|by Jason Steele|
Years ago, I had a MBNA card for the Aircraft Owners and Pilot’s Association. I think it was my first reward card. I couldn’t pass up the deal at the time, 5% cash back on all my aviation related purchases. At the time, I owned my own airplane and 5% back was huge. Imagine filling up a 50 gallon gas tank with fuel that costs about $2 more than automotive premium. It is not uncommon for an airplane fill up to cost hundreds of dollars.
AARP Does Better
I am no longer an airplane owner, and that deal is no longer available, but there is a new deal from AARP that is even better. This AARP card from Chase offers 5% cash back for 6 months, and 0% interest for 12 months. Now I am always skeptical about 0% interest offers. o% is the only interest rate I ever intend to pay on my credit card, but somehow there is always some gotcha fine print. In the past, that was the fact that subsequent purchases would continue to accrue interest until the entire balance was paid off. So if you purchased a sandwich after your introductory period, that sandwich and every subsequent purchase would continue to earn interest until everything was paid off, as banks were free to apply payments to the lowest interest balances first. After the CARD Act, they are no longer allowed to do this. That said, I am sure they have some other gotcha clause in there. Even under the best case scenario, you would still have all of those interest free purchases on your credit report as debt. If I were eligible for this offer, I would probably just skip the interest free part.
On the other hand, you can’t beat 5% cash back. There are some cards offering 5% on some categories of purchases occasionally, but I don’t know of another card offering 5% across the board. Heck, it is hard to earn 5% back on your money by investing it, and anyone who can earn that back on their spending is doing real well.
After The Promotion
After the initial 6 months, you would still get a good 3% cash back on travel expenses and a marginal 1% back on other purchases. So this is a decent card, but the initial offer is fantastic.
Who Can And Should Do This
First, you have to be an AARP member to apply. Membership is open to those 50 and above and costs only $16 a year. Members are also eligible for all sorts of other discounts. The card itself has no annual fee either. The more you plan on spending in the next 6 months, the better this deal is for you. It is not hard to imagine a business owner spending $50,000 on whatever card they want, earning $2,500 in cash back. This reward will far exceed the value of 50,000 frequent flier points. It’s also easy to imagine all sorts of schemes were someone is able to purchase gift cards during the promotional period, such as stored value cards. Keep in mind that Chase is one of the only banks that has been known to close the accounts of people who order coins from the Mint.
Scheming aside, I would imagine that I might purchase a host of gift cards for myself during the promotional period for retailers that I know I will visit in the future. This would include gas, grocery, and home improvement stores that I frequent.
So if you are or over, this is probably the best introductory cash back offer you are likely to see for a while. I am sure they offer won’t stick around until I turn 50, some time in the next decade.