Credit card miles can be a rewarding game, but not everyone wins. Summer from Mommy Points shared some cautionary notes a few days ago about the right financial approach to earning miles with credit cards. That is, if you can’t afford it with cash, then you simply can’t afford it. So while the credit card rewards we earn can take us on wonderful trips all over the world, it will only work with discipline and care. Summer notes that among hundred or perhaps thousands of people she knows who used credit card rewards to their benefit, she knows one who went beyond his limit and spend too much, putting himself in an unfortunate financial situation.
While I personally don’t know anyone who got themselves into financial trouble with reward credit cards, I do have a story of quite the opposite. Someone who let hundreds of dollars go to waste because he didn’t do enough.
In February of this year, a friend of mine asked for some recommendations on a few rewards credit cards. To give some background, he owns his own business, does quite well financially, works exceedingly hard and is generally viewed by everyone else as very responsible. I would occasionally mention to him the trips I was taking and, while he knew I was using miles and points, I never really suggested he should take a similar approach as I figured he was too busy to care about miles. Nevertheless, he did ask so I told him what I felt were the best offers at the time (as a side note, neither of these offers earned me any affiliate commission so there was no potential conflict of interest even involved).
- The Chase Ink Bold® Business Charge Card, which at the time offered 50,000 miles after spending $5000 within 3 months.
- The Citi American Airlines Executive Card, which at the time offered 100,000 miles after spending $10,000 within 3 months. It came with a $450 annual fee, but offered a $200 rebate after spending $200.
$15,000 is a lot of spending within 3 months, but this was during the days of Vanilla Reloads, which I won’t rehash since they’re no longer available. He could simply order a Bluebird, buy Vanilla Reloads at the CVS with his credit card and use the Bluebird to pay bills. And that was the plan. He’d sign up for both cards and work his bills into the spending to meet the spending requirements. Given he had an excellent credit history, he got approved for both cards right away and ordered his Bluebird card the exact same day. He marveled at how easy it all was – a few trips to the grocery store and he’d have his miles. He started thinking maybe his first trip could be to Hawaii…
Fast forward two months and I casually asked how the miles acquisition was going, fearing I already knew what the answer was given he hasn’t asked me anything about Vanilla Reloads since the initial conversation. He casually responded, “Yeah, I haven’t done anything on that.” To make a long story short, I’m sure many of you guessed how this ends. Three months came and went and he met the spending requirement for neither bonus. It’s not that he tried and failed. He was just too distracted by his life and work to even think about the miles. Of course, the $450 annual fee did get charged and he paid the $250 after the $200 rebate no problem, but he got nothing in return.
He handed over $250 to the bank and got nothing. It wasn’t because he was scammed or because he was the victim of a bait and switch. He just simply didn’t do enough – not because he’s lazy as he works very hard, but because he was too busy. However, money doesn’t grow on trees so, to me, it doesn’t make sense to waste hundred of dollars like that. Miles aren’t for everyone – they don’t require a lot of work, but they do require you to at least remember you’re trying to collect them. And keeping that one extra piece of information in one’s mind may be too much for some people. That’s why I am very accepting of everyone’s personal mile style. I know people working 14+ hours a day with very hectic lives who are fine paying out of pocket for a business class trip to Europe and don’t even sign up for a frequent flyer program. It’s just too much hassle to find that extra hour to do the research, however easy it may be, and keep a frequent flyer account handy for when they travel. And that’s fine. Miles simply don’t fit into their lifestyle… we can’t all take advantage of every deal.
So the moral of the story is the same as usual when it comes to credit card rewards. Don’t look at everyone else’s travels and try to do too much. Do what fits into your lifestyle and what you’re comfortable with. If you need to stress yourself out to carry out a minimum spending plan, then it may simply not be worth it. Vacations and travel are meant to be fun and not stressful.