I got the following question from a reader :

What is the difference between the Amex Blue and the Blue Sky? I am thinking of getting a card to use for airline rewards. My understanding is that the Blue card has membership rewards and that it is a great program. I also know that you can use points for other things other than travel rewards for the Blue. Which is the better card for me if I want to use it for travel rewards?

Answer : There is a major difference between the two cards. So let’s take a look at both of them.

Firstly, the Amex Blue card is actually not geared towards travel rewards. The traditional Amex charge cards (like the Green, Gold and Platinum Cards) is linked to the Membership Rewards program, which has 20 airline partners at present. For these cards, you earn one point for every dollar you spend on the card. You can transfer one point into one airmile for most airline partners. The amex charge cards all have an annual fee.

The Blue Card is based on a scaled down version of the Membership Rewards program, which is the Membership Rewards Express Program. This program is exactly identical to the Membership Rewards program except the airline rewards program. You cannot transfer points to airline partners. But instead, you can use points to buy airline tickets and you can pay an airline ticket with part points and the rest with your card if you do not have enough points. In a way, this functions more like a regular credit card reward program.

The Blue Sky is specially targeted at people who just want to use points for airline travel. You simply have to book your travel expenses on the card and if it qualifies, then you will rebates from those expenditure. These rebates will then appear in your next statement as a credit. The advantages of the Blue Sky is that it is really hassle free - no blackout dates or any of the other restrictions that are common in other programs.

So my advice to this question is if you want to use the card solely for travel, the Blue Sky is probably the better card. If you intend to use reward points for other rewards, the the Blue Card will probably be the better bet.

I get lots of this question from readers.

A credit card give you credit. That means that you do not have to pay your bills fully and you can carry a balance. You will be charged an interest on the balance that you carry. The rate that you will be charged is the apr (annual percentage rate), which is stated in the terms and conditions of your card. This is one of the ways that credit card companies make money.

A charge card on the other hand, requires that you pay your bills in full. That means that you cannot carry a balance. The most famous charge card is the American Express Rewards Gold Card, along with the Diners Club Charge Card.

Most charge cards have an annual fee. The reason is that these cards cannot make money from cardholders carrying a balance (they also make money from merchants whenever a transaction takes place).

Should you get a charge card or credit card. Well, if you need credit and carry a balance occasionally, getting a credit card makes sense as most do not have annual fees. Though a charge card has annual fees and does not allow you to carry a balance, they have very good reward programs. For example, the Membership Rewards from American Express and Diners Club Rewards are perhaps the best reward programs around.

FAQ : I am looking for a low interest rate credit card. How do I look for one and what should I be looking out for?

Answer : This is a common question I get from my readers, so I shall attempt to write a few notes on this. Firstly, before you attempt to compare credit card rates, check your own credit scores. Someone with a 750 score will get a much lower rate than someone with a 600 score. From that perspective, the rate that is advertised by credit cards is less relevant because you may get a different rate based on your own score.

Secondly, if you carry a balance every month, you should prefereably get a credit card that uses the average daily balance method to calculate monthly balance. Most credit card issuers include new purchases within the billing cycle in their calculations. You should avoid cards which use the 2-cycle average daily balance method if your balance fluctuates or if you plan to gradually reduce your monthly balance and be credit card debt free. This is because your monthly balance will be the average of the two billing cycles and you have higher balances than if you had used a card that does not use the 2-cycle method. For a more detailed look at this, you can read my previous article on The effects of the 2-cycle average daily balance method on your monthly balances.

The next factor to consider is whether your credit card uses the daily periodic rate or monthly periodic rate. This is often an overlooked factor. Assuming two cards with the same apr, the card that uses the monthly periodic rate will have a lower effective interest rate than the other card that uses the daily periodic rate. This is due to the compounding effect. Check out the article I wrote on How to calculate your effective interest rate on your credit card.

The next thing to look out for is the grace period. Previously, most credit card issuers gave you a grace period of 25 days. The grace is the number of days you are given before an interest charge is imposed if you do not carry a balance. These days most credit cards have a 20 days grace period although there are still cards which give you a 25 days grace period.

The last thing to consider is whether a credit card has any annual fee. While most credit cards do not have annual fee, some cards like the Pulaski Bank Credit Card have very low interest rates, 25 days of grace period, uses the monthy periodic rate, but has an annual fee. Other cards like the Bank of America Rewards American Express Card has a very low interest rate, no annual fee, 25 days of grace period but uses the daily periodic rate.

To sum up, if you are looking for a low apr credit card,

FAQ : I presently have an AMX gold card which I have used since 1972. My question is I want to exchange the gold card membership for a new Blue card. Can I transfer my earned miles to the new card and what procure if any do I need to begin. I also have an Optima card. I am retired and have little need for the gold card. Thank YouM

Answer : Yes you can transfer your membership reward points from your Gold Card to a new Blue Card.

You have to bear in mind one difference between the Membership Rewards in your Gold Card and the Membership Rewards Options program in the Blue Card. While you can transfer one point into one airline miles in the regular Membership Program, you need two points to get one mile in the Blues’ Membership Rewards Option program. Hence, I would suggest that you transfer any points that you want to use for air miles before making your transfer from the Gold to the Blue Card.

Other than the airline miles, the rest of the reward program is identical for the Gold and Blue card. The Blue card also has no annual fee so you will save some money on that. Essentially, the Blue Card is a no annual fee credit card version of the Gold charge card with a slightly watered down version in the airline rewards.

Mr Credit Card