All rewards are not equal in the credit card reward world. If you notice while shopping through rewards stores, you will notice some things cost more points per dollar equivalent than others. One way to get a big bang for your rewards bucks is with American Expresses “Pay with Points” for travel. Your points are worth basically 1 cent (about the going rate). So by saving up 20,000 rewards points, you can purchase flight tickets for nearly any airline through the site, use your American Express card to pay and get $200 off the price. Since your using your American Express card, you also get a little extra protection that comes with the card, which can be useful if your luggage is lost. You would expect the prices on the airfare to be pricer on the rewards site, but I actually found my tickets lower on the American Express site than on anywhere else. I even used Yapta to track prices and when the prices on Yapta dropped, the prices on AmEx dropped even more.

One other way that I saved money on the flight was by simply asking American Express to use my pending points. With AmEx, your points take about 1 month after the purchase to become active in your account. For the 1 month in-between they remain “pending” and cannot be used. However, by simply calling and asking them to instate these pending points, I was able to get an extra month of points to use toward the flight. It never hurts to ask.

I originally budgeted $1424 for 2 tickets. I saved nearly 50% and here is how…
Originally $712 per ticket
Used Yapta and waited until tickets dropped to $509
The AmEx site had same tickets for $476
Used $170 from Pay with Points
Also got an extra $7 off from pending points
Ended up paying $775 for 2 tickets (54% difference)

*Note: You do have to pay $13 to buy tickets through the AmEx site, but I figured that into the cost of the tickets.

I mainly use 2 rewards credit cards:

• 

  Citi Professional Card with Thank You Network.
  With this card I get 3 Thank you points per dollar at restaurants, gas stations, and office supply. Everywhere else I get 1 point per dollar. Zero annual fee.




• 

  American Express Business Rewards Gold Card.
  With this card I get 1 point per dollar. But there are other benefits to this card including travel options and higher point to reward conversion. Also, I don’t pay an annual fee on this card.

When it comes to travel rewards, the American Express wins hands down. Why? Well it actually requires slightly more points to buy the same flight through American Express than through Thank you Network. However, it is highly unlikely and close to impossible that we will accumulate the 300,000 some odd points to purchase our flight tickets. So, we will need to partially pay with points. This is where American Express is awesome.

Partially pay with points. American Express lets you use up your points and then pay for the rest with your American Express card. The amount you pay is pretty comparable to what you’ll find on the internet. So we can easily set a goal to pay for 1/2 with points and 1/2 with card that is paid in full at end of month. On the other hand, with Thank You Network, you must purchase Thank You points to fill the difference between what you have and what the flight costs in points. And these points aren’t cheap. So we would be paying much more than the face value of the tickets to purchase additional points required.

But you may be wondering about 3:1 ratio for restaurants, gas stations, and office supply with the Citi card. Since we already have a sizable balance of Thank You points we are going to use this ratio to our advantage. We will use the Citi card for purchases that fall into this category. In the end, we will use these points to partially pay for our hotel. But we will get around the partial point fiasco by using a Statement Credit. We will put the hotel room on this card, and use Thank You points to get a statement credit toward the hotel room. The statement credit is only a .07% reward, but with the 3:1 ratio, it works out in our favor.

By using these 2 cards to our advantage we are hoping to save about $850 on our trip.

If you aren’t interested in travel rewards, The Digerati Life has a great post on Cash Back Credit Cards

A brief overview of the proposed rules:

• Credit card companies couldn’t increase your rate on the balance you already have and they must allow you “reasonable” time to pay off the balance.
• They couldn’t apply your extra payments only toward your balance with the lowest interest (I HATE the way they do that!) This one would help out everyone who has special low interest rates on part of your balance.
• They couldn’t use the “two-cycle” method, which basically charges you interest on what you have already paid off. (Read How Two-Cycle Billing Works)
• They need to give you a reasonable amount of time to make your payments. My husband had an evil Citi Personal Loan that would continually send him the payment stub on the 2nd or 3rd of the month when it was due on the 5th… AND you couldn’t make online payments… AND pay by phone was an extra $5…. AND if you didn’t use their exact payment stub your payment would get lost in their system, trust me, we tried.

In addition to the Federal Reserve proposal, several legislatures are trying to take a stand against the credit card companies with bills that help the consumer. Rep. Carolyn Maloney of New York has created the Credit Cardholder’s Bill of Rights. Some of the items in the Bill of Rights resemble the proposal, and then takes it a bit farther to give the consumer more power. Sen. Christoper Dodd of Connecticut also has legislation that follows the proposal and adds a few more rules, like not allowing them to charge a fee to pay over the phone (hint – Citi).

Overall I think it is good that the economic turbulence has at least shined a spot light on some of the poor practices of credit card companies and mortgage companies. Maybe this unfortunate down turn will outcome in greater consumer rights and power. Power to the people, and stuff like that…

To read about the Federal Reserver proposal: Fed. Reserve Proposal
To submit a comment about the proposal: Comment on Proposal
To read about Rep. Maloney’s Bill of Rights: Credit Cardholder’s Bill of Rights
To read about Sen. Dodd’s Legislaton: Sen. Dodd’s Credit Card Reform

One financial blunder I will never live down is opening a stupid bebe store credit card. They make it so enticing…you are about to check out, thinking about how much this will all cost, and they offer an oh-so convenient way to save 15% (or maybe it’s 10% or 20% depending on the store). I made this egregious mistake while I was in college and had no right to be spending $100 on a single piece of clothing at bebe! What you don’t think about when offered this one time discount is the interest rates this new card will now tax you with. You also don’t think about how much more money you will spend with the store simply because you have a branded card for the store.

Ever wonder why the stores offer you these cards? Retail stores aren’t in the banking business. They want loyal customers who come back time and time again to their store. Research has shown that if a customer owns a store branded card, they are more likely to return and to spend more at the store. Anecdotally speaking, this has been true for me. I got a Victoria’s Secret card, now I buy things from them JUST because I have a coupon if I spend $50 or because I get a cute tote bag with…the Victoria’s Secret logo plastered all over (great, now I’m their walking billboard).

But let’s get back to the bebe card. I opened the card while I was purchasing a skirt and a pair of earrings. The skirt was expensive but the earrings were on sale and only $8. So with my 10-20% discount I might have saved $10 that day. After I got home and tried on the skirt with my shirts, I realized I didn’t like it so I returned it. I was new to credit cards at the time, and I didn’t understand how returns worked on the credit card. So I get a bill for maybe $108. I call the phone number on the bill to ask about what to do since I returned the skirt and the bill should only be about $8. They told me they would send me another bill right away. Stupid me, I don’t know why I didn’t just pay the minimum payment (more than the cost of the earrings) and be done with it. Instead I let it linger, waiting for an updated bill, the skirt didn’t get removed, so on and so forth… (plus I was bad at checking the mail at this time, so let’s be clear- this was MY money mistake and not bebe’s). In the end they sent it to the credit bureau. After the dust settled they did remove the skirt from the bill, but only AFTER my credit score was dinged! I will forever refer to this pair of earrings as my $500 earrings because god know how much they actually cost me when you consider all the problems it caused. And all for a $10 discount!

The moral of this mistake: THINK before all your financial decisions, even the small ones can turn into giant hair-balls if you don’t use your brain.

Now, I have to admit that I am a credit card point whore…I’ll do anything for those little points, don’t test me. So I signed up for 2 American Express cards that had annuals fees just to get the points. However, they waived the fee the first year. So I diligently counted my months and right before time I called them and cancelled one and got them to remove the fee on the other.

Lately, American Express has been sending me letters every week about how I am “invited” (don’t you love the terminology) to fork over $400 of my hard earned money every year for a super-shiny, ultra-exclusive platinum card. I get a good laugh at how they try to market these to customers by making you feel oh-so-special and playing to our natural desire to be better than those average folks with average credit cards. Then I swiftly throw the letter into the trash.

A few weeks ago my mom tells me she got a posh new card that has so many benefits. Of course, my poor mom fell for their gimmick. She’s only human and was particularly enticed by the offer that you get one free plane ticket with every ticket you purchase on the card. Oh, and did I mention you get to go into the airport lounge? Once again, pandering to our desire to feel special. I told her this was a bad idea, but she didn’t believe me. She said she would call me from the fancy-pants lounge with her mimosa in hand to tell me how absolutely fabulous it is. She was happy with her decision, until she found the catch.

Her platinum card didn’t get her a free ticket with every run-of-the-mill ticket she purchased, nope. She had to purchase a business class ticket to get the free one. And since business class is well over double the price of low-life-coach, this is really not a deal at all.

BTW- My mom isn’t the only one who fell for this, apparently Tina Fey did as well.