I have discussed many times the benefits of using point-earning credit cards as frequently as possible as long as you use them wisely. The following testament (edited for brevity) is from my friend on the west coast that explains why using airline credit cards can pay off handsomely. A disclaimer, everyone’s experience trying to cash in frequent flyer miles will vary, but there are innumerable amount of strategies one can incorporate in order to do so.
“So everyone has that place, yes that place that is in their dreams but hard to justify financially. My place is the south pacific where the water color is amazing, the air spectacularly warm, the white sands beaches are silky, and a tropical breeze that is so pleasant, it relaxes every fiber in your body. But this ‘place’ can be anywhere you are out of reach from the rest of the world and nothing bothers you. So, if you have an inkling, there is a way to make it affordable. Cash in those stocked up airline miles! You know the ones that you get every time you fly. The ones you can get every time you charge something to your credit card.
Here is how easy it can be. You know the place you want to go to, so find out who flies there and see who their travel partners are. Get the corresponding credit card for that airline program that allows you to fly to your
One drawback he so eloquently mentioned was that airline-branded credit cards typically have fees. While I generally advocate that one pay the least amount of fees in life to transact business, I will say that paying an annual fee for airline cards can be worth it–provided you charge enough–as he suggested. The advantage is getting closer to an award everyday, while you charge for your everyday purchases, as opposed to just flying and earning points. The disadvantage, obviously, is that you might pay an annual fee ($60-$75), you might feel that your loyalty handcuffs you to a certain airline (or hotel), and that you might tend to spend more than you normally would.
There is a way that you can mitigate the cost of using these credit cards, save for canceling them altogether: “threaten” to cancel them when the annual fee comes due. Do this: look at your statement and see when your next annual fee is due and mark that on your calendar. About a week before it is due (or anytime really) call the credit card issuer up and threaten to cancel. Don’t be curt about it, but just suggest, especially if your credit is really good, that you have “options.” These options may be you have a better deal elsewhere (another card offers you bonus miles), you don’t like the airline/hotel anymore and you are changing loyalty or simply that you dislike paying the fee.
If the customer service representative merely gives you the line that charging the fee is part of the structure of the card, and they won’t budge, escalate! Ask to talk to a manager or supervisor. If the lower end rep doesn’t have the power to negotiate, someone else will. If you think about it, like any customer, it costs companies a great deal of money to attract a new customer; it’s more cost-effective to retain them. Using your negotiation skills, ask if they have a “retention bonus” or a “reconsideration bonus.” They are typically unadvertised, but a great way to keep customers. It’s a similar tactic to threatening to cancel your phone or cable company. In my recent case, though I have had better luck in the past, I got 1,000 miles from my provider for threatening to cancel. I took their offer as it was better than nothing. So, subtract what I would value those miles at–$.01/mile x 1,000 = $10. $60 annual fee-$10 = $50 annual fee. Vacation got a little more affordable.
My friend just cashed in his miles and is now going to his “paradise.” If you follow some of the links on my page, and other advice I have mentioned, they will help you escape that much faster.