Credit Card Tips and Strategies, Issue #009 -- What makes a good frequent flyer credit card?

Credit Card Tips and Strategies Newsletter 009
Date : 30th March 2006

Table of Contents

1. What makes a good frequent flyer credit card?
2. New GM Flex Card
3. Chase Business Rebate Card
4. Skypoints Credit Card
5. Chase Visa Platinum Business Card
6. Circuit City Credit Card
7. Sears Credit Card Report
8. Home Depot Credit Card
9. Best Buy Credit Card



I have added quite a few reviews of retail store credit card this month to the website and posted some highlights on our blog. We'll go through them briefly in this newsletter. But first, let's start with our first article.

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What makes a good frequent flyer credit card?
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What makes a good frequent flyer credit card? Now let's be clear upfront. If you are a frequent flyer of a particular airline, this article will probably not influence you in your choice of your airline credit card. But it is still important to know what features good frequent flyer credit cards offer and how to take advantage of them because issuers normally have a few versions of their airline credit cards (classic, platinum or signature versions).

Are you allowed to earn double miles?

This is very important. Most frequent flyer credit cards charge an annual fee which ranges anywhere from $25.00 to $85.00 on average. Being able to earn double miles when you make a ticket purchase with your favourite airline will certainly help you earn faster miles and hence a faster free ticket. Most frequent flyer credit cards have versions (normally Platinum or Signature cards) that allows you to earn double miles. Some do not.

Annual Fees

Most frequent flyer credit cards charge an annual fee for the card. In fact, they are probably the most profitable type of credit cards for the issuer. The older legacy carrier airlines tend to have higher annual fees for their affinity credit cards. It is not uncommon for them to charge a $75.00 fee for a card that allows cardholders to earn "double miles". However, the newer carriers tend to have lower annual fees on their frequent flyer credit cards. For example, the JetBlue has an annual fee of $45.00, yet allows you to earn double miles. The Air mexicana for example, also has an annual fee of $45.00. There is not much one can do about the annual fee.

Bonus Miles

This is a one-time benefit that most frequent flyer credit cards offer. You essentially get some free bonus miles either when you are approved of the card, or when after you make your first purchase. Some cards give a lot of bonus miles (as high as 20,000 miles), which is just about 5,000 miles short of an airline ticket.

Companion Tickets

Some frequently flyer credit cards give a free companion ticket or a companion discount certificate if you make an airline ticket purchase within a specified price range. This is, in my opinion, one of the best deals you can get with an airline credit card.

Anniversary Bonuses

These are bonuses that the card gives you each year you renew your card. In fact, it is these bonuses that make airline credit cards good value. Not all frequent flyer credit cards have anniversary bonuses. But let's take a look at some of these bonuses.

Free Companion Tickets - we mentioned earlier that some airline credit cards give a free companion ticket if you buy a ticket within a certain price range (no discount tickets). There are a couple of frequent flyer credit cards that give a free companion ticket every year. This is of very good value if you travel frequently with a companion. In fact, the value of this feature often more than offsets the annual fee you pay.

Free Lounge Passes - Some cards give you a one or two lounge passes every year you renew your credit card. This will come in quite handy for the frequent flyer.

To sum up - A good frequent flyer credit card pays double miles when you make a purchases with the airline, gives you a lot of bonus miles when you get approved and gives you a free companion tickets or ertificates every year. Make sure your frequent flyer credit card has these features to get the best value out of them.

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GM Flex Card
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General Motors has introduced a new GM Flex Card that is slightly different from their original GM card. The original GM paid pays a very generous 5% rebates on every dollar you spend on the card. These rebates can only be used for purchases of eligible NEW GM vehicles. The problem with this card is that some cardholders change their minds and decide to buy a non-GM vehicle. Then the rebates that have been earned become redundant.

The GM Flex Card solves this problem because cardholders are given a variety of choices to redeem the "rebates" you earn with this card. If you decided to redeem for a eligible GM vehicle, the one point you earn for every dollar you spend becomes 3 points and you effectively have earned 3% rebates if you use them for a NEW GM purchase. If you decide that you would rather buy a non-GM vehicle, your points or rebates are still valid. But you only get to redeem them at 1%. If you decide not to use your rebates for any vehicle purchase, you can exchange them for cash at 1%.

If you are 100% sure that you want buy a new GM vehicle sometime in the future and want to save some money, you should get the original GM Card, which pays 5% rebates on every dollar of purchase you make on the card. If you are afraid you may change your mind, then perhaps the GM Flex Card is the better alternative.

You can read our review of the GM Flex Card here :

GM Flex Card Review

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Chase Business Rebate Card
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We are offering the Chase Business Rebate Card on our website. This is a cash back business credit card from Chase. You earn 3% rebates for every dollar you spend on purchases at restaurants, office supply stores, gas stations, building supply stores, home improvement stores and hardware stores. You earn 1% rebates on "other purchases". There is no limit to the amount of rebates you can earn, though you can only earn up to 4,000 points in rebates each month for the 3% items. Once you exceed this limit, you only earn the usual 1% rebate.

Like most business credit cards, there is no annual fee and you get a nice 0% introductory apr on both purchases and balance transfers for 12 months.

This card is similar to the Advanta Platinum Business Card with Rewards (the cash back version), which allows you to earn 5% rebates when you make purchases on gasoline and diesal purchases, computers, computer supplies, electronics and office supplies, utilities and telecommunications. Hence, in this respect, the Advanta pays a better rebates on regular "business purchases". However, the Advanta Card only allows you to earn up to $300 in annual rebates. For the small business owner who will exceed this rebate quota if they have an Advanta Platinum Business card, getting the Chase Business Rebate card would be a good alternative or a good second card to have.

You can read our review of the Chase Business Rebate Card here :

Chase Business Rebate Card Review

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Chase Visa Platinum Business Card
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We are now also offering the Chase Visa Platinum Business Card on our website. This is a basic no-frills business credit card with platinum benefits. There is no annual fee or additional card fee. New cardholders get a 0% apr on both purchases and balance transfers for 12 months. The apr varies, the lowest is prime rate plus 3.99%. Small business owners looking for a no-frills business credit card may want to check out this card.

You can read our review of the Chase Visa Platinum Business Card here :

Chase Visa Platinum Business Card Review

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Circuit City Credit Card
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I have been writing reviews on quite a number of "retail Store credit cards" this month. I am generally not in favour of most retail store cards because most do not allow you to earn points or extra points when you use their cards at store outlets.

The Circuit City credit card is one exception. You earn 5 points for every dollar you spend at Circuit City Stores and circuitcity.com. These points can be redeemed for Circuit City gift certificates.

You can read our review of the Circuit City credit card here :

Circuit City Credit Card Review.

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Sears Credit Card
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The Sears Credit card is one of the more interesting retail store credit card. It is issued by Citibank who bought over Sears credit card portfolio a while back. This card actually has a "proper reward program", which features travel and shopping rewards that you find in a regular credit card reward program. As part of the Sears Choice Reward program, you can obviously exchange points for Sear gift certificates. However, unlike the Circuit City credit card, you earn one point for every dollar you spend on all purchases. You do not earn "extra points" for using your card at Sears. This led me to question if you are better off getting a reward credit card which also allows you to exchange points for Sears gift certificate. I looked through the major credit card programs and came up with a card that I thought a Sears credit card holder may want to consider as an alternative.

You can read our report on the Sears Credit Card here :

Report on Sears Credit Card

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Home Depot Credit Card
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The main attraction of getting a home depot credit card is that when you make any purchase that is $299 and above, you are charged 0% apr and you do not have to make any interest payments for six months. However, thereafter, your apr is 21%! (more like a default apr rate!). This card can only be used at Home Depot stores.

In my review, I suggest a couple of alternatives for people who would like to get a reward credit card that allows you to exchange points for Home Depot gift certificates.

You can read our review of the Home Depot Credit Card here :

Home Depot Credit Card Review ========================================
Best Buy Credit Card
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This is a true "Store credit card". You cannot use it anywhere else except at Best Buy stores or BestBuy.com. The key attraction of this card is that you get 0% apr financing for 90 days (or longer for some special items). However, you do not earn reward points for using the card at Best Buy stores.

You can read our review of the Best Buy Credit Card here :

Best Buy Credit Card Review.







Nick Lian
http://www.askmrcreditcard.com"