Tuesday, February 10, 2015

Affordable Travel: Reward Credit Cards

While I am waiting for spring to arrive, I often spend time planning travel for the year. I am sharing how I keep our travels more affordable. By using these tips, we have been able to do a significant amount of travel. Grab a drink and try to take this in. If you missed my first post you can read it here. As I stated in that post, we use reward credit cards. Financial guru Dave Ramsey advises folks to avoid all credit including credit cards, especially reward cards because he doesn’t think you can ever reap the rewards. I could not disagree more on this topic. Let me share how I use mine.

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1. We charge everything that we can to our credit cards in order to accumulate miles. We pay the balance in full every month. We have never paid an interest fee for our credit card. This means that you can’t charge stuff that you can’t pay for. If you are not disciplined enough to do this then you should not use a credit card.

2. So what do I put on the credit card? Gasoline for our cars, groceries, all household purchases, restaurant purchases, auto insurance, homeowners insurance, utilities, telephone, cable, clothing purchases, auto service and repairs, medical care, property taxes, and even college tuition! Yes, college tuition! I just put it on the card, then moved the money from savings to pay for the tuition.

3. If you are nervous about paying in full every month you can do what my kids do. When they make a purchase, they go home and make a payment on their credit card right that minute. That way they don’t run up a bill that they can’t pay.

4. Our church has online giving available but we do not put our tithe on the credit card because the church would have to pay a 3% fee. This is one of the few exceptions we have for using our card.

 5. We use two different cards. Both have an annual fee but we feel that the benefits are more valuable than the fee.

Bruges Clock Tower from the canal

So, which cards do I use?

We use the American Express Platinum Delta Skymiles Card. We earn one mile per dollar with double miles on Delta purchases. The annual fee is $195. Yes, that is a lot but with that fee we get a complimentary companion ticket each year. That equates to one ticket for $195. There are very few tickets that can be purchased for $195 so that makes it a good deal alone if you take at least one flight per year. In order to use the companion ticket, you must purchase a ticket using your credit card so you could purchase a ticket for someone else and use the companion ticket with that purchase but you could not just give the certificate to someone else to use. Other benefits of the card include priority boarding, one free checked bag for up to 4 people in your party on every flight, 20% discount on in-flight purchases in the form of statement credit, no foreign transaction fees, reduced fees for Sky Club entry at airports, 10,000 bonus miles for $25,000 in purchases in a single year, and an additional 10,000 bonus miles for $50,000 in purchases in a single year.

Another favorite benefit of the American Express card is the consumer protection. Purchases made on the card include an additional 1 year of warranty protection and purchases are covered for accidental damage or theft for up to 90 days from purchase. We have used this feature twice. We purchased a new camera for our daughter for her birthday and  it fell out of her pocket onto the street and got broken a month later. American Express refunded the purchase price of the camera so that we could replace it.  Also, I once purchased a large floor length mirror and broke it putting it into the car! I was still in the parking lot of Homegoods! I simply filed a claim with American Express and received a credit for that purchase!  This is a great benefit!

Another benefit of the Delta American Express is the ability of “paying with miles” for Delta purchases. I will talk more about this in another post but it is an option of using miles for part of the purchase price and paying for the remainder when a reward ticket is not available.

If you go to the AmEx website to research the benefits of each card, you probably will not find the complimentary companion ticket listed, at least I could not find it, nor does it state anywhere about the option of paying with miles but I called and verified that the companion ticket is still a benefit and I recently used the pay with miles option.

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We also have another card because we have found that American Express is not accepted everywhere. Our other card is the Capital One Venture Card. Our annual fee is $59 and we receive 2 miles per dollar spent. We use it for all of our purchases where AmEx is not accepted. The best benefit of this card is that we are not tied to one airline. You can make any travel purchase on this credit card and then use the “purchase eraser” redeeming miles for statement credit. The reward rate is 100 miles per dollar which is 1%. However because we get 2 miles per dollar spent that translates to 50 miles or dollars spent per 1 dollar credit which makes it 2% return. Stay with me here while we do the math. In order for this card to pay for itself, you would need to acquire 5900 miles which would require $2950 in purchases. I’ll talk more about how I use these miles in another post.

My next post will give you some specifics of how I have redeemed these cards for travel. These tips only refer to these two specific cards. About a year ago my husband was trying to use his business AmEx card to redeem points for travel and we were appalled at the experience. The “points” did not equate to one point per dollar and the redemption rate was unbelievably high. What should have been a ticket for 120,000 miles required 274,000 points! While it was still a perk for the business the rate of return was a fraction of what it should have been. I would not recommend that card.

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My daughter and I used our Skymiles for our tickets to Europe last year. You can read about that trip by clicking here,here,here, and here.

If I have convinced you that you need the Delta Platinum American Express card I would love to refer you. I would get 5000 miles for the referral if you are approved and accept the card. You would receive 5000 bonus miles upon acceptance and an additional 35,000 bonus miles if you make $1000 in purchases in the first three months. You will also receive $100 in statement credit after a Delta purchase within the first 3 months. That’s one free ticket quickly!! In order for me to refer you, you must email me at phaney@lydiashouse.com so that I can send the “official” email offer.

Don’t forget to send me a postcard!

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I’ll be sharing with Wow Us Wednesday at Savvy Southern Style and to Grace at Home at Imparting Grace.



Stacey said...

Pat, I'm going to read and reread all of this and discuss with my husband. We used to get enough miles to travel everywhere for free and usually free hotels too. Now it never seems to work out that way so we need to adjust our plan. I've never used a credit card for everything because it makes me nervous to not know what the end number is and we don't do credit card balances. Thank you for all of this information.

Vel Criste said...

Very interesting and informative Pat! We have the blue Amex card but never thought of getting the Delta one. I was thinking of the Capital one venture card since there is no transaction fee abroad if you use this right?