account directly and immediately, so there’s little chance to spend more than you have, unlike using a credit card.

But when shopping online, there are reasons to consider using a credit card instead.

Using a debit card for online purchases can mean enduring greater losses if you're a victim of fraud. Plus, you're giving up valuable consumer protections and rewards each time you make a purchase with debit in a store or online.

Here are all the reasons you may want to stop using debit and use a credit card instead.

1. You may be putting yourself at risk for fraud

It's easy to assume you won't be liable for fraudulent purchases made with your debit card or checking account number, but this isn't the case. Where most credit cards come with zero fraud liability thanks to rules enacted in the Fair Credit Billing Act (FCBA), the same protections don't apply to transactions made with a debit card.

In fact, someone who finds your debit card number could wipe out all the money in your accounts. If you don't notice or report it in time, you won't have any way to get your money back.

According to the Federal Trade Commission (FTC), your level of liability depends on when you notice the fraud and report it. For example, if you report fraud within two business days after it's noticed, you're only liable for up to $50 in losses. If you report fraud within two to 60 days of your statement being mailed to you, you're only liable for up to $500. If you fail to report fraud once it's been 60 days from the date your statement was mailed to you, the FTC notes that you could lose "all the money taken from your ATM/debit card account, and possibly more; for example, money in accounts linked to your debit account."

2. You're missing out on rewards

In addition to putting yourself at risk for fraud, there are plenty of ways you're missing out when you shop online with a debit card. For example, you could be earning cash back or travel rewards if you made the same purchases with a rewards or travel credit card. These rewards can add up quickly, making it easier to see the world or splurge on merchandise, gift cards, and more.

While you can typically earn 1% to 3% back with a rewards or travel credit card, you can also double up on rewards by shopping through a cash back, travel rewards, or airline portal. You can also shop in portals with a debit card in some cases, but you'll mostly be limited to earning airline miles or cash back. (See also: How to Use Airline Shopping Portals to Cash In On Rewards)

3. You won't earn any sign-up bonuses

Using a debit card when you shop online also means giving up on the possibility of earning big sign-up bonuses. Keep in mind that many rewards credit cards offer consumers the chance to earn bonuses worth $500 or more when they meet a minimum spending requirement within a few months.

You may think you need to pay the annual fee on a credit card to qualify for sign-up bonuses or ongoing rewards, but this is far from the truth. The reality is, there are plenty of rewards credit cards that dole out sizable bonuses, ongoing rewards, and more without charging a fee each year. (See also: Don't Make These 6 Credit Card Sign-up Bonus Mistakes)

4. You're giving up valuable consumer protections

Another reason to use credit instead of debit is the fact that you could qualify for valuable consumer protections and free insurance. This can include travel protections like trip cancellation/interruption insurance, rental car insurance, travel accident insurance, baggage delay insurance, and more.

Other protections that can apply to your online purchases include extended warranties, purchase protection, and guaranteed returns. Most of the time, you won't qualify for any of these perks if you pay for your online purchases with a debit card. (See also: How Credit Cards Protect Your Purchases from Damage or Theft)

5. You're not building credit history

The final reason you may want to stop using your debit card is the fact that you're not building credit history based on your online purchases and everyday spending. When you use credit instead of debit, on the other hand, you're making regular purchases and payments that are reported to the three credit reporting agencies — Experian, Equifax, and TransUnion.

Having your credit usage and payments reported to the credit bureaus is huge because it helps prove your creditworthiness and gives them a basis to increase your credit score over time. Using a debit card certainly won't hurt your credit score, but it won't help it, either.

Considering a credit card? Here's a warning

While using debit online can be more risky and less rewarding, it's still important to figure out if you're a candidate for credit card use. While credit cards do come with better protection against fraud, the potential for rewards, and valuable consumer protections, they can make it easier to overspend and wind up in debt.

Before you sign up for a credit card and start using it for purchases, it's important to make sure you're committed to staying on budget and spending only what you can afford. If you wind up with a mountain of debt with the high interest rates most credit cards charge, the rewards and protections you receive won't be much help.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Maximize Rewards on Everyday Spending

Holly Johnson — Tue, 03 Nov 2020 17:32:44 +0000

While many rewards enthusiasts focus on signing up for new credit cards to earn signup bonuses, not everyone has the time or desire to play the signup game. There is effort involved in tracking multiple cards, annual fees, and rewards programs, after all, and some people don't want to spend their time or mental energy this way.

If you're someone who falls into this category, you may be better off maximizing one or two cards instead of chasing rewards. Fortunately, you can earn plenty of rewards over time if you're savvy about your card's benefits and bonus categories.

The key to getting the most out of your rewards cards is understanding how they work and looking for opportunities to earn more points on your everyday spending. Here are some tips that can help.

Brainstorm every bill you could pay with a credit card

Because rewards cards offer points based on each dollar you spend, maximizing the amount you can spend on credit is the best way to boost your rewards haul. The smartest strategy to use here is figuring out how many of your monthly bills you can pay with a credit card.

While you may not be notified or aware, it's possible that bills you've been paying with a check or debit card for years can be paid with a credit card without any fees. While your bills may vary, some expenses you should try to pay with a credit card include:

Rent
Utility bills like electric or gas
Health insurance
Cable television and internet
Cell phone
Taxes
Daycare
Auto and home insurance
Subscription services
College tuition or student loans
Medical bills
Lawn care

Keep in mind that these are just some of the bills you could be paying with credit. Depending on your situation, you could have additional, uncommon expenses to cover that could be paid with credit with ease.

Also, remember that these additional bills should be paid with credit on top of your everyday expenses like groceries, dining out, gas or bus fare, and miscellaneous spending. Every time you buy something in person or online, you should strive to pay with your rewards card if you can.

Leverage your rewards card bonus categories

It's also important to leverage your favorite card bonus categories, whatever they may be. This is especially important if you have a few cards with different bonus categories since you'll want to make sure you're using the right card for bills that let you earn bonus points.

Let's say you have a travel credit card that earns 3x points on dining and travel and another card that earns 6x points at the grocery store. In that case, you would be smart to use the travel card for dining and travel purchases and your other card when you stock up on food. While the amount of rewards you earn with individual purchases may seem nominal, using the right card for the right purchase can help you earn a lot more rewards over time.

Set up auto-pay bills to be paid with credit

Most of us have bills set up to be paid automatically, whether it's our Netflix and Hulu subscriptions, gym membership, or utility bills. Make sure each bill you have set up to be paid automatically is set up to be paid with your rewards card and not a debit card. This way, you can earn rewards points on those expenses every month.

Use shopping portals and dining clubs

Many flexible rewards programs, frequent flyer programs, and hotel loyalty programs have shopping portals you can access to earn extra points. Major airlines like American, Delta, and United also have shopping portals that work similarly. (See also: How to Maximize Rewards Through Credit Card Shopping Portals)

Some programs like Southwest and Delta also offer dining clubs. These programs let you earn additional points or miles just for dining at participating restaurants in your area. It's easy and it's free to join, so you may as well earn extra miles on your spending if you're going to dine out anyway. (See also: Everything You Need to Know About Airline Dining Rewards Programs)

How much the average family can earn

If you are skeptical the average family can rack up meaningful rewards without signing up for new cards over and over again, look at how this might work in real life. For example, imagine a family of four with two rewards card-toting adults. Across the two of them, they have:

A cash back card that earns 2% back
A travel credit card that earns 3% on dining and travel
A rewards card that earns 6% cash back at the grocery store on up to $6,000 in spending each year

To figure out how much this family might earn, we used Bureau of Labor Statistics spending averages from 2017. Here's a rundown of that data for the year plus how much a family could earn in rewards over 12 months based on average expenses:

Food at home ($4,363): $261.78 in rewards at 6%
Food away from home ($3,365): $100.95 at 3%
Utilities, fuels, and public services ($3,836): $76.72 at 2%
Household operations ($1,412): $28.24 at 2%
Household supplies ($755): $45.30 at 6%
Household furnishings and equipment ($1,987): $39.74 at 2%
Apparel and services ($1,833): $36.66 at 2%
Gasoline and motor oil ($1,968): $39.36 at 2%
Other vehicle expenses ($2,842): $56.84 at 2%
Healthcare ($4,928): $98.56 at 2%
Entertainment ($3,203): $64.06 at 2%
Personal care products ($762): $45.72 at 6%
Education ($1,491): $29.82 at 2%

Total rewards: $923.75

While $900+ is a lot to earn in rewards within a year, you have the potential to earn a lot more. After all, these are just some of the expenses the average family faces and not all of them. If you could pay some additional big bills with credit each month like daycare or your rent, you could significantly add to your bottom line.

What to watch out for

While maximizing rewards cards is a smart idea if you're using them already anyway, there are always pitfalls to be aware of when you're using a credit card. Here's what to watch out for during your quest for more cash back and travel rewards.

Fees for using credit

While there are many bills you can pay with credit without a fee, some vendors, merchants, and service providers charge a fee to use a credit card as payment. Fees are especially prevalent on bills such as utilities, cable or internet, rent, and insurance. Make sure to verify you aren't being charged a fee to use credit before you proceed.

Annual fees

Don't forget that some rewards cards charge annual fees. These fees may be worth it depending on your spending and rewards haul, but you should always factor them into the equation to make sure each fee is worth paying. If you're against paying annual fees, look for rewards cards that don't charge one.

Budgeting mishaps

Using a credit card for all your expenses may simplify your financial life, but it could also cause your budget to fall out of whack. Make sure you're only spending on purchases you planned to make anyway, and that you're tracking your spending and paying off your credit cards regularly.

Debt

Never use credit cards for purchases you can't afford to repay if you're pursuing rewards. The interest you'll pay will always be much more than the rewards you earn. If you're worried using credit will cause you to rack up debt you can't afford to repay, you're better off sticking to cash or debit instead.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Smart Strategies to Rack Up More Credit Card Rewards

Holly Johnson — Thu, 30 Jan 2020 17:19:14 +0000

Where it can take months, or even years, to earn significant sums of rewards through regular credit card spending, credit card sign-up bonuses make it easy to earn $300 or more in cash back, or enough miles for a round-trip flight within a matter of months. All that's required to qualify is signing up for a rewards credit card and getting approved, then meeting a minimum spending requirement (usually in the $1,000 to $4,000 range) within a specific length of time (usually three months).

However, there are plenty of scenarios where earning a new credit card sign-up bonus just isn't in the cards. Maybe you're planning on buying a home in the near future and want to keep new hard inquiries off your credit report, or perhaps your credit score recently took a dip and you can't get approved for the top rewards credit cards.

Whatever the reason you can't earn a sign-up bonus right now, there are plenty of ways to rack up rewards using the cards you already have, as well as other methods.

1. Use the right card for different types of purchases

If you have a handful of rewards credit cards with different earning structures, it's crucial to make sure you're using the optimal card for each purchase you make.

Different cards might offer bonus points for certain types of purchases. One card might offer extra points on dining, while another offers bonus points for groceries. The key to maximizing rewards is ensuring you're using the card that offers the most points on everything you buy. (See also: 3 Ways Your Credit Card Rewards Can Make You Rich)

2. Find more expenses you can cover with a credit card

Make sure to go over your monthly spending and bills to ensure every purchase you can make with plastic is being paid with a credit card.

While it's easy to use credit for groceries, gas, and miscellaneous purchases you make, take a few minutes to think outside the box on the biggest expenses you have each month. Could you pay for daycare with a credit card? How about quarterly tax payments? Health insurance premiums? Your monthly utility bills?

The more expenses you can cover with a credit card each month, the more rewards you'll rack up over time. Just make sure you're not paying a fee to pay bills with a credit card. Otherwise, the rewards you earn may not be worth it.

3. Take advantage of shopping portals and dining programs

Airline shopping portals through programs like American AAdvantage, Delta SkyMiles, and Southwest Rapid Rewards let you earn additional airline miles for each dollar you spend, and all you have to do is "click through" your favorite portal before you shop. You'll usually earn an extra 1-3 miles for each dollar you spend at participating stores in these portals, but it is possible to earn an additional 10 miles or more per $1 spent in obscure specialty stores, or when stores are having bonus promotions.

Many airline loyalty programs also offer dining programs that let you earn additional rewards when you dine at participating restaurants in your area. Some even offer initial sign-up bonuses when you dine out at least three times within 30 days.

4. Use Amex Offers or Chase Offers

Both American Express and Chase have their own "offers" that let you earn additional rewards or cash back when you make a specific purchase within a predetermined length of time. You do need to log into your account and add these offers to your card before you make a purchase to qualify, and you'll have to meet all terms and conditions they stipulate as well.

Note that not all Amex Offers and Chase Offers reward you for shopping, per se. Some give you cash back when you spend a certain amount of money with a hotel chain, or when you spend a specific amount of cash on airfare with a certain airline. You might also earn rewards for buying a new mattress, hiring a dog sitter, or signing up for identity theft protection.

Also, remember that both Chase Offers and Amex Offers feature a benefit on top of the rewards you receive. You can score a discount with an offer, but you'll also earn applicable rewards for each dollar you spend with your credit card.

5. Sign up for free loyalty programs

Finally, don't forget that most loyalty programs let you join for free, and that there are plenty of ways to rack up certain types of rewards without a credit card. For example, you can join airline loyalty programs and earn airline miles each time you fly, regardless of how you pay for your airfare. The same is true with hotel programs like Marriott Bonvoy and Hilton Honors, since you earn hotel points for each dollar you spend with these brands.

If you don't travel a lot, also keep in mind that some cash back programs are available for regular purchases you buy. The Rakuten portal, for example, lets you earn up to 40% off purchases made at participating stores like Amazon, Macy's.com, and Walmart.com.

Like other shopping portals, cash back portals also set you up to double up on rewards. You can get cash back through a portal like Rakuten or Dosh for purchases you make, but you'll also earn rewards if you use a point-earning credit card to pay.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways Credit Card Rewards Can Cost You Money

Holly Johnson — Thu, 25 Apr 2019 08:00:10 +0000

Rewards credit cards offer an alluring proposition — the promise of free points and miles for each dollar you spend. Many rewards cards even offer signup bonuses worth $500 or more right out of the gate, and that's in addition to the rewards you earn when you shop or pay bills.

The problem? Not everyone can or should pursue rewards, for several reasons. In some cases, trying to earn rewards can even wreck your finances, damage your credit score, or both.

Before you sign up for a cash back credit card or travel credit card, it's crucial to know the many ways pursuing points and miles can hurt you.

1. Going into debt by chasing rewards

A recent analysis of credit card data from the Federal Reserve from Experian revealed that only 45 percent of Americans with credit cards are paying their balances in full each month. This means the other 55 percent carry a balance at least part of the time, and it's easy to assume at least some of those people are pursuing rewards, right?

Because the average credit card now comes with an APR over 17 percent, this is a real problem. It makes almost no sense to try to earn 1 to 3 percent back while also paying over 17 percent in interest. The math just isn't there.

If you're charging purchases you can't afford to pay off each month just for the rewards, credit card rewards are not for you. You'll be much better off using cash or debit instead since those options won't leave you grappling with high-interest debt. (See also: The 5 Biggest Dangers of Credit Card Debt)

2. Overspending to earn a signup bonus

Most cash back and travel rewards credit cards offer initial welcome bonuses to entice you to sign up. Many times, these bonuses are worth $500 or more in points or miles, and all you are required to do is meet a minimum spending requirement (e.g. spend $3,000 within three months of opening the account to earn 50,000 bonus points).

While these offers are tempting, they can be problematic if you need to spend more than you normally would to meet the threshold. If your normal spending and bills don't add up to the minimum spending requirement within the allotted amount of time, what are you going to do?

Way too many people use minimum spending requirements as an excuse to splurge for new furniture or plan a vacation. Unfortunately, this means the rewards they earn won't leave them ahead financially. They may wind up with new stuff or a trip to look forward to, but they also wind up with less money than when they started. There's nothing rewarding about that. (See also: 5 Smart Ways to Meet a Rewards Card Minimum Spending Requirement)

3. Unplanned travel spending

Another pitfall of travel rewards points is the simple fact you often have to spend money to redeem them. Let's say you sign up for a hotel or travel credit card that offers a free night certificate and initial rush of bonus points and you decide to cash them in for a week in Hawaii. All of a sudden, you're splurging for pricey flights, a week-long car rental, and food and fun for seven days. Sure, your hotel may have been free, but what was the total cost? (See also: How Travel Rewards Credit Cards Really Work)

Also, redeeming travel rewards can come with costs you may not anticipate outside of regular travel expenses. Cashing in airline miles for international flights can require you to pay several hundred dollars in airline taxes and fees, and some airlines tack on hundreds in fuel surcharges to boot.

Higher end hotels you redeem points with may also have unavoidable fees for valet parking or resort privileges. These expenses can and do add up over time, so don't forget to factor them in.

4. Too many annual fees

And what about the annual fees many of the top rewards and travel credit cards charge? Top travel credit cards charge annual fees of $450 or more, which is a lot of money no matter how you cut it.

While annual fees can be worth it if you earn a lot of rewards and use travel benefits and perks regularly, they still add up. Before you sign up for too many credit cards with annual fees, make sure you have a plan to get more value than you're paying for. If you can't do that, then it's probably not worth it.

5. Damage to your credit score

Don't forget that the way you use credit cards can negatively impact your credit score. For example, opening new credit cards means having another hard inquiry on your credit report, which could cause your score to temporarily drop.

Since your payment history makes up 35 percent of your FICO score, falling behind on your credit card bills can also create a big problem. With your credit utilization — how much you owe in relation to your credit limits — making up another 30 percent of your FICO score, carrying large balances can hurt your score as well.

The bottom line

Credit cards that dole out points and miles can help you score free travel, earn cash back, or get other freebies, but that doesn't mean they're destined to leave you better off. Ultimately, the way you use your credit cards will determine whether they're a net positive for your finances.

Before you sign up for a rewards credit card, it can help to have a basic game plan in place. Figure out how you can earn a big signup bonus without making unplanned purchases, and make sure you have the discipline to pay your balance in full each month. From there, make sure you're only paying annual fees on cards that are worth it.

If that sounds like too much work, then it probably is. Cut your losses and stick with debit instead.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Everything You Need to Know About Airline Dining Rewards Programs

Holly Johnson — Mon, 15 Apr 2019 08:00:09 +0000

There are many ways to earn a lot of airline miles in a hurry, but the fastest way is signing up for a co-branded airline or travel credit card. Doing so allows you to earn miles on your regular spending, plus you can usually earn a signup bonus worth a few free flights. Other ways to earn miles include: signing up for frequent flyer programs, consistently flying with your favorite airline, using airline and travel rewards shopping portals, and keeping your eye out for special promotions.

Amazingly though, there's one more way to earn miles — and it may just be the easiest. With airline dining rewards programs, you can earn miles for each dollar you spend when you dine at your favorite restaurants.

How do airline dining rewards programs work?

The concept of earning miles with dining programs is simple, although the rules that govern each independent dining rewards program can vary. Popular dining rewards programs include Southwest Rapid Rewards Dining, Delta SkyMiles Dining, United MileagePlus Dining, and American Airlines Dining, although other airlines run programs as well.

Each airline dining program works with participating restaurants nationwide, making it easy to find establishments in your area or when you travel. Once you sign up for a dining rewards account, all that's required is using a credit or debit card tied to your account when you dine at a participating restaurant. Once you do, the miles you earn will be credited to your account — usually in less than 60 days.

How to earn the most miles

The number of miles you can earn depends on the program you decide to join, as well as other factors, but you should earn a minimum of one mile for each dollar you spend at a participating restaurant, and maybe more.

Earn more miles with elite dining status

Some dining rewards programs let you earn more miles each time you dine out once you reach a certain threshold within the program. With Delta SkyMiles Dining, for example, you can become a "VIP Member" after dining 11 times or more within the program by the end of the year. With a VIP membership, you'll earn five miles per dollar you spend at participating restaurants within the program.

Earn more miles for opting into emails

Southwest Rapid Rewards dining lets you earn three miles per $1 spent (as opposed to one mile per $2 spent) for dining members that agree to receive Rapid Rewards Dining emails. You can also earn more miles by opting into emails with the American AAdvantage Dining program or United MileagePlus Dining program and becoming a Select or VIP member.

Some dining programs offer a signup bonus

Airline dining programs incentivize consumers to sign up by offering initial signup bonuses worth a few thousand miles. With Delta SkyMiles Dining, for example, you'll earn 3,000 bonus miles for signing up and spending at least $30 (including tax and tip) at participating restaurants within the first 30 days of membership. American AAdvantage, United MileagePlus, and Southwest Rapid Rewards Dining offer similar bonuses.

Double dip with an airline or travel credit card

The best part about airline dining programs is that you can earn even more rewards by using a travel or airline credit card when you pay your restaurant bill. Remember that dining rewards are doled out on top of any points or miles you earn with a rewards credit card.

Connect multiple cards to each account

Most airline dining programs let you connect multiple credit and debit cards to your account, so make sure to connect all cards you use frequently. By connecting all credit cards you're likely to use, you'll never miss out on miles when you dine out.

You can usually pay with any rewards card you want

With most dining programs, you can use any credit card you want to pay provided it's connected to your account. This means you don't have to use an American AAdvantage card when you're dining within American AAdvantage dining, for example. Instead, you can use a rewards card that gives you more miles or cash back for dining out.

Join more than one program — or all the programs

If you earn miles in more than one frequent flyer program, there's no reason you shouldn't join every dining rewards program available to you. Free miles are on the table — including signup bonuses — so maximize all of them to earn as much free travel as you can. (See also: How I've Scored Free Travel for 5 Years Straight)

If you think you could benefit from joining a dining rewards program for your favorite airline, you're probably right. Joining these programs is free and you could benefit more than you think if your favorite restaurants participate in your area.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways to Automate Credit Card Payments and Rewards

Holly Johnson — Wed, 12 Sep 2018 08:00:10 +0000

Credit card rewards can seem overly cumbersome and complex, so much so that many consumers don't even bother trying to earn them. It takes a lot of work to figure out which rewards or cashback credit card would meet your needs in the first place, and even then, you still have to figure out how to use your rewards. If you try to juggle too many cards or loyalty programs at once, you can easily find yourself overwhelmed — or worse — letting your points go to waste.

If your goal is maximizing credit card rewards, but you don't really want to put in the leg work, there are several ways to make the process much more organized. Here are six ways to automate your credit card rewards and monthly payments.

1. Use AwardWallet to track your points and miles

The AwardWallet app is an online tracking service that helps you manage your airline miles, hotel points, and flexible travel points. You can join the service for free and all you have to do is add your current award accounts to get started. From there, AwardWallet will track and monitor your rewards programs and itineraries. This includes notifying you if your points are about to expire or if your point balances have changed for any reason.

The AwardWallet app claims to be tracking over 1.3 billion points and miles across over 670 loyalty programs.

2. Check out Points.com

Points.com works similarly to AwardWallet in that it promises to track your points and miles from various rewards programs for free. However, this service also lets you cash in your points and miles for gift cards for shopping or dining.

Joining Points.com is free, and it can simplify your life by letting you watch all of your loyalty accounts in one place. Once you sign up, you'll have one password and login for your programs, which is much simpler than keeping track of multiple logins and having to log in and out each time you want to see an account balance.

3. Use Reward Summit to maximize your miles

Reward Summit is another tool that tracks your points and miles. But this service focuses on the front-end of your transactions instead of helping you track rewards after you've earned them.

Here's how it works: Sign up for Reward Summit and connect your credit cards to your account. From there, the Reward Summit app will help you choose the right card for each purchase you make based on which one offers the most rewards. You can also use the app to search for nearby merchants who may dole out category bonuses you aren't sure how to maximize. Finally, you'll receive detailed reports that show how you're maximizing your rewards credit cards compared to other Reward Summit users.

If you're someone who gets tired of figuring out which of your cards would be best for individual purchases, this app is for you. Best of all, it's free to sign up and seamless to use.

4. Set up automatic credit card payments

Maybe you're not overly worried about losing track of your points and miles, but you are worried about getting into credit card debt. In that case, it makes a lot of sense to automate your credit card payments to ensure you are never late and never wind up carrying a balance.

Fortunately, most banks will let you set up automatic payments on or before your due date. While this strategy can take some getting use to, automating your credit card payments can help you avoid debt no matter what.

5. Use rewards cards only for recurring expenses

Another strategy to consider if you're leery of overspending is using rewards cards only for recurring expenses you can automate on both ends. This means you would set certain bills to be paid automatically — like utilities, cable bills, phone bills, and insurance. On the other end of the spectrum, you would set up automatic payments with your bank so these bills would be paid automatically by their due date.

The benefit of this strategy is threefold; not only are you paying bills with credit you were going to pay anyway, but you're having your bill paid automatically and earning rewards in the process. This strategy is easy to set and forget, and it will help you avoid overspending on regular purchases.

6. Treat your credit card like a debit card

Another way to automate your credit card purchases and payments while avoiding debt is to sign up for a service called Debitize. This service offers "credit card perks without credit card debt," and actually pays your credit card bills for you straight out of your checking account.

The best part about the service is that it's free. After opening an account, all you have to do is link your credit card accounts with your checking account. From there, you'll use your credit cards as usual and let Debitize make regular withdrawals to cover your charges over time.

The fact this is all automated means you get to earn rewards and take advantage of credit card perks like guaranteed returns, extended warranties, trip cancellation/interruption insurance, and travel accident insurance without worrying about credit card bills. Since the amount you spend will be withdrawn from your checking account regularly, you'll feel like you're using debit.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why the Best Credit Card Rewards Strategy Is a Slow One

Holly Johnson — Fri, 10 Aug 2018 08:00:11 +0000

For those who rush into the credit card rewards game, the consequences can be severe and long-lasting. After all, average credit card debt per indebted household stood at $9,100 in 2017. While some of that debt is probably the result of emergency spending, it's inevitable that some of it also comes from poor planning.

A former neighbor of mine recently told me how she racked up debt in pursuit of rewards. In the midst of a move across the country, she signed up for a travel credit card that would let her use miles for flights or transfer to airline partners. She was going to spend money on her move either way, so why not get something in return? She was going to pay off her balance right away — or so she thought. What could go wrong?

As life would have it, the mother of two faced higher moving expenses than anticipated. She also struggled to find a good job right away, which left her relying on credit to pay other bills. In the end, she wound up with a ton of debt and some negative marks on her credit report.

Now she's stuck trying to pay off credit card debt at a high APR until she can qualify for a balance transfer card with 0% APR for a limited time. It's easy to see what went wrong here; she used credit card rewards without a real plan in place — and without enough cash to cover her bills or an emergency.

The potential for debt is one of the major pitfalls of credit card rewards, but there are plenty of other reasons you should approach this strategy at a snail's pace. There's a lot that can go right if you win the game, sure, but there's even more that could go wrong. Here's why you should proceed with caution.

Credit cards may cause you to spend more

While many people who pursue credit card rewards say using credit doesn't change their spending habits, some academic research suggests that, at least for some of us, spending habits can change quite a bit.

One study published in the Journal of Experimental Psychology: Applied in 2008 noted that the immediacy of paying with cash affected people much differently than the delayed consequences of paying with credit. In an excerpt published in Psychology Today, the argument was that "the more transparent the payment outflow, the greater the aversion to spending or higher the 'pain of paying' … leading to less transparent payment modes such as credit cards and gift cards (vs. cash) being more easily spent or treated as play or 'monopoly money.'"

In other words, credit cards dull the pain of paying. They do this by delaying the timeline in which you have to pay your bill and by allowing you to mix your purchases in a way that causes you to forget exactly what you're buying.

If you sign up for a bunch of rewards cards without knowing whether you can use them like you would cash, you may find out the hard way that you're someone who overspends with credit. This can be a costly lesson, but you can minimize potential damage by taking your time with rewards cards and using them in moderation at first.

Juggling too many new cards can lead to reckless spending

One of the main drivers behind rewards card sign-ups is the initial bonuses they offer. Many cards offer hundreds of dollars in cash back or travel credit for spending a specific amount of money within a few months (e.g. $3,000 in three months). These bonuses can be lucrative, but they can also cause people to overspend to reach the required spending minimum.

Juggling too many new cards at once can also leave you in a position where you have to spend more to earn each of the bonuses you're after. If, for example, you signed up for three cards that required you to spend $3,000 in three months to earn the bonus, you'd be on the hook for $9,000 in spending at once. Could you pull it off without jeopardizing your financial health? Maybe, but maybe not.

You're better off pursuing only one bonus at a time and making sure you can reach any spending thresholds naturally with regular purchases like groceries, gas, insurance, and utilities. After all, buying stuff you don't need to earn a credit card sign-up bonus is unlikely to leave you in debt. (See also: 5-Minute Finance: Track Your Spending)

New credit cards can hurt your credit score

Another reason to approach credit card rewards carefully is the fact that getting too many credit cards at once can actually hurt your credit score. Keep in mind that "new credit" makes up 10% of your FICO score, and it's easy to see why. New credit cards may cause credit reporting agencies to believe you are a greater risk, and they may push your score down accordingly.

In addition to new credit, the length of your credit history also makes up 15% of your FICO score. Since getting new cards will cause the average length of your credit score to drop, this is another factor that can hurt your credit in the short-term. (See also: How to Rebuild Your Credit in 8 Simple Steps)

It takes time to build good credit habits

Finally, don't forget that it takes time to build positive financial habits — including the ability to use credit responsibly. If you jump into credit cards too soon, you might wind up in the middle of a problem you don't know how to fix.

The best way to use credit cards is in conjunction with a monthly budget. You can charge your purchases each month to earn rewards, but you should have the cash on-hand to pay your bills since the average credit card interest rate is over 16%.

It also helps to build an emergency fund you can use to cover unexpected expenses or fill the gaps if your earnings drop for any reason. If you use credit without a plan, you could live to regret it and wind up in debt for a long, long time.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the Merger of Marriott and SPG Programs Will Affect Member Rewards

Carrie Kirby — Thu, 26 Jul 2018 08:00:09 +0000

Marriott International bought Starwood Hotels & Resorts Worldwide almost two years ago, but they're just getting around to integrating the two hotel chains' popular loyalty programs in August. Whether you're a loyal Marriott lodger, you're sitting on a mountain of Starwood Preferred Guest (SPG) points, or if you've dabbled in both programs over the years, you may be wondering how this change is going to affect you.

Don't worry. The transition should work out fine for everyone. While it's true that the programs as you knew them will be gone forever, the good news is that the changes aren't terribly jolting for either Marriott or SPG members, and that members who have spent years building up their status won't have to start over.

Members of both programs have been able to link their accounts since shortly after the merger and transfer points from Marriott to SPG and vice versa. But once the unified program debuts in August, members will receive emails from the company notifying them that it's time to merge their Marriott and SPG accounts. The new program will have a new name (to be announced in 2019), new status tiers, and new rates for booking rooms. (See also: Tips for Using Hotel Reward Points to Get the Most Value)

You'll be able to search all the hotels from one site

The combined chain has 6,500 hotels worldwide. Currently, guests have to use Marriott.com to search for Marriott hotels (including The Ritz-Carlton, Courtyard, and other brands owned by the conglomerate) and SPG.com to look for Starwood hotels (including Sheraton, Westin, and other brands). Starting in August, you'll be able to go to either of those sites and book the whole portfolio, book through either brand's app, or by calling either brand's customer service number. (See also: 5 Hotel Room Booking Tools Every Frugal Traveler Should Know)

New earning rates

Members will earn 10 points for every dollar spent at all hotel brands except for three (Residence Inn, TownePlace Suites, and Element), where the earn rate will be five points per dollar. Elite members will earn more based on their status tier. That's the same as what current Marriott members get. SPG members currently earn two points per dollar.

Redemption rates are similar to current Marriott rates

While it may seem like SPG members will quintuple their earnings under the new plan, in reality, they probably won't notice much difference in how long it takes to earn free stays. That's because rate adjustments will make the new points both earn and spend more like Marriott points.

The new Free Night Award chart shows standard redemption rates for all hotels starting in August, with peak and off-peak rates coming in 2019. The new chart divides hotels into seven categories, with an eighth coming in 2019. The standard rate for the lowest tier will be 7,500 points per night, and the standard rate for the eighth tier will be 85,000. This compares to seven current SPG room categories with weekday prices ranging from 3,000 to 35,000 Starpoints, and nine current Marriott tiers ranging from 6,000 to 45,000 points per night.

Starwood points will triple

SPG points are worth three times as much as Marriott points. The Points Guy travel rewards blog pegs Marriott points at 0.9 cents and Starwood at 2.7 cents each. To account for this, SPG points will be tripled when you merge accounts, but Marriott point balances will stay the same. So if you had 10,000 Marriott points and 10,000 SPG points, your new account would have 40,000 points in it.

More elite status tiers

If you currently have status such as Gold Preferred Guest with Starwood or Platinum Elite with Marriott, you don't have to wait until August to find out what your status will be in the new program. You can check your elite status here for SPG and your elite status here for Marriott.

The new program has five elite tiers; Marriott currently has three and SPG has two. But the new tiers aren't an exact match to the old ones. This will mean a change in benefits for some frequent guests.

For instance, previously, someone who stayed 25 nights with SPG would get a jump in status that would let them suddenly start earning 50 percent more Starpoints for every dollar spent at the hotel, allowing them to earn free nights that much faster. Marriott elite guests had a similar deal that allowed them to earn 20 percent more points per dollar spent. The new program will give the same guest a 25 percent boost. Some benefits won't change: 50 nights will get you into lounges, just as they did in SPG and Marriott Rewards.

Lifetime elite status holders will also see slight changes. But most importantly to road warriors: Anyone with lifetime status under their original program will have it under the new program, even if it looks a little different.

Airline transfer partners

A popular way to use both Marriott and SPG points is to transfer them to airlines, and this flexible perk won't be going away with the new program. In fact, it will be slightly better, because members will be able to transfer to a few more airlines once the programs are combined. For instance, starting in August, former SPG members will be able to transfer points to JetBlue and Qantas airlines — which weren't available to them before. Former Marriott members will be able to transfer to Virgin Australia and Air New Zealand, among others — which they hadn't been able to before. In all, the program will have more than 40 airline transfer partners.

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How 2 People Can See Paris for $500 or Less

Holly Johnson — Wed, 18 Jul 2018 08:00:10 +0000

France is one of the most visited countries on Earth, and its capital city of Paris remains one of its biggest draws. This thriving metropolis boasts everything you could want in a European getaway — historic landmarks, world famous art, amazing food, and Insta-worthy photo ops galore.

You can visit historic Notre Dame cathedral, roam enchanting neighborhoods like Saint Germain and Le Marais, see Leonardo da Vinci's Mona Lisa at the Louvre, and ride to the top of the Eiffel Tower in a single day. You can also nosh on exquisite French pastries, macaroons, cheeses, and wine. With so much to do — and so many goodies to consume — why wouldn't you want to visit Paris? (See also: 8 Money Lessons I Learned From Three Weeks in Europe)

Planning a trip to Paris with rewards

For many people, the biggest deterrent is the cost of getting there. International flights aren't cheap, after all, and you still have to pay for a place to stay.

That's why savvy travelers leverage travel credit cards and cash-back to cover the biggest components of their Parisian getaway. With the right combination of airline credit cards and hotel cards, it's not that difficult to plan a vacation to Paris for the same price — or less — as a trip closer to home.

Before you rule out Paris for your next vacation, consider how you could use rewards to score a trip for two for $500 or less.

Getting to Paris with airline miles

Paris may be an eight-hour flight from many East Coast cities, but it's not that difficult to get there with airline miles. Because it's such a popular tourist destination, all the major airlines fly there and many offer multiple flights per day. As a result, you won't have to look too hard to find a frequent flyer program that can get you to Paris with ease. (See also: The Cheapest Way to Fly to Europe)

One of the most popular airline programs for flights to Paris is the American AAdvantage program. With this frequent flyer program, you can fly off-peak to Europe (including Paris) for 22,500 miles per leg plus airline taxes and fees. That works out to 45,000 miles for a round-trip flight, which is a fairly easy sum of miles to earn with an airline credit card.

Another popular program for travelers who live near a Delta hub is Air France/Flying Blue. This frequent flyer program lets you book flights to Europe with Delta, and you can frequently book flights for 25,000 to 29,000 miles one-way, or as little as 50,000 miles round-trip. Another airline program that's easy to earn miles with is United MileagePlus. You can book round-trip flights to Europe in economy for 60,000 miles round-trip. (See also: Best Airline Rewards Programs for Trips to Europe)

In addition to miles, you'll need to pay airline taxes and fees for your trip. These generally work out to around $100–$150 per person for flights to Europe, but they can vary based on the airline you book with, along with any partner airlines you'll fly with.

If you want to plan a trip for two to Paris, getting your flights squared away is one of the first steps you should take. Consider signing up for airline credit cards that let you rack up miles in a program that will let you fly to Paris from your home airport. With two spouses or partners each getting their own card, it's feasible to earn enough miles for two round-trip flights. Just remember that you'll be on the hook for government-mandated taxes and fees for those flights, and these fees will likely range from $200 to $300.

Covering Paris hotels with rewards

The next component of your trip you'll want to cover with rewards is your Parisian lodging. You have all kinds of options at your fingertips, but the best choice for you depends on the type of place you want to stay.

If you prefer to stay in a higher-end hotel, the World of Hyatt program is a smart option for any stay in Paris. This hotel program will let you book the following hotels with points:

Hyatt Paris Madeleine: 25,000 points per night
Hyatt Du Louvre: 20,000 points per night
Hyatt Regency Paris Etoile: 15,000 points per night
Park Hyatt Paris Vendome: 30,000 points per night

It's easy to rack up rewards in this program with their co-branded credit card. However, you can also earn points with some credit cards for transfers to the World of Hyatt program.

Another program that's easy to earn points with is IHG Rewards. InterContinental Hotels Group properties you can book with points in Paris include:

Holiday Inn Paris Notre Dame: 40,000 points per night
Crowne Plaza Paris Republique: 45,000 points per night
Holiday Inn Paris Opera: 35,000 points per night
Holiday Inn Paris Gare de Lyon Bastille: 40,000 points per night
Holiday Inn Paris St. Germain des Pres: 40,000 points per night

Also consider the fact that hotel brands like Marriott, Starwood Preferred Guest, and Radisson Rewards offer properties in and around Paris and greater France. Make sure to compare hotel loyalty programs to see which one might be best for you depending on where you want to stay before you sign up for a new credit card to earn points.

In addition to large hotels, Paris is also packed with rental condos and Airbnbs you can book. If you would rather shack up in a cozy flat with more of a neighborhood feel, we recommend signing up for a credit card that lets you earn flexible travel credit. With a card that falls into this category, you can earn a big sign-up bonus plus ongoing rewards to pay for any type of hotel or condo you prefer.

Ideally, you'll use hotel points, flexible travel credit, or a combination of the two to pay for all your hotels in Paris. By doing so, you can avoid the expense of lodging altogether and save your travel funds for the other components of your trip.

Covering excursions with rewards

When it comes to the other components of your trip, there are plenty of free things to do in Paris. You can go inside Notre Dame Cathedral, walk through courtyards and winding city streets, and peer at major historical sites such as the Arc de Triomphe and Place de la Concorde. However, there are some activities in Paris you'll need to pay to take part in. Fortunately, credit card rewards can also come in handy when it comes to the getting the most out of your trip.

With some credit card rewards programs, you can use points to book all kinds of activities and excursions through their travel portal. While the options are nearly unlimited, activities available to you include things like food tours, skip-the-line entry into the Louvre, Eiffel Tower entry, guided city tours, and Seine River cruises.

If you can cover your flights with miles, pay less than $300 in airline taxes and fees, cover your lodging with hotel points, and limit spending on extras, you could easily book a trip to Paris for $500 or less outside the cost of food.

Since French cuisine is divine and you'll need a while to rack up the points for this trip, it's wise to start planning now. You definitely want to save up enough to have a few of those French meals that will make you understand why French cuisine is so famous.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Use These 8 Credit Card Perks to Save Big and Have More Fun on Your Summer Vacation

Lindsay VanSomeren — Tue, 22 May 2018 08:30:39 +0000

Summer is here, and it's time to get out and enjoy the weather. If you'll be vacationing in the next few months, you can bet that there'll be millions of other people traveling as well. It can be a hectic time, but there's one surprising thing you might already be holding in your wallet that can make your travels way easier — your credit card.

It can pay off (literally) to take a few minutes to look up your credit card's Terms and Conditions (T&C) online. Keep an eye out for these eight travel perks. Your T&C will tell you exactly how to take advantage of them.

And if you don't have a card that offers these travel perks yet? Now's a great time to see if any travel rewards credit cards might be a good fit for you, while keeping an eye out for these perks.

1. Car rental and trip insurance

Just because you might not be traveling through treacherous winter weather doesn't mean that there isn't a potential for something to go wrong. Many travel credit cards offer insurance to protect you in these cases, such as:

Again, your credit card's T&C is the best place to get the full scoop on which programs you might be eligible for, and if so, what the details are. (See also: 12 Travel Perks You Didn't Know Your Credit Card Had)

2. Global Entry/TSA Precheck fee credits

Few things are worse at the airport than standing in line for what seems like hours and then frantically shedding and then redonning all of your possessions. Global Entry and TSA Precheck allow you to bypass most of this hassle, but they come with a hefty fee: $100 for Global Entry, and $85 for TSA Precheck.

Many travel rewards cards offer you Global Entry and TSA Precheck credits, however. Usually all you have to do is make the purchase with the card, and you'll receive an automatic credit on your statement. But check your card's T&C to be sure.

3. Airport lounge access

When the airport mobs are tight, there's no better place than an exclusive airport lounge. These lounges are usually affiliated with a particular airline or credit card. Priority Pass is one program that gives members access to a number of different types of lounges around the world.

Lounge amenities vary based on which individual lounge you go to, but at a bare minimum you can expect to find a less-crowded, more comfortable atmosphere full of free Wi-Fi connections and outlets to charge your electronics while you wait.

Many lounges offer free drinks and snacks. Some even offer creative conveniences, such as showers, spas, and sleeping pods. It's a good idea to check ahead to see what lounges are along your travel route and what, if any, requirements there are (smart casual dress is required with some lounges, for example). (See also: Best Credit Cards with Free Airport Lounge Access)

4. Roadside assistance

Maybe you get locked out of your car, your tire goes flat, or you hear a sharp crack while you're driving down the road. Any way you slice it, car problems are a summer road trippers' worst fear. More than that, they can be dangerous. You definitely don't want to be stranded out in three-digit summer heat with no help.

That's why having roadside assistance can be a huge safety net for you while you're driving around this summer. They can help you with services like towing, a tire change, a jump-start, a locksmith, or gas. Make sure to print a copy of your roadside assistance details from your card's T&Cs so you have the phone number handy and know the program's limitations. Some roadside assistance programs, for instance, will only cover a certain dollar amount worth of services.

5. Uber credits

Unless you plan on staying at the airport for your entire trip, chances are you'll need to find a mode of transportation to take you to your final destination. Some credit cards allow you to earn points that can be redeemed for Uber rides, while others give you Uber credits every month as a perk. To use the latter, you simply link up your credit card in the Uber app. Then, when you're getting ready to take a ride, you simply select the credits as payment for your ride.

6. Concierge service

Sure, you can use your phone to Google a lot of things these days. But if you're out adventuring in the sticks or camping somewhere remote, sometimes you'll find yourself with an internet signal that's frustratingly slow. In this case, it might be easier to just call up someone who can answer your questions or help guide you over the phone, such as a phone-in concierge service.

Believe it or not, many travel rewards credit cards come with such a perk. Depending on your credit card's concierge program, you can call them up and ask them to help you with things like finding the nearest mechanic; booking tickets or making reservations at hotels, restaurants, or events; or even to helping you plan your trip.

7. Boingo Wi-Fi membership

Speaking of internet connections, it can be frustrating to find them when you're en route between destinations. Boingo Wi-Fi is one product that can help you stay connected while you travel. They've got more than 200,000 hot spots around the country and over one million spots around the world where you can connect securely. Normally this service costs $10 per month, but with some travel rewards credit cards, you can get a complimentary membership.

8. Status upgrades

One of the most common travel perks on credit cards is a status upgrade. Some cards automatically give you status upgrades at hotels, airlines, or with rental car companies. Depending on the program, these can add just a nice little touch, or they can be travel lifesavers.

For example, if you're a tall person and you're trying to save a buck by renting a car that's the size equivalent of a golf cart, having an automatic upgrade to a full-size rental car can be a game-changer. If you're on the road a lot or you're trying to enjoy an all-too-infrequent vacation, being automatically upgraded to a nicer room with a breathtaking ocean view and a soft-as-silk bed can turn your mere travel experience into a luxury vacation you'll never forget.

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This article is from Lindsay VanSomeren of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Calculate the Value of Your Credit Card Rewards

Jason Steele — Thu, 05 Apr 2018 08:30:10 +0000

Earning credit card rewards is a great way to offset the cost of purchases you already make. But it's worth calculating just how much those rewards are worth if you have to pay an annual fee on the credit card, or are trying to streamline your rewards strategy to focus on one or two cards that are most valuable for you.

While it may seem easy to dismiss all credit cards that charge an annual fee, many annual-fee credit cards are well worth the price of the fee. The trick is to figure out the value of a card's rewards and benefits for you. When you know how much the card is worth to you, then it can be easier to decide whether to keep it. (See also: How to Decide if an Annual Fee Credit Card Is Worth It for You)

How to calculate the value of rewards

Credit cards offer rewards in the form of points, miles, or cash back. The value of cash-back rewards are the easiest to calculate, and many cash-back credit card issuers list the total cash-back rewards that you've earned during the last year on your statements or elsewhere in your online account.

But it's more complex to calculate the value of the points or miles you've earned. To do so, you need to look at what you've been able to redeem them for in the past, or what you could redeem them for in the future. For example, you could look at the value of merchandise or gift card options available with a particular rewards program. Typically, these options will return a value of one cent per point, or perhaps less.

In particular, merchandise awards often max out at a value of one cent per point or mile, and that's based on the product's full retail price. Since you can often find products discounted in some way, you should base your valuations on the best price that you can find, rather than the full manufacturer's suggested retail price. In fact, even gift cards are often available to buy at below face value.

Next, you should subtract the value of the rewards you could have earned by paying for that purchase on a rewards card, rather than redeeming your points and miles for it.

When it comes to awards you earn with travel rewards credit cards, the process is somewhat similar, but less exact. Usually the best you can do is to get a ballpark figure for the dollar value of points or miles you've cashed in previously. For instance, if you took an award flight to Hawaii in July, 2017, use Expedia or your favorite travel booking site to look up the price of flights in that same class of service in July, 2018. Do the same for any hotel stays you've used rewards for. If you haven't used any travel points yet, you could estimate their value by looking up the dollar price for a flight or hotel stay you'd like to take in the future using those points. (See also: Which Credit Cards Have the Best Travel Redemption Value?)

Again, the next step is to subtract the value of the credit card rewards you could have earned from your credit card, as well as any frequent flyer miles or hotel points that you could have received by paying for your flight or hotel room with a card instead of points or miles.

Estimating the value of your credit card perks

In addition to reward points or miles, many credit cards offer valuable benefits that can also be worth paying an annual fee for. For instance, some airline credit cards offer checked baggage fee waivers that can be very valuable, especially if you're traveling with family. However, they are only valuable to travelers who wouldn't have received that benefit any other way, such as by earning elite status with the airline.

Other valuable benefits may include airport business lounge access, and elite status with hotel or rental car programs, or credit toward elite status with an airline. Also, credit cards may offer travel insurance and purchase protection policies. If you have actually taken advantage of those perks, then you can add the estimated value of those benefits into your calculation. For instance, you could look up the price of travel insurance you would have had to pay for if you hadn't had the credit card perk.

Finally, many premium travel reward credit cards now come with annual statement credits toward travel reservations, airline fees, and the application fees for Global Entry and TSA Precheck. It's fairly easy to add up the value of these benefits and include them in your calculation. (See also: Travel Perks You Didn't Know Your Credit Card Had)

Figuring out how much the credit card is worth

Once you have an accurate estimate of the value of a card's rewards and benefits, then you can subtract that amount from its annual fee to determine its net benefit to you. However, just because the card's benefits outweigh its annual fee, doesn't mean that the card is worth keeping. You have to judge the card based on its net benefits compared to the value of a similar card that doesn't have an annual fee, as well as other competing cards that do have annual fees.

Finally, you have to look at how you use the card. If you're in the habit of carrying a balance on your card, then you are paying interest charges each month. In that case, your first priority should be to pay off your debt and avoid interest charges. Forget about earning rewards until that's done.

To save money on interest charges while paying off your debt, you can use a card that doesn't offer rewards, which will almost always have a lower interest rate than similar cards that have rewards. You might even want to transfer your balance to a card with a promotional 0% balance transfer APR.

When you take the time to calculate all of the costs and benefits of your reward cards, then you can decide if the card is worth keeping and where it fits into your overall rewards-earning strategy.

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How Professional Award Bookers Can Get You Free Rewards Flights

Jason Steele — Tue, 03 Apr 2018 08:30:13 +0000

Racking up airline points by flying or using travel rewards credit cards is fairly easy, but redeeming them for award flights can be more challenging. It can be hard to find available award seats using the airline's search functions, and it takes time to pore over multiple partner airlines' websites and consider different routing options.

Thankfully, there are services that can help you get the most value out of your reward points and miles. For a fee, you can hire a professional award booker to find and book your award, saving you not only time, but sometimes points worth hundreds of dollars.

The challenges of award booking

When you have reward points or miles with a single airline, at first it might seem like a straightforward process to redeem those miles for an award flight. When in fact, it can be difficult, confusing, and time consuming. First, you might try to use the airline's website. However, these websites may not show most of the airline's partner award flights.

For example, the American Airlines AAdvantage program only allows you to redeem miles online for flights on American and seven of its partners. That leaves over a dozen other airline partners that you can only call to book, including Cathay Pacific, Japan Airlines, LATAM, and Etihad Airways. (See also: How to Get More Value Out of American Airlines Miles)

But even if the airline claims to show all partner awards, its website might not actually display what you are looking for. For example, some airlines will only show itineraries with a certain number of connections. If your itinerary requires you to make more connections than the website will display, then you will be unable to book your award online.

And if you do call the airline to get help with award booking, you will often reach indifferent customer service agents who may have little training and even less incentive to spend time on the phone helping you redeem your points and miles.

This task becomes exponentially more complex when you're trying to redeem reward points in a flexible program that allows transfers to multiple airline partners. For example, one credit card rewards program lets you transfer your points to miles with nine different airline programs, while another has 16 different transfer partners. The Starwood Preferred Guest program has over 30 airline transfer partners. When you consider that each one of these frequent flyer programs can have over a dozen redemption partners, the award travel possibilities are overwhelming.

Finally, booking an award flight can be extremely time consuming. I've been seriously collecting points and miles for more than 10 years, and have redeemed my miles for dozens of award flights for myself, my family, and my friends. I've also researched and written hundreds of articles on credit card rewards and award travel.

And yet when I have to book an award, I can spend hours searching various websites, piecing flights together, and calling the airlines to book them. If it takes someone like me that long to book an award flight, imagine what it's like for the average traveler.

How award booking companies work

I have several friends who offer award booking services, and they have two advantages that I lack. They have access to numerous programs and websites that help to automate airline award searching. Sometimes these programs grant special access to the airline reservation systems and can return far more accurate and comprehensive results than the airlines' consumer facing websites do. Other services simply query multiple airline websites and aggregate the results in a more helpful format. Some of these services are available to the general public, but for a fee, that's rarely worth it for most occasional award travelers.

In addition, professional award bookers have invaluable experience that they can draw on. These are hard-core travel geeks who have memorized airline award charts and flight routes, and instinctively know how to redeem the fewest points for the best flights. Many award bookers even know how to instruct airline customer service representatives to use their systems to book awards that the agents weren't trained to do.

How to work with an award booking company

To get started with an award booking company, you will typically have to fill out a form or have a telephone consultation in which you list the points and miles you have, where you are trying to go, and the dates you are willing to travel. Award booking companies are great, but they are not miracle workers. Therefore, you'll have the best results when you can specify a range of possible dates, and you'll do even better if you offer alternate departure airports or destinations.

To have the award booking service ticket your itinerary, you will also have to give them your frequent flyer numbers and login information. Once you submit your information, you can expect the process to take at least a day or two before you are presented with proposed itineraries for your approval.

Most award booking companies charge clients only when they are able to find an acceptable itinerary. The prices vary but you can usually expect to pay between $100 and $200 per person. For example, Gary Leff runs Book Your Award and charges $185 per person. He got started in the business in 2009 after getting many reader questions about award booking on his travel blog, View From The Wing. His service has since been written about in Condé Nast Traveler, The Wall Street Journal, The New York Times, USA Today, and many other publications.

Leff specializes in helping people secure premium cabin international award seats, which are often the most valuable use of your points and miles. "Digging into the minutiae of airline partners and frequent flyer program rules isn't for everyone," Leff says. "And you can't always just enter where you're starting from and where you're going and get all of the options for your trip from your frequent flyer program's website."

Ari Charlestein runs Award Magic, which charges $179 per person for one-way and round-trip awards, and $279 per person for multi-destination and round-the-world awards. When Charlestein was in college, he met someone who flew to Australia each year in business class with miles. He recalls thinking, You're telling me these miles that my parents wasted to go skiing in Colorado, we could have used to fly to Australia in business class? When he told his friends and family that he could help them book award flights, and they told their friends, he started doing this on the side, and later went full-time.

Typically, his clients reach out to him through his website and schedule a phone call. He then goes through every possible routing and airline, looking for the best combination. For example, he could help you use credit card points to transfer to Virgin Atlantic to redeem for a flight operated by Japan's ANA airline.

Should you use an award booking company?

For most travelers, it makes sense to at least try to book an award yourself, especially if it's a simple itinerary. There are lots of tips and tools to help you along the way. (See also: 5 Tips to Making the Most of Your Reward Miles)

But once you've tried and failed to find award space at the lowest mileage levels, and you are feeling overwhelmed, then it might be the time to seek professional help. This is especially true if you're looking for an international flight in a premium cabin, or if you'd like to make multiple stops on your trip. By paying an award booking service a few hundred dollars, you can save the time and aggravation necessary to book an award trip that might be worth thousands.

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This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Things to Consider Before Making a Big Purchase for Rewards Points

Jason Steele — Thu, 29 Mar 2018 09:30:21 +0000

It can be thrilling to chase credit card rewards. When you use a travel rewards credit card, you earn points and miles that you can redeem for a free trip. And when you use cash back cards, you're essentially earning a nice little refund on your purchases.

Making big purchases on your credit card is one way to rack up points quickly. A home remodel or wedding can cost tens of thousands of dollars, and as long as you're not spending extra just to rack up rewards, using a rewards credit card can be a way to defray those large costs.

This strategy can be more complex than you think, however. Here are six things to think about before making a large purchase for rewards.

1. Will the merchant accept credit cards?

Before you can even consider using your credit card to make a large purchase, you have to find out if the store or vendor will even accept them. Every time a merchant accepts a credit card, it must pay the processor a merchant fee of about 2% to 3% of the transaction. Understandably, this makes many companies hesitant to accept credit cards, especially for their largest sales.

For example, home improvement contractors often won't accept credit cards because they know that the merchant fees will directly impact their bottom line. You may, however, be able to work out a deal where you can, for instance, buy some of the project supplies with your credit card from a home improvement store. It never hurts to ask. (See also: Best Credit Cards for a Home Renovation)

Some car dealers might also have policies preventing you from using your credit card to pay for a vehicle, while others may allow you to use your credit card for a certain percentage of the transaction and use cash or other financing for the rest of the sale. (See also: Should You Buy a Car With a Credit Card?)

Finally, double check that the merchant is part of your rewards card's payment network. For example, some merchants don't accept American Express.

2. Will the company impose a surcharge to use your credit card?

Some companies are happy to accept credit cards for large transactions, but they will impose a surcharge that will cost you more than any rewards that you might earn. For example, it's not uncommon for companies to impose a 3% to 5% surcharge on credit card transactions, and bury that information in the fine print of the agreement. And conveniently for the companies that do this, their surcharges are often in excess of their credit card processing fees, allowing them to make a profit.

Thankfully, there are 10 states where it's actually illegal to add a surcharge to a credit card transaction. If you are doing business in California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, or Texas, and a merchant is adding a surcharge to credit card transactions, you might want to inform them that the practice is illegal. If you are polite about it, the merchant may reconsider its surcharge and let you pay for your purchase with a credit card at no additional cost. Just be aware that the government and publicly regulated utilities are often exempt from the laws prohibiting credit card surcharges.

3. Does the company offer a cash discount?

Most states allow merchants to offer a cash discount on the advertised price instead of imposing a credit card surcharge. And even if a cash discount is not expressly advertised, you might be able to negotiate one before using your credit card, especially if it's for a large purchase. If the value of your discount is greater than the rewards you could earn, then it can be better to use cash.

4. Will the card issuer approve the charge?

Once you've figured out that the merchant will accept your credit card, you should double check that your card issuer will authorize the charge. Not only do you need to have a large enough line of available credit, but even if you do, a card issuer might flag an unusually large purchase as potentially fraudulent. For these reasons, it's a good idea to inform your card issuer in advance of a large charge, so they can make a note in their systems to expect it.

And if you would like to make a purchase in excess of your current credit limit, you may be able to do so if you call your card issuer. It may grant you a credit limit increase, or, if you've got more than one credit card from that issuer, it may be willing to move a portion of your credit limit from one card to another.

5. Will you be able to avoid interest by paying your balance in full?

Whether your purchase is large or small, it only makes sense to chase rewards when you can avoid interest charges by paying your entire statement balance in full. When you're incurring interest on your debts, then your first priority should be to save money while paying it off.

Rewards cards tend to impose higher interest rates than cards that don't offer rewards. So if you know you'll need to run a balance to pay off your large purchase, your best strategy is to use a card with a low interest rate or a card with 0% APR on new purchases for a promotional period. These cards tend to offer skimpier rewards, if any, but the interest you'll save should more than make up for the lack of rewards. Forget about rewards until you're in a place to pay off your balance in full every month. (See also: Fastest Way to Pay Off $10,000 in Credit Card Debt)

Other options are to delay the purchase until you have saved up enough money to pay for it without incurring debt, or seek other low-interest forms of finance.

6. How will this purchase affect your credit?

A large portion of your credit score is determined by your credit utilization ratio — the amount of debt you have compared to how much credit you have available. Even when you pay off your statement balance in full, that balance is reported to the major consumer credit bureaus as debt for the month, and that can have a temporary impact on your credit score.

If you have an excellent credit score and a large amount of available credit, then you shouldn't expect much of an impact. But if you have a limited amount of credit, then consuming it with a large purchase could cause your credit score to drop dramatically. One way to avoid this is to make a large payment before your statement period ends. Doing this will reduce your statement balance and its impact on your credit score.

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This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Ease into Credit Card Rewards After Debt Repayment

Holly Johnson — Fri, 23 Mar 2018 09:30:18 +0000

Imagine you've just paid off a boatload of debt after months, or years, of struggle. Now that you're finally debt-free, you have extra cash to spend each month and your credit score is higher than ever.

With that in mind, you may think you're ready to use credit cards again. Thanks to the array of travel rewards and cash-back offers available, you may even be itching to start earning rewards for each dollar you spend. And why not? You're debt-free and have a much better grasp on your spending now. Plus, paying off debt has helped you develop the discipline to avoid letting your spending get out of hand.

While it's great to feel confident, many financial advisers say you should probably still err on the side of caution to avoid any more credit mishaps. It's true you may be ready for credit cards, but there are still precautions you'll want to take right away, they say.

As you ease back into credit card use, here are some steps you should take.

Review your spending frequently — especially at first

Wealth adviser and certified financial planner Brian Behl of Bronfman Rothschild says one of the best steps you can take as you get started is reviewing your spending often. "Every few days or at least weekly" at a minimum is what Behl suggests, although you can tailor this advice to your lifestyle and needs.

By reviewing your spending at least once a week, you can check to see if using a credit card has brought on any of your old habits. For example, you can make sure you're not using credit as an excuse to splurge, and that everything you've purchased can be paid off immediately when your credit card bill becomes due.

Make frequent payments

Behl also suggests making more than one payment each month. If you have access to your account online, you can usually make payments from your checking account instantly without sending a check. This allows you to keep your balance from accumulating and lets you maintain a low credit utilization ratio.

By making frequent payments, Behl says you can stay on top of your spending, take advantage of credit card rewards, and avoid credit card debt. (See also: 5 Simple Ways to Never Make a Late Credit Card Payment)

Use credit cards as part of a monthly spending plan

Financial adviser Matt Adams of MoneyMethods.com suggests you use credit cards as part of a monthly spending plan if you want to make the most of rewards without falling back into debt. Yes, this means dealing with the dreaded "b-word" (budget), but it doesn't have to be bad news.

Try writing out a budget for the month, then make sure you never charge more on that card than you would if you were paying in cash, says Adams. Also, "make certain it is never an amount that can't be paid off each month. If you don't keep close track of it, that credit card balance can get overwhelming very quickly." (See also: How to Budget When You're No Longer Broke)

Adams says that, even though he is a financial adviser, he still tracks his spending and compares it to his budget at least once a week. This way, he can earn travel rewards points good for airfare or hotels while making sure his spending isn't getting out of hand.

"If you are diligent and pay close attention to it, the rewards may very well be worth the trouble," he says. After all, who doesn't love a free vacation?

Use credit for fixed bills only

Shane Sullivan, a certified financial planner and founder of the blog Wealth Over 50, offers this strategy for people who want to ease into credit use slowly: Try paying only recurring bills with credit and use cash or debit for everything else.

Recurring bills include any bills you pay monthly — for example, utility bills, cable subscriptions, day care, and your gym membership. Very often, you can even set these bills up to be charged to your card automatically. From there, you can set up automatic payments so your credit card bills are paid once a month from your checking account.

Sullivan says he uses this strategy to maximize rewards while avoiding debt problems in his home. "For example, our day care is $1,000 per month and it is automatically charged to our credit card where we earn points used to take a family vacation," he says. "However, I also set up a monthly bill pay to automatically send $1,000 per month to pay off the card."

For this strategy to work, Sullivan says you need to make sure you don't carry your credit card around in your wallet. If you want to benefit from your recurring expenses without worrying about getting into trouble, then you have to make sure you're not using your card for regular spending.

"Stick it in a drawer, give it to your spouse, or cut it up," he says. "If you carry the card, you'll use the card — so don't carry it."

Hold off on rewards if you're not certain

Finally, if all of this sounds overwhelming or the mere thought of using credit has you nervous, don't forget that you don't have to jump in.

Jon Luskin, a certified financial planner based in San Diego, says that, for many people, the risk of getting back into debt is simply too great. Sure, you may be able to earn 2% back on your purchases, but what happens if you wind up paying 24% APR on those purchases for years?

Sign-up bonuses can make the initial rewards sweeter, but Luskin says it's still a terrible deal when you're stuck paying credit card interest for an unknown period of time.

So pursue credit card rewards if you're determined to do it responsibly, but don't forget there's nothing wrong with skipping credit altogether. The rewards may be tempting, but the risks are downright scary.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Rack Up Extra Rewards Points by Buying Gift Cards

Jason Steele — Thu, 01 Mar 2018 09:30:09 +0000

When you're out of ideas for buying a present, a gift card can be an easy way out. Not only are gift cards available for use at most major retailers, but they're easy to find. You can buy gift cards while doing your other shopping at supermarkets, office supply stores, and drugstores. And if you're trying to maximize the amount of credit card rewards you earn, buying gift cards can be an important tool in your arsenal.

Buying gift cards at the right store

Since many different stores sell gift cards, buying a gift card can be an opportunity to earn additional rewards for your purchase. For example, some credit cards offer bonus rewards at grocery stores, which typically have large racks full of gift cards. Also, there are small-business credit cards that offer as many as five points per dollar spent at office supply stores, which can have a vast selection of gift cards.

In fact, some credit card rewards enthusiasts will often buy gift cards for their own personal consumption, in order to earn bonus rewards for their purchases. For example, if you have a large home improvement project, you might choose to purchase Home Depot gift cards at an office supply store using a small-business credit card that offers you 5x points there.

Purchasing gift cards to meet a minimum spending requirement

Many credit cards offer extremely valuable welcome bonuses of points, miles, or cash back to new applicants. However, these offers usually require you to spend a specific amount, often several thousand dollars, within a limited time period — typically three months. If you are unable to meet that requirement through your normal spending, you could consider purchasing gift cards that you can use later. Of course, you shouldn't consider doing so unless you are able to avoid interest charges by paying off your entire statement balance in full.

Retail versus general purpose gift cards

When purchasing gift cards, you have two options. The first is to purchase a gift card for a specific retailer. These are sometimes called "closed loop cards," because you can only use them at that retailer. Closed loop cards will not carry any additional fees, so a $100 gift card will only cost $100.00. On the other hand, these cards can only be used for purchases at a single store or restaurant.

The other option is to purchase a general purpose gift card that allows you to make purchases at any retailer that participates in a payment network such as Visa, MasterCard, or American Express. These are known as "open loop gift cards." While they offer additional flexibility, you'll have to pay fees to activate and use them, which can be as high as $8.95 per card. Furthermore, there are some retailers that won't allow you to purchase generic gift cards with your credit card.

Earning additional rewards from your gift card purchases

Beyond the rewards offered by your credit card issuer, it's also possible to earn additional rewards directly from a store. For example, some supermarkets will give you fuel points for all purchases including gift cards. These points will allow you to save money when purchasing gas from their fuel centers. And wholesale stores often give their members some amount of cash back for their annual purchases, which can include gift cards. (See also: Best Credit Cards to Use at Costco)

Gift card reselling

Some hobbyists have found a way to earn credit card rewards by buying discounted gift cards and then reselling them. With these transactions, the buyer might take a small monetary loss, break even, or even make a very small profit, all while earning enough points, miles, or cash back from their credit cards to justify the purchase.

However, this isn't an easy way to generate reward points or to earn money. Anyone who gets into this hobby should be extremely organized with their finances, and should never incur credit card debt in the process. The debt will negate any small value you gain from the rewards you earn. Also, there's no guarantee you can offload the gift cards, or that selling fees won't eat up any of those gains, either.

Gift cards can make for good gifts, but there are a lot of other uses for them. By buying the right gift cards from the right retailer, you can possibly earn valuable rewards for your purchases.

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This article is from Jason Steele of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: