Tim Leffel's Cheapest Destinations

An Airline Credit Card?

The other day I did an interview with a writer from Men’s Health about the best credit card for different kinds of guys. Obviously if you are someone who doesn’t travel much, it doesn’t make much sense to get a travel-related credit card. You’re better off getting one that ties into what you do more so you can get the extra points: one from Amazon or B&N if you’re a book lover, from Best Buy if you’re a gadget freak, or from a gas company if you have a long commute every day. Or just forget all that and use a card that gives you a cash rebate—you can spend that on anything. One of mine puts 1% into my tyke’s college fund: painless savings and it will compound over many years.

Whatever you do, pull out a calculator. If a card costs $85 a year and you’re only charging $4,000 a year on it, you’re losing money. You generally earn 1% on these things (or one mile per dollar–worth about a penny) unless you are buying from a certain merchant, whereby it might go up to 2% to 5%. Even then, you’ve got to spend a lot to make it worthwhile unless there is no annual fee. And if you pay any interest along the way, you’ve almost surely gone in the hole. If you carry a balance, you’re better off just getting the one with the lowest interest rate.

To see what your options are, go to a site like Credit Card Search Engine, where you can compare terms and features. They even have all the airline mileage cards grouped together so you can see them side by side. (And you’ll soon see that the best strategy for many of them is to get the card, use it for a year, then drop it.)

One last thought. Most credit cards charge you a 3% fee when you charge things in a foreign country. This is a pure commission on their part since they are already making money on the exchange rate. Amex charges 2%, Capital One does not charge anything. So if you are going to continually charge a lot of money overseas, keep this in mind. You don’t see it on your bill usually–they just bury it in the exchange rate you are charged. Read the fine print…

Related posts:

1. Credit Card Companies Keep Stealing From Travelers
2. Airline Fees in Europe
3. Good Travel Info From Elsewhere