How to Earn Free Plane Tickets and Cash Back by Shopping Online
Published on - August 14th, 2009 (Modified on - December 12th, 2011) (by April Dykman) 
This is a guest post from April Dykman, an avid GRS reader, and a writer and editor by trade. April is a potential Staff Writer for Get Rich Slowly. In her first article, April described how she discovered freedom from mindless spending. April is an active commenter at this site.
When my husband and I went to Italy in 2006, we spent $2500 on plane tickets. We’re planning to spend much less for our next hop across the pond because as of this month we have over 80,000 airline miles — just enough for two tickets to Europe.
I used to think frequent flier miles were only awarded to, you know, frequent fliers. Or people who use an American Express for big company expenses. I certainly didn’t think little ol’ me who gets on a plane maybe once a year would be able to rack up enough miles to matter.
Then I stumbled upon Free Frequent Flyer Miles, a guide written by Gary Steiger, air-mileage earner extraordinaire. I couldn’t believe there were so many ways to earn miles. Soon after, I learned about sites that offer quarterly cash rebates. From these two discoveries, my online buying process developed.
Rewards card
We started by applying for an air rewards card and received 30,000 miles for opening the account. My husband and I put every possible expense on this card — even our electric bill. The card earns one mile per dollar spent.
Warning: Super important disclaimer ahead. If you do not pay the balance every month, rewards cards are not for you. There are lower interest credit cards and the interest charges on a rewards card will kill any travel benefits. Our card has a higher rate than our non-reward cards, but we never pay one cent of interest. We also pay a $50 annual fee, which doesn’t bother me considering the savings we’ll get on plane tickets. In short, read the fine print.
Airline shopping malls and rebate sites
I would never buy something merely to earn rewards. But we all buy stuff at some point, and there are benefits to be gained by shopping online. Let’s say I need to stock up on some household items like detergent and dish soap. This is the process I use:
- Google the items. Note the names of the merchants offering the three best prices (include shipping charges).
- Check the airline malls and rebate sites. I use AAdvantage eShopping and Ebates. In my example, drugstore.com participates in both programs and offers free shipping for orders over $49. Let’s say my merchandise total comes to $55.
- Search for coupons. Typically I Google the merchant name and “coupon” or “code.” I found a $10 coupon code for drugstore.com.
- Log into Ebates or rebate site of your choice. Click on the merchant name, and a new window will open. (Ebates offers 6 percent back on drugstore.com purchases.)
- Log into AAdvantage eShopping or airline shopping portal of your choice. Click on the merchant name, and a new window will open. (AAdvantage offers three miles for every dollar spent at drugstore.com.)
- Using the last window to open, select your items. I always log into AA last and purchase from the AA window to ensure I’ll receive my miles. Sometimes the registration tracking to AA can be overwritten if you click to another affiliate, though I’ve always received both the rebate and the miles.
- Go to the checkout screen, and enter your coupon code.
- Complete purchase with a rewards card.
- Follow up to ensure you receive your rewards. It can take up to 60 days for air miles to be credited.
This process takes me maybe 10 minutes. Using my example, I’ve paid about $45 for $55 of merchandise. I will get $2.70 in cash rebates and 180 air miles (135 miles from the airline shopping portal and 45 miles for paying with my rewards card). No purchase is too small — the rewards will add up quickly.
More tips
- Sign up for mailing lists for sites you frequent. Often subscribers are privy to special discounts.
- Try out a site like wishlisting.com, which allows you to bookmark items and alerts you when they go on sale.
- Stock up on products you know you’ll use if a bigger order means free shipping. I buy three bottles of dishwashing liquid per order, or more if it’s on sale.
- Spend time perusing lists of participating vendors — you might be surprised. When we installed new floors, we bought materials from a store in town, only to discover that we could have bought our supplies online from the same merchant and earned 2,000 miles. (Yes, just to torture myself, I did the math.)
- Look for rewards on subscription services. A new Netflix account awarded us 1,500 miles.
- If you buy gift cards, see if the merchant participates in rewards programs. (Be sure to check the merchant exclusions. Some give credit for gift cards purchased, others for gift card money redeemed.)
- Watch prices on items you buy. If you can find something cheaper in a store, weigh the savings versus the rewards.
Diversify
The next thing we need to do is to diversify. Right now we only have miles with one airline. Since the company can change its rewards program at any time, we’d be much better off if we stockpiled miles from several airlines. According to Gary Steiger’s site, he has nine airline accounts!
I encourage anyone who shops online to make the most of every dollar. Memberships to most reward programs are free. For very little effort, I’ve received $160 in cash and earned enough miles for roundtrip tickets to Europe. Even with the fees and taxes, we’ll pay much less for plane tickets than we would without the miles.
What about you? Do you participate in rewards or rebates programs? Which are your favorites?
Photos by Andres Rueda.
This article is about Credit Cards, Money Hacks, Shopping, Travel
SEARCH FOR RECENT ARTICLES
For those of you who want to go with an airline/hotel rewards card but don’t know which one to go with, Gary of the “View from the Wing” blog wrote an excellent article comparing all the major cards out there. You can read it at http://boardingarea.com/blogs/viewfromthewing/2009/06/28/how-to-choose-the-best-rewards-credit-card/
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I vote for April. Good advice and enjoy her writing style.
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I had been using miles reward card for over 6 years, and fly for free about twice a year. As somebody mentioned, I put every single purchase on a credit card – but I DO pay the balance in full every month, not ever a penny of debt. It works for me. I even charge a cup of coffee – if I ever to buy one. I don’t spend my rewards for anything else but airline tickets, I don’t need to accumulate any other stuff 9I am a complete anti-pack-rat as they get). However, I run races and I like to travel, so I fly about 4 times a year (as a minimum).
Also, I LOVE drying clothes out (or in) on the line. I grew up in a country where it was the only option anyway, and while I had a dryer since I moved to US 16 years ago, I never got to like a dryer. Energy is expensive, it’s loud, and clothes shrink and get yellowish color. The time that hanging clothes takes from me is negligable – and I use it to unwind. Besides, I often ask my kids to help – and pick up on their chore list.
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Olga, like you, I grew up using a clothesline in England. Sadly my neighborhood in the US does not allow them or I would hang clothes out to dry in a flash.
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Good post.
I have a rewards card that I’ve used for about 10 years. I never redeemed the rewards until last week. I got an iPod and a digital camera with my points; I didn’t even need to pay for shipping!
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Rewards programs make me so angry. You’re not actually getting something for free. How do you think that they pay for all the administrative nonsense going on around rewards programs? They just increase the costs of what you’re buying to make up the difference. But then you’re forced to go along with it because the herd is so stupid that they’ll just blindly follow.
If it sounds too good to be true, it probably is.
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My wife and I recently returned from a three week trip to europe. We didn’t have enough airline miles to buy tickets outright, so tried using our miles to upgrade and thus I can only speak to that experience, but I’m not sure it’s really worth it.
*If* you get upgraded to business class, you pay a fee (at least for AA, with whom we have our miles) of $350 per person. However, the catch is that there’s no guarantee that you’ll be upgraded. We booked our late summer flights about 4 months in advance and still ended up on a wait list for upgrades for each of the different legs of the trip. In the end, we were upgraded for our return flight from London to LA (which was very enjoyable), but not for any other flights. Since we weren’t able to comparison shop between airlines if we wanted to be able to use our AA miles, we ended up paying more for our tickets.
All told, based on our experience, I’d say that using a rewards card to build up airline miles is only useful if you plan on building up enough miles to outright purchase your flights — planning on trying to do upgrades doesn’t seem worth it.
Still, a very good article and interesting comments
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@Tyler – I recently used AlaskaAir miles to purchase 3 tickets to Florida. It was quite easy! I just logged into our AlaskaAir rewards account, picked my flight and the mileage points applied automatically towards the purchase. I didn’t find it a hassle at all and saved us about $800 vs. paying for the tickets out of pocket.
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Tyler @ 49 – I have to say relative to my experience you are way off base. I have absolutely no hassles redeeming points for airline tickets. I go to the CC website, click the Rewards link, click the travel link, select an itinerary and accept – bingo, points deducted and I’m electronically ticketed and ready to go. Perhaps the problems you describe about the airlines are true, yet one more reason I would never have an airline card.
April @ 50 – First, you’ve earned the vote with your excellent writing!
Second, you are correct, years ago most of the rewards cards had the $50-75 fee schedule you mentioned for annual fees. However, there are many now that do not have that. I’m not sure about airlines cards, maybe they all do have annual fees, they try to rip you off about everything else so why not annual fees.
I’m currently using a Bank of America Rewards card primarily. I’m also using a Chase Visa through BP that gives extra gas rewards beyond the normal rewards points.However, I did just sign up for an ETrade Visa that has similar rewards.
I’m going to get rid of either the BofA or Chase card in the next few months since I only keep one primary card and a backup in the event of ID theft. I used to only have one card for years. However, I had my card number stolen in 2007 twice and learned that traveling with one card that has to be shut down because of number theft creates real hassles, especially if you’re out of country.
The thing to realize with the rewards cards is that you typically get 1 point/1 dollar. Then you can use the points to buy airline tickets. Typically its a 1 to 100 ratio on the rewards that are redeemed short term (i.e., buying an airline ticket with less than 21 days notice). So if I’m buying a $250 ticket it will probably take 25,000 points. However, all my cards have the option that if you purchase your tickets at least three weeks in advance a domestic ticket will take 25,000 pts, Caribbean is usually 35,000, Europe last I checked was 40,000, etc.
However, the CC agencies are always offering new introductory offers. The best website I’ve found to compare cards is http://www.bankrate.com. You can specify that you’re looking for rewards cards and compare the terms right there.
Looking forward to the follow up story on your redemption of the points!
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I’ll second Fred on Southwest. Their rewards program is soooo easy to use and I have never had any problems with blackout dates or last-minute usage. In fact, their customer service folks seem to want to go out their way to help me because they see me as a valued customer.
I’m pretty frugal and don’t spend much money, so I only get maybe one free flight a year (they do flight credits, not these weird miles accumulations). BUT, my mother-in-law uses her Southwest Visa on EVERYTHING and pays it off each month. She has free flights coming out of her ears and gives them away to people like candy. Well worth the $60/year fee.
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For rebates, I use http://www.shopathome.com – it’s similar to eBates, but often has better rebates (drugstore.com is 7%, for instance), and they have a lot of coupon codes and whatnot right there, too. They mail out checks monthly, whenever your balance is over $20.
I also use my Amex Blue Cash to get cash back on just about everything I buy. (If a store doesn’t take that, I try Discover, and finally just use my Visa.) Yes, I pay it in full every month.
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@Bear (#59):
It really costs 25,000 miles for a $250 dollar ticket? I never used airline miles before, so I have no idea how they work. My primary rewards credit card is an American Express Blue Sky Credit Card. You get one point per dollar spent, and 7,500 points gives you a $100 statement credit on any travel related purchase. Using this formula, it would be 18,750 points for a $250 dollar ticket. Quite a lot of savings compared to what you get.
Here’s the link if anyone is interested: Blue Sky
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@Bear: Thanks! I might need to shop around for a new card if they don’t waive my annual fee.
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I wonder if the folks who are strongly opposed to using credit cards at all — even awards cards — are reacting this way because of a current or recent experience with credit card debt? Yes, of course the cc companies are making a profit with rewards accounts and they will stop offering the rewards when it starts cutting into their bottom line. Sadly, it seems like there are always more than enough people willing to be in debt to the cc companies, though, so they haven’t had to cancel the programs yet.
I love my Discover card. They pay *me* to use their card since I pay the balance off every month. I charge as much of my normal expenses to it as possible: groceries, utilities, etc. I apply the cash back rewards I get to the balance, which is basically adding that money back into my budget.
I’d rather do this an pay an annual fee to an air mile rewards card, but that’s my choice. I get air miles when I fly (which isn’t too frequently anymore) and through other special programs the airlines offer from time to time. If you dine out at all, look into joining the dining programs to get air miles. If I send flowers, I always do so by linking through one of my air miles accounts. Little things like that can add up.
A couple weeks ago I booked a trip between Chicago and Monterey using air miles. United had a sale going on, so it only cost me 20K miles and a $10 booking fee. That $10 fee was charged to my Discover. I may not get a lot of cash back for such a small transaction, but I also get free flight insurance when I charge a flight through Discover. I’m happy with this outcome.
Did I have to make any concessions to book that flight? Yes. I really didn’t *need* to fly into Monterey on a Saturday, but I couldn’t book the flight on a Sunday. So, I will have to stay an extra night in Monterey. But I should be able to find low cost accomodations for one night (the local hostel sounds great!), and frankly spending one more day on vacation because “the airline made me do it” is not such a hardship!
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I recently cashed in my miles on the Capital One no hassles card – I compared that to getting a best buy gift card for a new TV.
here’s the values i calculated:
Capital one miles/$redeemed value
Cash, Gift cards, and merchandise: 200mi = 1$
Flights : 100mi = 1$ at maxs, 171mi/1$ at mins
Anytime: 125mi/1$
obviously the cash back is the worst deal, but i’m sure lots of people use their miles to get gifts cards without a second thought.
I used my miles to get a round trip non-stop flight from LAX to Heathrow (137mi/1$). It is really easy cause you just buy the flight you want using whatever airline or website, then you are credited the amount on your bill. Simple and no blackout frustration!
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“He’ll use a frequent-flyer card to order $8,000 of coins from the U.S. mint (they’re sent with free shipping). When he receives the coins, he immediately deposits them at the bank (a physically laborious process, and one that has earned him a reputation at the local branch), and then uses the money to pay off the credit card.”
I don’t respect people who abuse the system like this. It isn’t honorable.
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Wow, I wish there was a more efficient way to read through all these 60+ comments. This is a good topic.
I have an AA miles credit card. It was fee-free for the first year. Before the year is up (or even once you notice them charging you next year’s fee) you can call and ask them to convert your card to a no-fee version and refund the fee. You’ll get a new card that earns you fewer miles, but it might be more appealing for some. I emptied out my AA ff miles last year to fly my boyfriend and I to Dublin. It coincided with me getting laid off, so it was a nice escape. And because I “paid” for my boyfriend’s ticket, he footed the bill for my ticket to France this spring (on which I earned a lot of Delta miles). While I dislike seeing a large credit card bill when I could pay by cash or check for a necessary purchase, the appeal of free miles is high — I just paid for almost $3000 in tuition with my card.
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Once again I have to say JD,
April’s writing style seems to seamlessly compliment yours, as well as the site the most. It’s very personable and always speaks from experience.
However, in regards to the topic, this article was informative, but I’m definetly VERY skeptical about any rewards card program. Living in Canada, it’s a bit of a different ball park for us, where our leading points card AIR MILES usually requires you to spend a MINIMUM OF $20 FOR ONE AIR MILE! Yikes! Occasionally, there are some products that will give you more miles if you purchase them, but they are ALWAYS more expensive and can ONLY be purchased at some of our most expensive big box stores. I like the fact that April emphasized “not to make purchases simply for rewards” because frankly, I feel that’s mostly what the misleading psychology behind these cards are all about: buy x product that costs x amount and you can travel to y country (eventually.) Most of the time, however, it’s not that simple, it takes years to save up for anything meaningful meanwhile you’ve already spent thousands of dollars. I have a feeling that if you just avoided several of those extra purchases in general and saved up towards a vacation (as well as looking for cheaper flights/ better deals) you’d save alot more time & financial heart ache.
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@ Adrian:
I wonder….is that $20/air mile and ACTUAL mile? Because I’ve always wondered about these frequent flier systems where it is like “I got 100,000 miles, now I can fly from LA to NYC” which is actually about 3000 miles, of course. The “miles” on the rewards systems here don’t equal real miles. It might actual ending costing about the same…just a matter of spinning it differently. I dunno…
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I use my debit card for all spending including rent and get one mile/USD spent (yes, contrary to misinformation spread on most PF blogs, you can get a debit card which gives you miles). I have taken about ten free international trips over the past three years to Asia, Central America, South America, Australia, and Europe, all using miles. However, my rule of thumb is to never make purchase which changes my spending habits due to offer of miles. They are just marketing tactics which strike me as tacky and I would rather not support, and it is not a sustainable way to earn miles over the long term. There are all sorts of offers to switch grocery stores etc to get miles but they are always more premium establishments and probably not worth it.
The industry standard valuation for a mile is US$0.01, although (as comment #2 says) I personally value them closer to around $0.02; I just purchased an US$800+ ticket from USA to South America for 35,000 miles. You have to figure out how much they are worth to figure out the premium to pay, they really are just another currency. So if you are paying more than about US$30.00 for the 1500 miles for a DVD mailer service, it may not be a deal. Really the specific airline matters less than the alliance, of which there are only three major ones, and they all share mileage programs. One problem with miles is that many international airlines (example: the national airline in Ethiopia) are not part of alliance, so you have to pay money for those tickets if you’re going more off the beaten track. One thing I did not see mentioned in this thread is you can also take online surveys to get miles, my airline sends me email about them regularly, if you’re into that type of thing.
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@April
No, you just don’t see a cost. Not every merchant is available on those shopping portals. Merchants pay a fee to be included on sites like that. And how do they cover the fees to be included? By increasing their prices.
That was my reference to the herd. The issue is that as soon as enough of the herd jump on the bandwagon they’re punishing the rest of the herd. So now I’m in a position where I’m being punished for not having a rewards card. I’m paying that higher price that was caused by the rewards card junkies but not enjoying any of the benefits.
When has a business ever given up something for free? And why would they? Everything costs something. You just might not see those costs broken out on your bill.
Nothing personal, but I don’t think this was a very well researched view into rewards cards. It would be very interesting to see something about what rewards cards actually cost the consumer.
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It looks like I may be way off base on the airline miles topic. If I could rescind my original comment, I would. It would throw of the conversation at this point though, since so many other people have mentioned it, so I guess it needs to stay.
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KT @ 66 – I don’t understand how you can say the Chris (ANOC) is abusing the system. He is not cheating at all. He is making a legitimate purchase of coins and then cashing them in. How is that any different than someone buying a meal and “cashing” it in by eating it and also getting rewards miles???
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@Budgie – The MBNA Smart Cash card is not advertised. You will have to call them and ask for it. MBNA is so sneaky.
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@ Corey:
Nope, the term ‘Airmile’ here is better seen as a metaphor lol. You’re right, they usually claim it takes a set amount of miles to reach one destination, when in fact, it really isn’t that far. (Ironically in Canada — we don’t even measure distances in miles, we use kilometers, so you can already see the method used to trick naiive average joes.)
I think these cards (in Canada at least) are great for those who love the Big Box stores with Big Brand Names , as well as those who aren’t exactly looking to live VERY frugally, and would rather outsource the responsibility of saving towards a trip to someone else. With some self-control and ALOT of determination and saving, and I feel ANYONE can take a vacation regardless of your income, or if you have a points card.
PS: I gotta confess I’m a little jealous of JD heading to France — it’s always been a dream destination of mine — however, paying off my debt first is more important and will be even more satisfying. Hope you enjoy that trip, JD. You earned it!
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@Amy #37 – I have several credit cards. One with a big-ass (am I allowed to use that word on this blog?) limit for 90% of my purchases. I have a separate groceries and on-line credit card with a small limit because if someone hacks Amazon, I don’t want them to be able to buy a Cartier watch with it. I have separate Visa for gas because it only gives me the 5% discount on gas. I also get points with this card, which I use for free car washes. And I have a few other cards in case a merchant doesn’t take MasterCard or Visa or if I go to Cuba, which doesn’t take American credit cards.
I don’t know too much about my credit rating, but the last time I was in the bank to get a loan on a new rental property, the banker was a little astounded by my score. So, a $1000 limit on a single credit card won’t hurt you if you have a slew of other credit cards with high limits and you pay off the balance every month.
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For anyone interested in diving deep into the world of frequent-flyer mile accounts and earning free flights and upgrades, check out http://www.flyertalk.com. Just reading through some of the “stickied” explanatory posts is a massive education in how to maximize the value of frequent flier programs.
I agree with the poster above who said do ***not*** diversify. The best way to get the most out of frequent flier programs is to pick the one airline that serves your city best and stick with that.
Yes, it can be complicated — even Byzantine — to try to redeem points for free travel. Your best bet is always to plan very far in advance (award seats are usually made available 330 days before the day of flight) and to be flexible on dates. My partner and I put most of our wedding expenses on a Chase United Mileage Plus Visa and got two round-trip business class tickets to Europe and back for around $70 (that was the “taxes and fees” component). My parents went from NY to New Zealand and back on award tickets — they use their American Airlines credit card for everything. I’m also flying cross-country to visit my mom next month on a reduced-award ticket on United (they were having an award fare sale, so it only took 20K points to fly Calif. to NYC and back). My partner and I also flew from Calif. to the Caribbean and back for a friend’s wedding on miles (50,000k points total for two round-trip tickets) on American a couple years ago. So yes, it is possible, and people do redeem points for free tickets all the time.
To clear one thing up — calling what you build up in your frequent-flier account “miles” is accurate, b/c it reflects the miles you have flown (or the dollars you have spent on a related credit card) in the ***past****. Each airline then sets up its own rule for how many “miles” you need in your account to be able to redeem them for a free ticket. It’s generally 25,000 miles for a domestic round trip for a “Saver” award, and 50,000 miles for an anytime award. Unfortunately, most of the US airlines just increased the requirements for all travel beyond the continental US.
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This post bothered me and it’s taken me until now to pin down why.
My perception of the site (being called “Get Rich Slowly” and all!) is that it’s about the slow, sensible approach to money. Not about money hacks and crazy stuff you can do that, if done just right, will save money/get free stuff. This sort of idea is the absolute WORST thing someone could do if they have problems handling their money. It’s the sort of thing that for every person that does it successfully, you probably have 4 more that end up losing because they fall into the credit card traps. It’s anathema to my conservative approach to personal finance and the things I enjoy about this website.
Just my two cents… I liked her first article, but this one not so much.
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#77 “calling what you build up in your frequent-flier account “miles” is accurate, b/c it reflects the miles you have flown (or the dollars you have spent on a related credit card) in the ***past****. Each airline then sets up its own rule for how many “miles” you need in your account to be able to redeem them for a free ticket”
That still means that the term “miles” is skewed and doesn’t actually reflect a literal travelling “mile” that you earned. It’s referring to money you spent (that’s depressing for someone pining to recieve something for “free”) and if each airline gets to set up its’ own definition of how many miles it takes to travel somewhere, it sounds like an outright deceptive practice. The ticket then really isn’t free after all, is it? Is it just me, or does post #77 read more like an advertisement by an online ad campaign than an opinion?
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@ Lesley (78) – the excessive amount of branding makes it look more like a deals blog article than PF article. It is plastered with pictures of airline logos (tacky) and links to all sorts of online services, and lots of brand name dropping – things which JD typically avoids. It took me about 3 readings to like the article. With a bit of clean up (e.g. using more general descriptions than all of the specific brands) it would be a very good article which would stand the test of time. Lots of potential here. I am an April fan.
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Not so much about the CC issue as the shopping portal issue.
I use igive.com as my shopping portal. It gives a percentage of your shopping to the non-profit group or charity of your choice. This is particularly helpful for me. I work at a non-profit and for a variety of reasons am very limited to how I can use our CC. Shopping through igive.com gives us back a little something when we buy office supplies and other items and we can still put them on account and get our invoice/bill sent to us the same as usual, but we also get a check sent to us two or three times a year.
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I have frequent flyer miles, but I only really fly every other year, so I don’t accumulate them very fast.
I will have to check out earning the miles, because I would like to have them to upgrade to business when I do fly. The only problem is, I can’t be loyal to one airline so if I understand correctly, I need to look for a program that lets me choose the airline.
That trip across the Atlantic gets really long in coach.
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i never thought airline miles cards were worth it. as with most things credit cards, they aren’t worth it past their introductory mileage bonus. http://www.smartmoney.com/spending/travel/keep-the-miles-why-airline-cards-aren-t-worth-it/
don’t forget that you still have to pay tax on the miles ticket, so include that into the calculation.
also, the psychology of the whole cash back or earn rewards card should be tempered. buying crap you don’t need in order to get cash back or rewards or miles, ends up costing you more in the end. this whole article read like, if you want free tickets, then spend, spend, spend, sign up for this, sign up for that, etc., etc. Not something that people in these tough times or any time should freely be doing.
lastly, the more crap you sign up for, the more mailing lists you get on, the more your information is shared, sold, and passed around, and the more offers for this, that, and the other you will get.
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@Tim #83 – It’s not a matter of encouraging spending, but, in April’s case, spending at certain merchants to maximize her rewards. I don’t see her advocating blowing $5k on a wide-screen television just to fly for free.
For me, I see nothing wrong with using my credit cards for 99.9% of my purchases to earn the cash back. I have to eat, clothe, and shelter myself. Might as well get a little something back for all the money I spend on food, gas, clothing, incidentals, tax-deductible business expenses, etc. These are not frivolous wants.
(The PS3 Slim I’ll be buying is a frivolous want, but I consider it cheaper entertainment than going out to the bar every night like most people my age do.)
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Re: #71. Amanda. Why are “rewards” cards worse than other c/c? I don’t understand any of you that say this?
Why by skipping using c/c and using only cash and not getting any benefit, are you “smarter”? The only way you are smarter is if you actually spend less money. Does spending cash help you spend less money? If the stores actually raised your prices by 3% if you used c/c, then I could understand it. BUT THEY DON’T. If I use my c/c and you use your cash, we pay the same price for that bottle of shampoo at Walmart.
You aren’t paying for it. The C/C company only gets 2% profit from your purchase instead of 3% if they are giving 1% back to you. Why is that bad? That seems only SMART.
I’m not sure why so many of you think that the c/c companies only make money when people don’t pay off their bills every month. They make a percentage of each sale. Don’t you understand that even if all their customers paid off their bills in full every month (like we do), they would still exist, because they are convenient and make money?
All of you who contend that using c/c cost us money–your point is silly unless you are telling us to avoid stores that allow you to pay with c/c and telling us only to shop at venders that accept only cash because they have lower prices. If your point is that stores that accept c/c are cheaper, then, make THAT point. BUT, that definitely isn’t true 100% of the time for people who are “smart shoppers” and know how to find deals and use coupons at the name brand stores.
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Re: #72 Tyler.
My “no hassle” Capital One rewards card couldn’t have been easier to use. I bought the ticket for my son on line using expedia and then charging it using my NoHassle card. Then, I waited a day or two for it to show up on my c/c listing. I clicked on my c/c site where it says ‘redeem rewards’ and it gave me the option for both of the tickets I had purchased lately. I told them I wanted to use up 74000 for the $740 ticket from FL to AK for my son and it was that easy. They subtracted the points and added a credit to my c/c as if I had paid $740. It was soo easy.
Don’t dismiss something til you’ve tried it.
My sis bought me a ticket to fly to the states using her Am. Ex. points that she had earned. I had to work it through their c/c site and it was a bit more complicated, but I managed to find a decent connection using her points. I don’t think it cost her anything. Using the No Hassle card was easier, but the AE wasn’t difficult.
At the same time as she bought mine, she bought another friend another ticket so we could all meet at a college reunion. It wasn’t difficult at all.
I think it’s like so many reviews. Many times it’s only the disgruntleds who bother to write it up. The ones who are happy just go on their way. Unfortunately it makes those on the outside think that something was really wrong with that hotel/restaurant/place of entertainment when it might have just been the reviewer or a fluke.
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I’ve flown twice to Europe on Delta rewards. The first time I was able to fly on Delta, mainly because I did it far enough in advance. But the second time, all the dates and times I needed were already full. What Delta doesn’t tell you upfront is that you can use the miles to fly with their partner airlines as well. I ended up flying Air France, which was a FAR better experience anyway than flying Delta. The only catch was I had to fly to Germany via France, which added an additional leg to my trip. In general, you can eventually use your miles, but you have to jump through a few hoops, especially if you want to fly to desirable places on them. If want to use your miles to fly domestically to non-touristy places, I imagine you can book less in advance. The ticket agent told me that to use miles to fly to the Caribbean, you have to almost book years in advance (or opt to use twice as many miles to get there).
We don’t have an airlines credit card and instead opt for a rewards one. This one enabled us to pay off a considerable about of my students loans. We have a Citibank card, and they will cut checks directly to your loan provider. This was a great way to use our points. Now that we don’t have loans anymore (hurray!), we plan to use them at whatever major vendor gives the best deal (Amazon, Kohls, etc).
I think it’s a great idea to pay tuition on a reward credit card. When I was in college, I don’t believe my parents had that option, but I wish they had, considering I went to an overpriced private school.
Great topic!
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April, thanks for the warning not to do this if you can’t pay your cc’s off monthly.
For a lot of people, “too good to pass up deals” like this are what landed them in a debt trap.
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The trick here is to make sure you can and DO payoff your monthly credit card bills. The interests rates for CCs are out of this world. For those who are strong minded and in a position fortunate enough to payoff their credit card on a monthly basis, I completely agree with April in the benefits a rewards credit card can bring.
I currently use a USAA credit card that allows me cash back, gas discounts, food discounts, and a bunch of other discounts (mostly travel related) for using the card. For the past three years, I’ve been able to get $300 cash back per year, which adds up! I encourage anyone looking for a rewards card to do so as there are some good deals to be had.
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@Ann, I think you miss the psychology of what i was talking about. as with anything cc, it’s about controlling your spending. the more you focus on things like cash back, rewards, miles, etc, the more you lose focus on if you need the purchase or not. if you don’t need the purchases, then you need to add all those costs up to see if you are actually getting a deal with the miles cards. in general, you are far better to pocket the discount on purchases than you are getting miles. same goes for rewards. it incentivises rewards over saving money on a purchase.
i use my cc for the 1-2.5% discounts, but again you really have to watch spending behavior so it is actually needs rather than turning into wants just because your mind is saying you are getting cash back or rewards or miles towards that vacation you think you’ve earned.
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Delurking to say that I loved both articles from April and she is my favorite guest poster so far!
As for reward miles, we have been redeeming the miles once or twice a year since 2002 (usually a roundtrip to Europe at the end of summer and a trip to California for New Year celebration with friends) and while it’s not always easy to get the exact dates with minimum layover time, it is certainly not impossible.
Usually we are successful getting desired dates (or close enough) with direct flights if airline offers them. Some airlines require fewer miles (Virgin used to require only 35K miles for round trip to London, and this summer they were running a promotion requiring only 25K for roundtrip, with plenty of summer dates open. Their taxes and fees are another matter, however).
We used to charge *everything* on our Amex Green and Blue cards, collecting Membership Rewards points. We now switched to Starwood and just last week I cashed in some of the points for a hotel in Stockholm (paying cash for air this time since Icelandair had a really good deal).
So it’s certainly possible for average folks without advance stratagems to accumulate enough miles for at least one annual trip. We happen to travel a lot, therefore for us, the value of miles is higher if we can redeem them for high season air tickets, as opposed to straight cash back. When that changes, we will switch to cash back card instead.
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@Tim – Why do you assume those who use rewards CCs must not be focused on controlling their spending? Multitasking isn’t rocket science. Personally, a rewards CC doesn’t make me think “ooh, if I buy those shoes, I’ll get another dollar in my rewards balance.” Instead, it’s: “The glue has given on the old loafers and it’s time to replace them. If I use this CC instead of cash, I’ll get an extra discount. Hmm, or maybe I should wait for a bigger sale because a little Super Glue can get a couple more months out of the old pair.”
If I didn’t have a handle on my spending, I wouldn’t be four glorious months from paying off my mortgage on a home in a rather pricey area…and I’m 29 on a single income, albeit a respectable income.
And sometimes indulging the occasional want is okay. There’s no point in amassing wealth if I’m going to be miserable. There needs to be a reason for being frugal and making money beyond simply watching your net worth increase, although I do a get a little thrill out of that as well.
I forgo Starbucks, brand name clothes, and the like so I can indulge my love for comic books, treat my sisters to restaurants they love but can’t afford, help my parents out when the washer and dryer break down. I work hard at the day job so I can pay off the mortgage and establish a nest egg because one day I want to write full time without having to worry about making ends meet. I’m practical enough to know starving for my art would get old pretty fast.
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Becky @ 85 – you’ve made some excellent points. I’m glad you noted that for every purchase the CC company gets a cut. Note though that that cut is really only a small part of the CC companies profits. If everyone paid off their cards monthly most CC companies would go out of business, they cannot operate the overhead on the 2% cut. That’s a big reason why we are seeing our rewards benefits cuts on these cards, with people charging less and more paying off their bills their revenue has gone down so they are cutting costs.
All that said, there is one downside to using a CC over cash even if you pay it off every month that you didn’t consider. It has proven that the majority of people over spend (by 25%+) when they use a CC vs cash. I guess it has something to do with the psychology of pulling actual money out of the wallet instead of plastic.
So as long as you can pay off your cards EVERY month AND not overspend this airmiles/rewards concept is a great one.
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Whether or not these cards are worth it just depends what your goals are for using the travel rewards. I go on a big trip each year (Europe, Australia, Aruba, etc.) that I plan around when I can get flights with miles – otherwise these trips would be cost prohibitive. For me, using a rewards card for all my purchases year-round, then buying a couple of $1,000+ flights with it, makes total sense. There is an annual fee, which I think is $50 or $60, plus international airport fees, taxes, etc. when you cash in. But still FAR cheaper than buying a flight abroad.
One of my best friends, though, expects to be able to use her miles to take last minute trips to see her boyfriend on the east coast and gets very frustrated with the miles programs. For her, it doesn’t make sense.
Figure out what you are trying to get out of the program. For a lot of people, the cash back makes more sense. But if you are a long-distance traveller whose vacation plans are somewhat flexible, that once-in-a-lifetime trip can become a reality pretty quickly with a miles card.
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April, I am a little confused by one fine point. Do you log on to e bates AND the AA shopping site or just pick one depending on the rebate?
Thanks for clarifying this.
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April
I also second @Jackie J’s question above for some clarification on the process. I did a test with 2 online purchases I needed to make. I opened ebates and clicked on the store, which brought me to the page that shows the rebate info, and then clicked on “shop now”. I left this window open. I then opened a NEW window for the airline shopping portal and ordered my purchases through the airline shopping portal. I know it takes some times for the airline miles to show up, but usually ebates is pretty quick to put the transaction in “pending” and I don’t have anything yet. Just hoping I did this correctly and this works like you say! It was a great article!
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Not sure if this has been covered yet as I’m new to this site but I entered into a protracted dispute with American Express regarding a charge to my card. Long story short; although the dispute did not go in my favor, Amex gave me 10,000 membership reward points as a consolation. I converted these to airline miles and they helped during our summer vacation to the Philippines this year.
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Just following up on the comments from Jackie J and AnnH. I wasn’t able to get this to work. The first time I clicked through the ebates offer, left the window open, then licked through and purchased through the AA site. I received only the miles. A second time I did the reverse and received only the ebates reward. Has anyone been able to get this to work?
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Hi guys–I have always been able to get both credits on a single purchase. I do log in to both sites and purchase from one, and in the past it has worked. It takes a long time for AA to credit miles…sometimes weeks. Ebates says most rewards are credited within 48 hours, but “some stores, however, cannot confirm your purchase until the return period has elapsed and may take up to thirty days to confirm your cash back.”
I just made a purchase using this method, so I’ll let you know if they’ve blocked you from getting AA and Ebates credit, though it may take awhile to know if I’m going to be credited.
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Very interesting topic, thank you for sharing! I think some of the mindset with the miles is that people think the tickets should be free. They really aren’t – you still have to pay taxes, airport fees, etc, but you get a massive discount on your tickets due to having accumulated the points.
I don’t use credit cards, but a have an AAdvantage debit card. I don’t mind paying the annual fee (its worth it to me). When I go out to restaurants, I check American Airlines’ iDine page to get the 3mi/$1 for restaurants (after 12 dines in a calendar year, its 5mi/$1) on top of my AA card. I am in the DFW area, and paired my Tom Thumb store card with AA so I get 1mi/$1 I spend there (in 250 mile chunks) on top of the debit card.
If I do any online shopping, I usually use ebates, but I’ll try to see if I can do the hack listed here.
I said I don’t mind paying the annual fee, because to me paying $65/year is worth it to get to visit a friend of mine who is traveling abroad to teach English as a foriegn language. While she’s in Mexico, I’ll pay for the tickets ($350/ea after taxes, and I get the miles – I purposely do a layover, too. It doesn’t cost more but doubles the miles on the trip – and I don’t mind reading in a terminal), but when she goes to Japan or Korea or eastern Europe, I get to save the $1000-$1500 on the round-trip and just pay taxes and fees.
I’m really flexible with my travel plans, too – I can book really far in advance and I don’t mind taking less desirable flights or having connections – as I said before, I don’t mind reading in terminals.
Since its a debit card, I can’t go crazy in debt, and I don’t change my spending habits because I can’t. I only put a set amount in the account that card is attached to (bills are paid from a different account, savings in another), so its just my allowance money (gas, groceries, weekly spending money) – I just decided I wanted to get miles for it.
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