Thursday, September 16, 2010

Credit cards - not all credit is bad!!

So here's the good news - credit cards are still the easiest way to earn frequent flyer points.  The bad news - how do you know which one to use?!  One important point that needs to be made up front is that frequent flyer points are usually only earned on PERSONAL credit cards, not business cards.  This means that you have the credit card in your name and you make personal purchases on it!  Of course the definition of personal purchases here is a wee bit grey, and will depend on your own circumstances!  You can read whatever you like between the lines here!!

So how do you decide which credit card to get (or maybe which ones to get rid of?!)  In my own experience I think that American Express offer the most points for your dollars spent, and here I'm talking about cards directly with Amex, not those offered through the major banks.  I believe that now all credit cards offered by the major banks have some sort of limitation on the amount of points you can earn, be it monthly or annually.  Most convert the points earned at less than one point per dollar, but some do offer bonus points.  Of course they like to muddy the water by offering all sorts of other things that you can buy with these points - and here it will all depend on your personal circumstances, but I find the best value is converting the points directly to frequent flyer points and using for free flights.  Some banks now even offer Qantas joint branded credit cards that have the facility to transfer the points directly to your frequent flyer account each month - if this is your goal, then these will work best for you.  (feel free to add your comments on which Bank/credit card you find works best for earning FF points!!

I strongly suggest that you check out all of the four major banks and compare the amount of points per dollar spent, and also the annual limit that you can earn - which I must add is usually enough for the average personal spend.  The only downside I've encountered with American Express is that some merchants charge an extra fee to take this - mainly of course because they are charged the extra fees by Amex.  These days some hotel chains even charge you a fee to use Visa and Mastercard!  When you weigh up the fees charged though, and the benefits you can get from the use of the credit card (basic travel insurance coverage, purchase protection etc) and what the points will get you (best case scenario - international first class travel!!) do the math and decide for yourself!!

One final word on the use of credit cards - the most cost effective way to use them is to pay them off at the end of the month, and thus incur no interest or transaction fees.  If you don't - be prepared (in most cases!) for very nasty interest charges!!!

coming up...........when is the best time to look for ff seats??

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