My friend Kevin from Credit Shout just came back from a one week vacation at the Jersey shore. Kevin, like me also reviews credit cards. Since I’m taking it easy this weekend, I’ve asked Kevin to write a guest post for me. Here is his short take on cards that can save you some money on the beach

Millions of people who live by the coast make the trek down to the beach for 4th of July weekend. Although the fourth is a time to celebrate, this year your pocket may feel a bit lighter and you may be looking to cut down on costs for your vacation.

Although I’ll be celebrating on the 4th at home, I recently got home from a trip down to the beach and found a few ways simple ways to cut down the costs of my trip using by taking advantage of the benefits of certain credit cards.

You can actually start saving money on your vacation this year before you even leave the gas station. If your driving down to the beach, when you go to fill up be sure to use a gas credit card that gives you cash back on all of your fuel purchases. Some of the best gas credit cards can save you up to 5% on all of your fuel purchases, and if your taking a long trip this can really add up, especially if you have a larger vehicle like an SUV or truck.

Another thing to be aware of is the different gasoline taxes imposed by different states. Both Mr Credit Card and I live in the same area. When you are traveling out of state, be sure to find out which state has the cheapest gas and fill up your tank in that state. In our case, gasoline prices are lower in New Jersey than in Pennsylvania. So I make it a point to fill up my tank only when I’m in New Jersey.

If you are looking to get a gas credit card I recommend looking into the Discover Open Road card. This card gives you 5% cash back on the first $100 in fuel purchases each month, and you can get 5% back on up to $1,200 in purchases each year.

Hopefully by now you already have your hotel accommodations sorted out but if for some reason you still need to book a hotel room for your vacation you can redeem points you’ve earned on a hotel rewards credit card such as the Starwood Preferred Guest Credit Card from American Express. This card allows you to redeem points for 860 participating Starwood hotels and resorts in 95 countries including Sheraton, W Hotels, Westin and more with no blackout dates. With no blackout dates, you can redeem your points for free rooms at the peak of the season which is July and August at most beaches. (Mr Credit Card’s added comments: The best way to get cheap vacation packages (aside from reward points) is to book way in advance, or take advantage of any last minute deals). Doing tons of research also helps).

Finally, when you are on vacation you can use a cash back credit card such as the Discover More Card to earn up to 5% cash back at restaurants and on other misc travel related expenses. Here is a list of some of the best cash back credit cards. Hopefully by using some of this advice you’re able to relax a bit more this 4th of July knowing that your pocket isn’t quite as light as it could be, especially during these hard economic times. Mr Credit Card’s added thoughts: More often than not, your cash back credit card should also pay you a good rebate on gasoline as well.)

The following reader question has been edited for length, spelling, and punctuation.

Greetings Mr Credit Card,
I have had a Bank of America Alaska Airlines credit card for close to 10 years.   In that time I have had marital status change, job changes, life changes, and had contacted BOA regarding the billing cycle and income cycle that were not copacetic with my finances.  It was like talking to a flippen brick wall as they would never work with me and of course when payments came late there were periodic charges and rate increases.  I ceased charging and continued to make payments, sometime not on time but always payments.  They made lots and lots of money on my charges, my credit line was originally only $3,000.  Well this April, I made a $2,000+ payment to clear off my balance, I also stated on my bill that I wanted to close my account.

Well they did close my account but the payment was received 10 days past due and since have been billing me $30 a month as penalty.  I called and was treated like the scum of the earth and given policy crap, passed on the more anal managers and of course I am so flippen mad that I am looking to scream and shout legally and NOT pay this, not only that I want my credit repaired by these guys.

I have another credit card which was actually paid off with zero balance and received a letter from them reducing my credit limit $3,000 to $1,500. Which I am sure is either because my Union Plus MC is either owned or reviewed my credit history with BOA. This tweaks me, not because I want more credit but because they have exercised control that incorrectly portrays my financial responsibility. I am a single mom of 9. I have ALWAYS found a way to cover my debt and raise my family. Now I am looking to start my own business and have this to address. I know these companies have people on staff that are real and understand the loop holes to work with people. This is ridiculous that I have found rude and disrespectful corporate staff who really don”t care what your situation or story is.  Bottom line. I paid my debt, and them some.  I not only want this billing to stop, I want my credit cleaned of their unsavory opinion. How do I do this.  How do I find out who the corporate officers are that I can submit a letter to?  Would it be the Federal Trade Commission that I could also complain to?

-Brenda

There is a lot of emotion here.   You clearly don’t like your former credit card issuer, Bank Of America.     Let me get a few things of my chest before I try to answer your question.    You start by saying that you had that card for 10 years, and it has seen you through a lot of changes.   It seems that you have felt like you had a personal relationship with that bank, and now you are upset that your relationship went bad.    You should really step back and realize that it is now and has always been just business for them.  You should treat them, or any other bank no different.    Fortunately, we live in a country where there are dozens of banks with hundreds, if not thousands, of credit card offerings.    If at any time you do not feel like your business is valued, cancel your card and get another.

That said, there are a few inconsistencies in your story.   On one hand, you admit that you have sometimes made your payments late, yet on the the other hand you insist that you “have ALWAYS found a way to cover my debt and raise my family”.    Congratulations on raising your family, I know that is a very challenging job.   Otherwise, I have to tell you that making your payments late is not covering your debt in the world of business.   It may work with your friends or family, but when you accepted your credit card, you agreed to pay on time.     When you did not, they were in their rights to charge you late fees and interest, as unfair as it may have appeared.   The first time or two, you probably could  have just called them and asked them nicely for the charges to be waived, but now you are way past that point.

Since you have canceled your card, now the bank really has little incentive to bend the rules to retain you as a customer.    If you have proof that you made your final payment on time, then you should be able offer that evidence to them and ask them to waive the fee.   If you do not have proof, and they will not waive the fee, I recommend paying it.   As you found out, they have the ability to damage your credit, and that damage will be worth far more than $30.

Going forward, I strongly recommend that you organize your finances in such a way to ensure that you will never again make a late payment.    You should be using the online bill paying service that is offered free with almost all checking accounts these days.     In this way, the bills are paid on time  and you have proof of the payment should it ever come into question.    This will be important as your rebuild your credit.   Needless to say, you should really pay your balance in full at all times and never carry a balance.

Finally, you are asking to which Federal authority you can complain to.     Certainly it can’t hurt to complain to any number of Federal Agencies and elected officials.   I should tell you that the best case scenario, that the law is changed to make it harder for banks to cheat you, has already happened.   If you haven’t heard the news, President Obama has signed the Credit Card Bill of Rights into law back in May.     On the other hand, informing the Bank that you will be alerting regulators might give you the extra leverage that you need for them to drop that final late fee.

This may be a little outdated, but here are some executive contacts at BOA.   Please be sure to keep your request brief, polite, and well written if you hope to have any effect.

Thanks for the question.

A reader asks the following question:

I have a business Amex card that I have accumulated over 800,000+ miles on.
In January, I transferred over 400,000 to Delta sky miles. Approximately 1 month ago, I looked at the Delta sky miles account and realized that the miles were never transferred and showed that the transfer was pending on the Amex membership rewards site. The problem now is that our business is in the tanks and our account has been put on a payment plan and is temporarily inactive. I called and told Amex the situation and asked to transfer miles immediately. I have been given the run around and have been told they will not honor the previous points until the card is paid.

I have spent well over two million dollars on this card, not to mention over 15 million through merchant accounts at 3.0% that my business runs through.

Can they legally pull back points that have been paid for and accrued over the last 3 years?

Is there any legal course of action I can take?

Thank you,
JP

JP,

I am sorry to hear of your predicament.   This must be upsetting as 800,000 Membership Rewards Points has substantial value.   Even at the minimum 1 cent per mile value, just the points you attempted to transfer represent about $4,000 dollars worth of travel on Delta, any time, anywhere.

Unfortunately, American Express’s Membership Rewards program is tied directly to your credit card account.   With most other reward cards, the loyalty program is merely an affiliate of the bank, and problems with your credit card have no bearing on your status with the loyalty program.   For example, had you accrued Delta SkyMiles directly through an American Express Delta SkyMiles card, you may not be awarded miles for a particular statement that was delinquent, but previously accrued miles would be untouchable.

With the Membership Rewards program, when you are in default, they reserve the right to freeze your accumulated points for late payment.    Those rules are spelled out here in surprisingly simple terms:

POINT FORFEITURE FOR LATE PAYMENT

1. If the amount due on any Linked charge Card Account is not paid in full within one month of the closing date on the billing statement for that Linked Account, points accrued in the program for that Linked Account for that month may be forfeited.

2. For any Linked Card Account for which points have been forfeited, once the Linked Account returns to good standing, the forfeited points may be reinstated for a $29 fee for each month of points reinstated.

Slightly more complicated are their rules for Point Forfeiture in the event of account cancellation.

What I am missing is the sequence of events.   If your account was in good standing in January, at the time that you  attempted to transfer your Membership Rewards points, Delta and American Express should honor the transaction.    As with any financial transaction worth thousands of dollars, you should have kept adequate records to prove the transaction took place.   If you have a screen shot of the transaction confirmation, or a confirmation email, I have a hard time seeing how Amex can retroactively void the transaction.   This assumes that your account was in good standing at the time you attempted to make the transfer.

Unfortunately, you are in a very bad position to make demands from their customer service department, as your recent problems have made you an undesirable customer to retain, to say the least.    Ultimately, your only resolution may be to take them to small claims court, depending on the limits of claims in your jurisdiction.   If you documented the transfer request, and the fact that your account was in good standing at that time, hopefully the threat of legal action should be sufficient for American Express to fulfill their obligations.

Even if you were not current in January, you may still redeem your points in the future by becoming current.   The rules are vague, but it seems like if your account is reinstated, you may be able to pay a fee to have  those points returned.   Since you say that your account is “temporarily inactive”, the reinstatement of your account might allow you to recover some of those miles.

The key provision here is as follows: “If any Linked Account is not in good standing, your enrollment in the program may be canceled or the points accrued in your program account forfeited.”

Since you seem to have negotiated a payment plan, I would have recommended that your Membership Rewards points be included in that negotiation.    Even now, it may be possible to contact whichever part of American Express you negotiated this payment plan with, and ask if your Membership Rewards points can be reinstated once you have fulfilled your end of the plan.   That person will have an interest in encouraging you to pay off your debt, and may be willing to work with you on the subject of your Membership Rewards balance.

Good Luck!

Despite the recent Credit Card Bill of Rights, there are still plenty of “tricks and traps” out there to ensnare you.   Jason Cochran, over at Wallet Pop,  has come up with his list of the six common ones.

Let’s Take A Look

The first one is the floating due date.   Frankly, I don’t recall having a card with a fixed due date,  I always assume that they float.   Actually, I believe that the closing date is fixed, and the due date is a fixed number of days beyond the closing date.   In that way, the payment due date will always be a different day of the month and a different day of the week, often on a weekend or holiday.  I suppose there are people who go places without mail service or the Internet for weeks at a time, but I am not one of them.    For me, I get the statement in the mail and I authorize electronic bill payment through my bank for the full balance to be paid no later than the due date.    If I am out of town, I will check my statements online.   This always works, and I don’t have to pay a week before as they recommend.

The next one is called almost a month. I frankly don’t know what he is talking about here.   I have to assume this month rule has something to do with carrying a balance.   Pay on or before  your due date, and you will never have this problem.

His third trap is ing for rewards.   I have talked about this before.  The idea is that people will more, just to get more rewards.    The ultimate satire on this phenomenon was in a movie I once saw where a spoiled teenager was asked if her parents are concerned that she is spending so much on their credit card.   Her response was something along the lines of, “they don’t care, they get frequent flier miles.”    The truth is that people do spend more in some shortsighted attempt to gain rewards.   Keep in mind that he best rewards, if your are lucky, will earn 5 cents on each dollar spent, with 2 cents or less being much more likely.   If you are spending more out of your own pocket to get more rewards, you should cancel your reward card immediately.    On the other hand, if you always volunteer to charge company reimbursed expenses on your card, good for you.

The fourth one is not checking the bill. This is a big one as so many scams these days work by setting up recurring charges on your credit card.    Always look through each charge to see if it is legit.   I actually know people who keep every receipt and match it up with their bill.   I can’t say I actually do that, but every year I find something that shouldn’t be there, just from memory.

The fifth trap is accepting store credit cards.   I have to disagree a little here.  First, he says that opening lots of accounts will hurt your credit.   This is not true.     While too many recent accounts may have a small, short term impact, it is good in the long term to have a low credit utilization ratio.    The way to have that is to have far more available credit than you need.   On the other hand, you should not open up a new store charge every time you a pair of socks.   I know a couple who purchased a house with no appliances.    They opened a store charge at The Home Depot in order to save 10% off several thousand dollars worth of purchases.    This was a wise move that saved them hundreds of dollars.   Other valuable merchant charge cards are reward cards at places you shop very often.

The sixth trap is the minimum payment trap.    By now, everyone should know that paying the minimum payment is about as bad as being an indentured servant or a sharecropper; you will always be struggling to gain freedom from your debt.  This is obvious advice, but it can’t be said often enough.

A Reminder Why Credit Cards Are So Usefull

The “registered traveler” program called Clear shut down this week, leaving it’s customers with a useless piece of plastic in their wallet.    Tens of thousands of people had spent $199  for a card that would allow them to bypass the security line at the airport, yet go through pretty much the same screening as everyone else.      As I said in my personal blog, good riddance.

What do you do if you have already paid the fee for the Clear card?    Unless you paid by credit card, you have virtually no recourse other than a bankruptcy judge.    If you charged this expense to your credit card, you will suffer no loss at all.   Just call your company and ask for a chargeback.   They will likely pro-rate the amount, but that is fair.

Another reminder of how the benefits of using a credit card can outweigh the tricks and traps.

In the run up to the passage of the Credit Card Bill of Rights, I expressed some concern over the provisions affecting young adults.    Now that the bill is law, it is time to look at what actually passed, and what effect it will have on Americans ages 18, 19,and 20.

Not As Bad As I Thought

As the bill was originally described, no one under 21 would be able to get a credit card without parental permission.   I thought it was outrageous that legal adults who could legally marry, join the armed forces, purchase firearms, enter contracts, and be held criminally liable for their actions, would not be able to apply for a credit card on their own.    I now feel that these concerns were either unfounded, or that the ultimate bill that passed has addressed them.

According to this article, the law will only affect those young adults that do not have their own means to pay back their credit card bills.    Frankly, I am shocked that companies have been granting credit cards to people who have no income.  It is not hard to connect the dots that the credit card companies have been: 1) Trying to hook students on credit card debt while they are in college, and 2) Entice them to rack up debt that their unsuspecting parents would feel forced to repay.  In retrospect, it seems like this is a reasonable solution to these problems.

The article does point out that it may be harder for consumers to develop a credit history.    My parents love to tell the story about how they had to first apply for a Sears card, because they had no credit card history.   After making a few small purchases and paying their bills, they then qualified for a gasoline station’s card.    Only later, were they thrilled to get an actual Visa card.

In the future, it is easy to imagine a time where my children will have a similar experience.   Perhaps they will first get a secured credit card.     Call me an old coot, but I think the old way was better than the current method of giving out freebees on college campuses to anyone who applies for a credit card; no income required.

Financial Literacy

The article then speculates that credit card companies may require financial literacy courses as a prerequisite.     This makes sense.   I remember taking driver’s ed classes in order to get auto insurance as a teenager.    I even had to take some little course to qualify for some government subsidized mortgage when I bought my first house.   My only concern would be that such a course would be written by the banks themselves, and would not address the tricks, traps, and other negative aspects of credit cards.     Do you think a bank sponsored course will spend much time teaching the desirability of paying your balance in full every month?

Adult Supervision Required

What this bill recognizes is that granting a student with no income credit is essentially asking the parents to co-sign a loan.    At that point, the parents may as well just add their child to their account.     I was given a card from my parents as a teenager, and it served several purposes.    It was important to have it in an emergency, where I may need to purchase something unexpected.   It was also a valuable tool for teaching me financial responsibility.   My parents could monitor what I spent, and collect from my what I owed them.    It worked well for me, and that is how my wife and I hope to teach our children financial responsibility.     Frankly, I think that waiting until age 18 is probably too late.    I would have my child carry a credit card at an even younger age, with the complete understanding that they are only to use it with my permission.

More Information

Earlier this year, I looked at credit card use among college students and offered some advice in that regard.   In light of the new rules, it is worth taking another look at it.