Credit Cards - Important Starting Info

Types of cards | My Favorite Cards | Cautions
Cancelling a Card | Intro to My Pages

Note: Whichever cards you decide upon, be sure to register them with an iDine program. You can read about these programs in the Dining section of my Other Programs I Like page.

Types of cards:

Most airlines offer Visa, MasterCard, or American Express credit cards that will give you miles for dollars charged to their card, typically 1 mile per dollar spent. Some points to miles programs (such as hotels and Amtrak) offer cards that give points per dollars spent, where those points are convertible to miles. Many banks offer cards which offer points or pseudo-miles which are not convertible to airline miles, but, if you accumulate enough of them within a restricted amount of time, can get you a free airline ticket. Almost all cards offer a free up-front bonus for first time use. Sometimes this bonus is quite generous.

Most of these cards charge annual fee, which I usually refuse to pay, unless they offer lots of miles for my doing so. (However, they may be worth the investment, depending on the bonus for first use and how much you use the card.) Often a mileage earning card is offered free of an annual fee for a year with an bonus for first use, and others are free of that fee always. I specialize in finding free offers.

You can find listings of these cards at

The lists are not complete and probably are not up to date on the best available deals (so ask before applying, and always search this section first), but they are a starting point.

Although I mention some offers for Canadians, probably the best resource for miles producing credit cards for Canadians is the Rewards Canada Bonus Mile Promotion Directory.

The links above this page take you to the various types of cards. But patience - read below first:

My Favorite Cards:

  • The Pentagon Federal Credit Union Visa card for foreign travel.
    • 5% cash back on gasoline.
    • 2% cash back on groceries.
    • 1.25% cash back on everything else.
    • Only the standard 1% fee from visa for foreign currency conversion, so that 1.25% actuall makes me a profit while traveling outside the U.S. This a even better dealt than getting foreign currency from ATM machines. However, the 1.25% is not quite enough to cause me to give up my regular miles cards.
    • Unlike other cash back cards, you cash back posts at the end of each monthly statement. Other cards usually require that you accumulate a minimum cash back before giving it to you.
  • Discover® Open Road® Card. 5% Cashback Bonus ® on your first $100 in gas and auto maintenance purchases each month – up to $1,200 in purchases each year.
  • The Citibank Platinum Dividend card. Since I value my miles at less than 2 cents each, I use this card whenever it gives me 2% cash back (gasoline, utilities, and grocery and drug stores).
  • Starwood American Express card: I gladly pay the annual fee for the Starwood card if I have to (I usually don't), even though I have stayed in a Starwood hotel only once in my life (the Clarion Hotel in Iguazu Falls, Argentina). Starwood points are convertible to miles on many airlines, and at a bonus conversion rate.
  • Pentagon Federal Credit Union Visa: This card gives 5% back on gasoline purchases with no upper limit, 2% back on grocery store purchases, and 1.25% back on everything else. It charges only the 1% Visa fee for foreign currency conversion, making it the best card for travel outside the U.S., since it actually gives me a 1/4% profit on purchases there. (All mileage producing card charge 3% for such purchases - way too much money for the miles.) Everyone can join the credit union, one way or another.
  • For domestic charges at merchants who do not accept American Express and for which I get none of the special deals mentioned above, I use whatever miles earning card I can get for free. If I don't have a free card, I use one of the cash back cards for this purpose.
  • Of course, I obtain all credit cards that offer mega bonuse miles on my airlines of interest for first purchase(s), do the minimum purchase required, then not use the card and hope for a good 0% balance transfer offer.

Cautions:

  • Most cards have a limit on the number of miles you can earn in one year. If you plan to charge a lot on a card, be aware of this limit.

  • When making purchases outside of the U.S., almost all U.S. mileage earning Visa and Mastercards will charge a fee of about at least 1%, up to 3%. The higher fees are for no reason except they think they can get away with it. It is just sneakily added into the conversion rate. The last time I looked, some cards from MBNA add only 1%. The only card I use in countries outside of the U.S. is my MBNA AAA Visa card, which you can read about on my Free Cards page. On March 9, 2005, David Lazarus of the San Francisco Chronicle wrote an excellent article on the new fees foreign transaction fees, appropriately called The credit card travel skewer.

    Oanda's FXConverter - 164 Currency Converter is my favorite online currency converter. Not only will it provide the interbank rate on the day of your departure (for comparison to bank conversion rates upon arrival), but it will also provide that rate for past dates so you can check the conversion rate your credit card gave you on the day they posted the charge. (Alas, it will not provide the rate for future dates...)

    On April 21,2005, USA Today listed conversion fees for some major banks' credit cards. But these fees can change rapidly, so call the bank to confirm before you go.

  • Some cards offer a limited time 0% interest on balance transfers. These can be quite useful, but consider:
    • The transfers often do not earn miles.
    • Often there is a 3% fee for the transfer. Frequently this is capped at $50 or so per transfer, so a very large transfer might be worth the fee. Do the math.
    • Payments are always credited to the lowest interest rate debits first. This means that if you actually charge purchases to the card, you will be paying interest on those purchases, usually at a very high rate, until you completely pay off the card. So if you make a 0% balance transfer to the card, be sure that you have not and will not make purchases on it. Also, for some cards, if you pay a balance transfer fee, that fee will be charged interest in the same manner until you pay off the entire balance.
    • You must make the minimum payment each month to keep your 0% rate. I am told that it will help your credit score if you pay at least $1 more than the minimum each month.
    • My Holy Grail of credit cards would be one that offers 0% interest for balance transfers, charges no fee for the transfer, and gives miles for that transfer. If you find it, please let me know.
    Here is a little known fact about Citibank 0% balance transfer, no fee offers: You can call to get the "transfer" immediately sent to you as a check. It charges to your credit card as a balance transfer, not a cash advance. Free loan, no fee, no interest for a year.
    • Ask for a "Direct Check" for $1 less than the full credit limit of the card (they won't give you the full limit).
    • Very carefully confirm that there will be no fee and 0% interest.
    • Carefully listen to the script they read to you before doing the final transaction. It should confirm 0% and no fee, and tell you when you have to pay off the loan.
    • If the rep doesn't know how to do this, ask for a supervisor.
    • Put the money you receive in an interest bearing account and pay $1 over the minimum (for less impact on your credit score) each month from that account. A Virtual Bank or ING Bank account would be fine for this. (See the bottom of the Banking section of my Finance page.)
    • Or, if you are sufficiently financially disciplined, pay down a higher interest loan (such as a home equity loan) with the check. Just be sure you will be able to pay off the 0% loan when it becomes due.
    • Be sure to read my cautions on 0% balance transfer offers above.
    • I know for sure that this works for the MyPoints card, but that card is no longer available. Other Citibank cards with a 0%, no fee offer can be found at the bank's Citibank credit card website. Click on Cards with Rewards in the left menu, then use the pull down menues to find No Annual Fee and Balance Transfer Offer cards. My favorite is the Citi Dividend Platinum Select MasterCard, which you can read about near the bottom of my Free Cards page.
    • I am most interested to know if the regular customer reps at Citibank know about this Direct Check option. Please let me know of your experience trying to get a Direct Check.
    • I have also received checks this way from Bank of America and Discover Credit Cards. I am most interested to know if banks other than Citibank offer this Direct Check option. Please let me know what you have recently found out. Thanks.
      • On September 2, 2007, a reader wrote
        I do it all the time. In the past 6 months, have done this with BofA, Chase, Advanta, WAMU, and US bank. It's a perfectly normal part of balance transferring; reps often suggest it as part of their sales pitch.

  • Bankrate.com has some excellent articles on how credit cards are not particularly altruistic. They describe how a bank might try to get more of your money than you expect. They are well worth reading.

  • I am hearing that Citibank is sending something called a "yearly summary" to card holders and billing them $15 for it. Readers are complaining that they did not order and did not want this summary. They tell me the fee is reversed when complaint is made, but I suggest you tell Citibank up front that you don't want the summary.

  • Acquiring credit cards does affect your credit rating, sometimes positively, and sometimes negatively. Here is some excellent information on the subject:

  • Some cards offer a discount on a purchase of a ticket. These discounts are usually worthless, because they apply only to fares higher than those you can get on the airline's web site or through a consolidator. Even the free companion tickets sometime offered are not worth much, for the same reason.

  • Before acquiring a card, you might want to see if any opinions have been expressed on it on Epinion's page on credit cards.
Cancelling a card:

If you are considering cancelling a card because you don't want to pay the annual fee that is about to become due, you may be able to reduce or avoid the fee, or get a worthwhile number of miles for paying it.

Intro to My Pages

First I list some credit card offers that are actually free of annual charges. Get any card that offers miles up front for just qualifying for it - there is no reason not to (unless you are concerned that it might affect your credit rating - see below). If they are free for only a specified period of time, just close the account just before that time is up, telling them you refuse to pay an annual fee. Do this by a telephone call to the customer service center for the card. You may be offered an extension of the free time, or you may be offered another free card that earns miles.

Then I will list some offers I have found that are not free, but, due to the up front bonus, may be a cheap way for you to buy miles, depending on how you value those miles. This list is by no means complete. Please tell me about any other good deals you find. Some airlines offer both free and annual fee cards. I describe these in the annual fee section, with a link to that description in the free section.

Lastly, I will list dedicated bank travel credit cards. These programs earn points or pseudo-miles per dollar spent on the cards, but have no other way of earning those points or miles. Some seem worth considering, anyway, but heed the cautions at the top of the section.
 

    
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