Maximum Return On Your Credit Cards
There has been an explosion of credit cards that specialize in certain benefits over the last five years; reward points, cash back, 0 percent transfers, credit monitoring, discount gasoline, money market savings, etc. So how do you get the most return from your card, particularly when their plans change?
(Presuming you never, ever carry a credit card balance interest charges and potential fees will more than consume any side benefit that a card can offer.)
In the old days, the big benefit was airline miles. Let s see how well that works out. The average airfare for a ticket that was paid for with credit card airline miles is about 400. And the average program requires 25,000 to 35,000 miles to be credited a free ticket. Since miles are normally accrued dollar for dollar, the average benefit is between 1 to 1.5 percent of what you spend.
Now we are starting to have something to compare. If you get an offer for a 1 percent cash back credit card, you d be slightly better off getting the airline miles. But in my opinion, the many cards offering up to 5 percent cash back are the best deal, as long the fine print lines up. First, there are normally limitations on the shops where the 5 percent applies. You want a card that applies the 5 percent to where you spend the most of your monthly income. The credit card industry calls these
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