Posted on Monday, 1st February 2010 by admin
I just read a thought provoking post by Mark Ashley over at the Upgrade Travel Better blog. In it, he explores his thinking behind choosing which card to use in which situation. He does some basic consideration of award points, foreign transaction fees, and even purchase protection benefits.
My Take
This is a great subject to explore, so as both the world’s foremost expert on credit cards, as well as the most modest person in the world, I thought that I might give you my two cents. First, Mark touches upon the subject of foreign transaction fees. I have discussed this in the past, but the fact is that FTFs are a pure scam. They are 100% profit and I refuse to pay them on principle. Principles aside, I have yet to find a reward card that consistently offers a return that would justify the FTF anyways. Take my Amex Starwood card. This is a fantastic card with one egregious exception, a 2.7% FTF (it was raised from 2% last year). When I am out of the country, I use my Capitol One Visa card with 1% cash back and no FTF. If I traveled more often, I would probably get the Schwab bank card with 2% cash back. Starpoints are great, but they are not consistently worth more than 4.7 cents each, the difference between 2% cash back and the Amex 2.7% FTF scam. I can sometimes get 3.7 cents in value per Starpoint, but even if I could, I have principles to uphold, which is why my Starwood Amex stays burried deep in my wallet when I am overseas, only to be used in an emergency.
What About Big Ticket Items?
It generally doesn’t matter much to me if I am buying something for a dollar or a thousand dollars, I will just use the best card for the situation. Mark goes into some good details about purchase protection policies, but I have never had occasion to use one. As my readers know ad nauseum, I always pay off all my statements in full every month. Because I do this, I will sometimes put an expensive purchase on a particular card when I have just past the statement closing date, in order to gain another 30 days to come up with the cash. More often, I will just postpone my large purchases until after my Starwood Amex closes.
Exceptions
If I have a new card, with a minimum spending threshold, I will try to hit that as soon as possible. That meant putting some purchases on my Frontier card when they were offering a total of 40,000 miles after $750 spent. On Frontier, that is two round trip tickets, irresistible for a Denver based traveler.
Obviously, with an Amex as my primary card, there are plenty of times I have to switch to my Capitol One Visa when Amex is not accepted. Then there are the times that certain cards have extra bonuses attached to them. I still get 5% back on my cell phones when I charge my monthly bill to my Amex Open card. For a time, I got 5% back on Delta as well.
Conclusions
Beyond the specifics of different cards, the larger point that both Mark and I are making is that there are a lot of factors. Sometimes, like in rental car protection and purchase protection, the differences can be far more than pennies on the dollar. Take a moment to think about which card you are going to pull out of your wallet when the time comes, there is a lot of money at stake.
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