A Review of Consumer Reports’ Tool For Calculating Credit Card Rewards

Choosing the right rewards credit card is no easy task. First, you have to determine how much you spend each month, categorize your spending, and then sift through all the information out there to find the card that will give you the most bang for your buck. Fortunately, Consumer Reports has come up with a solution to this problem. Its Credit Card Adviser Comparison Tool uses your monthly spending habits to match you with the best rewards credit card — one that will give you the most cash back.

The main feature of Consumer Reports’ Credit Card Adviser Tool is the ability to customize your recommendations based on your monthly spending. The tool lets you break down your spending into five categories: Gas, Groceries, Restaurants, Travel, and Everything Else. The tool then calculates how much cash back you earn over the first year and the first three years, utilizing the categories from over 50 different rewards cards.

Let’s take a look at the top credit card recommendations based on three different budgets.

Budget 1: Carless and a Low Spender

cr1

The first example is actually based on my budget. I don’t own a car and have minimal expenses aside from monthly bills and occasional eating out or travel. With this low monthly spending, it can be difficult to get a lot of cash back from a credit card. This is why I’m always looking for creative ways to maximize my cash back rewards.

In addition to finding ways to get more cash back rewards with your current spending, having the best credit card for your spending habits is half the battle. The Consumer Reports’ Credit Card Adviser Comparison Tool recommends these three top credit cards for someone with my monthly expenditures:

MasterCard – Titanium Card

  • 1% cash back on all purchases
  • $500 sign up bonus when you spend $1,000 in the first three months
  • $195 annual fee

American Express Blue Cash Preferred

  • 1% cash back on all purchases; 3% cash back on gas; 6% cash back for first $6,000 spent on groceries and then 1% on grocery purchases
  • $150 sign up bonus when you spend $1,000 in the first three months
  • $75 annual fee
  • Read more about this card here

Chase Freedom

  • 1% cash back on all purchases; rotating quarterly cash back rewards
  • $150 sign up bonus when you spend $500 in the first three months
  • No annual fee
  • Read more about this card here

Budget 2: Frequent Driver and Diner

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The average American spends about $2,000 per year, or $167 per month, on car fuel and on average $150 to $175 per month on dining out. Let’s say you drive and eat out a little more often than the average person, spending about $400 per month in each category. Here are the top three credit cards that Consumer Reports’ tool would recommend for you:

MasterCard – Titanium Card

  • 1% cash back on all purchases
  • $500 sign up bonus when you spend $1,000 in the first three months
  • $195 annual fee

Discover It Miles

PenFed Platinum Cash Rewards Plus Visa

Budget 3: Frequent Traveler

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Those who travel often are in luck when it comes to credit card rewards. There are plenty of programs that reward frequently travelers. Let’s say you’re someone whose expenses are pretty typical outside of travel. When it comes to travel, assume you spend about $1,000 per month between flights, hotels, and other travel-related items. Here are the top three credit cards the Adviser Comparison Tool would recommend for you:

Chase Sapphire Preferred

  • 1% cash back on all purchases; 2% cash back on travel; 2% cash back at restaurants
  • $500 sign up bonus when you spend $4,000 in the first three months
  • $95 annual fee, waived in the first year
  • Read more about this card here

Discover It Miles

MasterCard – Titanium Card

  • 1% cash back on all purchases
  • $500 sign up bonus when you spend $1,000 in the first three months
  • $195 annual fee

Pros

The main advantage of this tool is the ease of use, and the website is very user-friendly. All you have to do is input numbers and watch the tool go to work, churning out calculations for how much cash back you would earn in one year and in three years. As you change the values, the list of recommended credit cards will update in real time.

Another advantage of the tool is the fact that you can use it as a forecasting mechanism. For example, if you are planning on traveling more in the upcoming year, you can browse the recommended credit cards to see which ones would offer the most rewards. You can sort the recommended credit cards in alphabetical order as well and use the tool just to browse the offers that are out there.

Cons

The main disadvantage of this tool is the calculation limitation. Currently, the tool only shows cash back rewards. For credit cards that offer rewards in the form of miles or points, the tool converts those miles and points into a cash equivalent. Since the value of miles and points can vary so much, not being able to view the actual rewards is a disadvantage. The tool’s cash equivalent may not necessarily be the exact value you would get.

Another disadvantage of the tool is that the database of credit cards compared is not fully inclusive. For example, a few credit cards not currently listed in the tool include: Chase Freedom Unlimited, Capital One Venture Rewards, and Discover It® Cashback MatchTM. Not having these key credit cards in the tool means that you could be missing out on an opportunity to get a card that offers you maximum rewards.

Wrapping Up

The concept of the Consumer Reports’ Credit Card Adviser Comparison Tool is one that is much needed in the personal finance world today. It isn’t perfect and could use some tweaking before I give it my full recommendation, though.

The good thing about this tool is how easy it is to predict the rewards you would receive based on your monthly spending. However, the fact that miles and points rewards are converted to cash equivalents leaves the end user with a lot more to consider. Will you redeem all of the points or miles in a given year to realize the cash equivalent? Are you better off getting a strictly cash back card to earn more money?

The Consumer Reports’ Credit Card Adviser Comparison Tool is a step in the right direction. I imagine that over time, it will become more robust and cater to the end users’ needs even more.

What do you think of this tool? Would you use it?


Blue Cash Preferred® Card from American Express Review – Up to 6% Cash Back

The Blue Cash Preferred® Card from American Express is known as one of the highest paying cash back cards available. It offers up to 6% cash back and a 0% introductory APR on purchases and balance transfers for 12 months.

Blue Cash Preferred ReviewAmerican Express is perhaps best known for its travel rewards–“Don’t leave home without it.” But with the Blue Cash Preferred® Card from American Express, it also offers a top notch cash rewards cards. The card has a tiered reward system ranging from one to six percent. It also has a cash bonus for new card members and a 0% introductory APR offer.

Blue Cash Preferred® Card from American Express Snapshot

  • Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit.
  • Earn Cash Back: 6% U.S. supermarkets up to $6,000 per year in purchases (then 1%), 3% U.S. gas stations & select U.S. dept stores, 1% other purchases. Terms and limitations apply.
  • With the Blue Cash Preferred® Card, you can start earning cash back. No rotating reward categories. No enrollment required.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Cash back is earned only on eligible purchases.
  • 0% intro APR on purchases and balance transfers for 12 months, then a variable rate, currently 13.24% to 22.24%, based on your creditworthiness and other factors.
  • Terms and limitations apply.
  • See Rates & Fees
  • Learn how to apply here.

Cash Back Rewards Program

There are four components of the rewards program: (1) the $150 bonus; (2) 6% cash back;  (3) 3% cash back; and (4) 1% cash back.

1. $150 Bonus: Spend just $1,000 on the card in the first 3 months and you’ll pocket a $150 cash bonus in the form of a statement credit.

2. 6% Cash Back: For rewards, you earn 6% U.S. supermarkets up to $6,000 per year in purchases (then 1%). This is one of the highest cash back rewards available from any card.

3. 3% Cash Back: You’ll earn 3% at U.S gas stations.

4. 1% Cash Back: On all other purchases.

0% Introductory Rate

The card offers a 0% introductory rate on purchases and balance transfers for 12 months.

What we like about the Blue Cash Preferred® Card

  • The $150 cash bonus
  • Up to 6% cash back
  • 0% introductory APR

What could be better

  • The 6% cash back has a spending cap
  • $95 annual fee
  • Requires Excellent Credit
    Excellent Credit
    Credit cards for excellent credit are
    intended for those with a credit score of 700 or Higher.
    Get Your Free Score

Summary

  • Apply by 1/11/2017- Earn 10% cash back on purchases at Amazon.com in the first 6 months, up to $200.
  • Plus, earn $150 back after you spend $1,000 in purchases on your new card within the first 3 months.
  • You will receive cash back in the form of statement credits.
  • Everyday Cash Back: 6% at U.S supermarkets on up to $6,000 per year in purchases (then 1%); 3% at U.S gas stations; 1% other purchases. Terms and limitations apply.
  • No rotating reward categories. No enrollment required.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. You can only earn cash back on eligible purchases.
  • 0% intro APR on purchases and balance transfers for 12 months, then a variable rate, currently 13.24% to 23.24%, based on your creditworthiness and other factors.
  • Terms and Conditions apply.
  • Regular Purchase APR: 13.24%-23.24% (Variable)
  • Penalty APR: See Terms
  • Annual Fee: $95
  • Late Payment Fee: See Terms
  • Foreign Transaction Fee: 2.7% of each transaction in U.S. dollars
  • Ideal for those who want up to 6% cash back
  • A good choice for those looking for a 0% APR introductory rate
  • Requires Excellent Credit
    Excellent Credit
    Credit cards for excellent credit are
    intended for those with a credit score of 700 or Higher.
    Get Your Free Score

How to Snag a Southwest Companion Pass Without Taking 100 Flights

For many frequent travelers, the Southwest Airlines Companion Pass is the holy grail. It allows you to choose a person to fly with you anywhere, for free. You read that right: your partner, sibling, friend, or family member can tag along everywhere you fly, gratis.

Earning the Companion Pass is a real challenge, however. You’ll have to either earn 110,000 qualifying miles or fly 100 qualifying one-way flights, all with Southwest and all in a single calendar year. The Companion Pass is then good for the remainder of that year as well as the following calendar year. In theory, when timed properly, this could give you a full two years of free flights for another fellow flier.

If you’re interested in how to obtain a Companion Pass, read on. Plan carefully, however, as you’ll want to time things to start as early as possible in the new year. It’s much less valuable to earn one over the next couple of months (and only get to enjoy it through the remainder of 2016)!

Earning the Companion Pass

Accruing 110,000 miles (also known as “points,” in some parlances) or 100 one-way flights in a single year seems impossible to all but the most frequent of travelers. Those are quantities that only seem accessible to those who fly very often (for work, perhaps), and have some control over the airlines with whom they fly.

Let’s focus here on the miles. The easiest way to earn Southwest miles is through credit card bonuses. Chase offers three different Southwest credit cards: the Premier, the Plus, and the Premier Business.

Read More About these cards here.

Currently, the Premier and Plus cards offer a bonus of 40,000 miles with a $1,000 minimum spend, but referral links  on the Internet can get you the larger 50,000 mile bonus. The Premier Business also carries a 50,000 mile bonus. You can find local advertising in airports for these credit cards with the 50,000 mile bonus.

If you’re applying for these cards, it’s important to understand that they all fall under Chase’s 5/24 rule. This means that if you’ve applied for 5 or more lines of credit (all types of credit, not just with Chase) in the past 24 months, you’ll be denied for any of these cards.

If you’re just getting started with travel hacking, I would strongly recommend you instead prioritize the Chase Sapphire Preferred and Chase Sapphire Reserve before looking into the Chase Southwest cards. The Companion Pass is an amazing deal, but the flexibility and large signup bonuses with the Sapphire cards are significantly more valuable to most travelers.

Learn All About the Chase Sapphire Preferred card here.

By applying for and earning the bonus on the Southwest Premier and Plus cards, you’ll have spent $168 in fees and $4,000 in meeting the minimum spends. But, you will have earned at least 104,000 Southwest qualifying miles. You’ll need to earn the next 6,000 miles by making purchases on the cards, taking flights or renting cars, or by transferring from hotel programs.

Hyatt hotel points are a popular option for this, but it transfers at a 2.5:1 ratio. So, you’d need 15,000 Hyatt points to convert to 6,000 Southwest Rapid Rewards miles. Another popular option is using Marriott’s Flight + Hotel booking awards. If you’re points-rich with Marriott, you may be able to earn significant amounts of Rapid Rewards miles.

Finally, keep in mind that the 110,000 miles you earn for the Companion Pass don’t go away — that is, you’re not losing your 110,000 miles by getting the Companion Pass. You can use all of those miles to book flights and then tack on free second flights!

Using Your Companion Pass

Traveling with your Companion Pass is fairly straightforward. The pass has no blackout dates or seat restrictions, so you can book flight any time, in any class, and earn a free second seat for your companion.

To book your companion’s flight, first purchase and book your flight using cash or miles through Southwest, just as you would normally. Then, book a second flight for your companion, again through Southwest, but this time by selecting the “Rapid Rewards Companion Pass” booking option. You can do this easily online, or by calling in to Southwest’s toll-free reservations number.

Both your ticket and your companion’s must be on the same flight on the same date and time. If you end up cancelling your flight, your companion’s flight will also be cancelled. If you’d like to change your flight, you’ll also have to change your second ticket. You also have to show up and check in for the flight together, so make sure to bring the physical Companion Pass and, of course, valid forms of identification.

Changing Your Companion

If you have a Southwest Companion Pass, you should know that you can actually change your designated companion, up to three times each calendar year! Since there’s a limit on the number of times you can change it, it might be good to structure these changes around beginning- or end-of-year vacations. So, for example: start the year off by taking a trip with a sibling or relative somewhere. Then swap your companion to your partner, and enjoy free flights throughout the year. Finally, towards the end of the year, change your companion to another relative or friend, and take another trip.

Keep in mind that changing your designated companion can take up to 21 business days on the Southwest side — so plan carefully!

For New Travel Hackers Only

Unfortunately, due to Chase’s 5/24 restrictions, the Southwest Companion Pass is going to be difficult to earn for veteran travel hackers. People who are new to the scene should strongly consider it as a second priority, after the Chase Sapphire Reserve and Preferred credit cards. When timed correctly, though, the Companion Pass can save you thousands of dollars over the course of two years!


Review of the New USAA Visa and Its Benefits

After first announcing the change almost a year ago, USAA has switched from MasterCard to Visa as its credit card processor. The United Services Automobile Association serves military members and their families, who comprise a large bulk of our population. It’s also one of the largest issuers of debit and credit cards in the United States. So, as you can imagine, this is a big blow to MasterCard.

This change is, of course, good news for Visa. Visa currently holds the majority of market share in the credit card industry — about 50%. Acquiring USAA as a client only puts Visa further ahead.

For USAA credit card holders, this should be good news as well.

What’s Changing

The switch will bring Visa’s state-of-the-art capabilities to USAA credit card holders. For one, Visa is the world’s largest electronic payment network. It’s widely accepted by merchants and ATMs around the world. So, you’ll have no problem using your card across the country and abroad.

Another big feature is the elimination of foreign transaction fees. When you travel abroad, not only will your card be accepted by most merchants, but you’ll also enjoy not having to pay an extra fee on your purchases.

Your card number will change, so that is one downside. A few minutes out of your day to update your billing accounts with the new information is all you need, though.

If you travel abroad frequently, this change will definitely benefit you. Overall, the switch should be a good one for most USAA credit card holders.

What’s Staying The Same

Despite these changes, some things will remain the same:

  • Your PIN will not change during the conversion from MasterCard to Visa.
  • Your rewards points and cash back earned on your MasterCard will roll over to the Visa card. The rewards program is also staying the same.
  • You’ll keep the same terms of your account, including things like interest rate and credit limit.
  • Your account history will remain on your credit report and your credit score will not be affected.

It’s clear that USAA really thought this transition through. They obviously worked hard to make sure the switch was executed properly, with little impact to credit card holders.

Benefits

Let’s take a look at all the USAA Visa credit cards and their benefits:

Cash Rewards Visa Signature® Card

  • Up to 1.25% cash back on everyday purchases
  • No limit on cash back earnings
  • Redeem cash rewards anytime
  • No foreign transaction fees
  • No annual fee

Preferred Cash Rewards Visa Signature® Card

  • Up to 1.5% cash back on everyday purchases
  • No limit on cash back earnings
  • Redeem cash rewards anytime
  • No foreign transaction fees
  • No annual fee

USAA Rewards Visa Signature® Card

  • One point for every dollar spent on everyday purchases
  • 2,500 bonus points with first purchase
  • No limit on points earnings
  • No expiration date for points
  • Redeem points for cash, gift cards, travel, or donations to a military affiliate group
  • No foreign transaction fees
  • No annual fee

USAA Rate Advantage Visa Platinum® Card

  • Lowest interest rate card
  • No foreign transaction fees
  • No over-the-limit fee
  • No annual fee

USAA Classic Visa Platinum® Card

  • Periodic consideration for automatic upgrade to a premium credit card
  • No foreign transaction fees
  • $35 annual fee

USAA Secured Card Visa Platinum® Card

  • Determine your own credit limit, up to $5,000, with an interest-earning CD
  • No foreign transaction fees
  • $35 annual fee

On USAA’s website, the credit cards have an average review rating of 3.9 out of 5 stars. USAA also has a tool on its website for you to answer a few questions in order to get a credit card recommendation.

Wrapping Up

All in all, USAA’s switch of credit card processors from MasterCard to Visa is a good move for all involved — except for MasterCard, of course. As the nation’s largest credit card processor, Visa continues to dominate the market with their share of half the market.

Credit card holders will enjoy multiple benefits that make this card good for use while traveling abroad. First, there is no foreign transaction fee for all Visa cards. Second, Visa is widely accepted at merchants across the world. So, you’ll have no problem using your card at home or abroad.

With six different Visa cards to choose from, USAA appeals to a wide range of people within the population of military members and their families.


Chase Freedom Unlimited Visa Review

Chase has recently begun offering a new card, the Freedom Unlimited Visa. It comes complete with generous cash back rewards, a 0% introductory rate, a bonus of up to $150, and a host of other features and benefits. It competes well for an everyday spending card. Let’s walk through the details in this review.

Unlimited Rewards

You earn 1.5% cash back on every purchase with this card, with no limits on the rewards. Redeeming your cash back rewards is easy: cash them in at any time and in any amount. Your rewards also don’t expire, as long as your account is open and in good standing.

Each $1 in rewards is equal to 100 points, which comes out to $.01 per point. Points can be earned anytime you or an authorized user of your card make a purchase of either products or services. You also don’t have to worry about signing up for quarterly categories (as with the standard Chase Freedom card).

Certain transactions will not apply towards rewards. These include balance transfers, cash advances, traveler’s checks, money orders, casino gambling, or other betting transactions.

Bonus Offer

Chase is currently offering a bonus of up to $150 after you spent $500 on purchases within the first three months of opening your account. The bonus offer is available only if you are a new Chase Freedom Unlimited cardholder. You will receive 15,000 bonus which can be redeemed for $150 cash back. The bonus points will post to your account after 6 to 8 weeks.

You can also qualify for an additional $25 bonus by adding your first authorized user. (They also need to make a first purchase within three months.) You will receive 2,500 bonus points which can be redeemed for $25 cash back. Once again, the bonus points will post your account after 6 to 8 weeks.

Card Features

The Chase Freedom Unlimited Card is offered with no annual membership fee, as well as a host of other features.

The card includes Zero Liability Protection. This means that you won’t be held responsible for any unauthorized charges on your card, or the use of your account information. You can also feel more secure with Chip-Enabled Security, for additional protection of your account.

One of my favorite features is Purchase Protection. This means that any purchases made with the card are protected for 120 days from damage or theft. (Note that there is a maximum of $500 per claim, and $50,000 per account.)

You’ll also enjoy Price Protection coverage with the Chase Freedom Unlimited. Say you make a purchase and later on find a lower price advertised either online or in print (within 90 days, for US purchases only). Chase will reimburse you for up to $500 per item ($2,500 per year).

Lastly, you also get a complimentary Auto Rental Collision Damage Waiver. This feature enables you to decline the optional collision insurance when you charge your car rental on your card.

Rates and Fees

The Chase Freedom Unlimited Card is offered with no annual membership fee, and no minimum interest charge.

You will pay a fee of $5 or 5% — whichever is greater — of the amount moved on balance transfers. Cash advances will come with a $10 or 5% fee; again, whichever is greater. Foreign transactions will have a fee of 3% applied to the amount of the transaction, in US dollars.

If you’re late making a payment, there is a tiered fee structure. If your account holds a balance of less than $100, your late fee will be up to $15. If your balance is between $100 and $250, the fee will be up to $100. And if your balance is over $250, the fee will be up to $37. Lastly, returned payments incur a fee of $37.

Introductory Interest Rates

For both purchases and balance transfers, there is a 0% Intro APR that applies to the first 15 billing cycles that your account is open. Once the introductory period is over, your rate will vary depending upon your creditworthiness.

For either cash advances or overdraft advances, the rate is 25.24%.

No interest will be charged on your account if you pay the entire balance by the due date. That will be a minimum of 21 days after the close of each billing cycle.

Interest rate calculation: After the introductory period, your interest rate will be calculated based on the Prime Rate (currently 3.50%), plus a margin of between 10.74% and 19.74% in the case of either a purchase or balance transfer. For cash advances and overdraft advances, 21.74% is added to the Prime Rate. The maximum APR in either case is 29.99%.

You can get more details on the Chase Freedom Unlimited Card here.


Ally CashBack Credit Card Review

In an exciting move, Ally Bank has introduced its very first credit card: the Ally CashBack. This new rewards-earner offers something for everyone and makes a good competitor when stacked against other cash back cards, right off the bat.

Before establishing their inaugural credit card, Ally Bank conducted a series of surveys to find out exactly what the market sought. Their findings?

Of credit card-users surveyed, 58% said they preferred a cash back option over travel rewards, gift cards, or even introductory interest rates. On top of that, 80% of respondents said that if rewards were earned, they would prefer to hold various financial products — such as loans, checking/savings accounts, and credit cards — with the same bank, rather than spread them out.

Ally took this information and created the Ally CashBack, which I expect to hold its own among other cash back offers out there. Here is a bit more about the card:

The Rewards

In an attempt to be beneficial to all cardholders, Ally eliminated rotating categories and gave its highest cash back rate (2%) to the categories that apply to pretty much everyone: gas and groceries.

While there are cards that offer higher percentages for either category, they are often rotating (such as 5% back with Discover it® and Chase Freedom® during those promotional quarters). The exception would be my personal favorite, the American Express Blue Cash Preferred — which offers up to 6% on groceries and 3% on gas — though that card also includes an annual fee.

For all purchases not involving gas or groceries, the Ally CashBack card gives 1% back. There is no limit on rewards and they do not expire as long as your account is in good standing.

Bonus — If you’re a customer with the bank, you’ll receive an additional 10% cash back when you deposit your rewards into an Ally non-IRA Online Savings, Interest Checking, or Money Market account. This convenience factor is similar to Fidelity’s Rewards Visa Signature® cash back card, though that one does not offer a bonus for redeeming into existing accounts, as you’ll get from Ally.

You can visit the Ally CashBack site to explore their cash back calculator. Enter your monthly spending on gas, groceries, and everything else, and it will tell you not only your annual rewards, but the potential bonus cash back for depositing in an Ally account.

Ally1

APR, Annual Fee, and Sign-up Bonus

In the quest to be as competitive as possible, Ally is also offering introductory APR for balance transfers: 0% for 12 months. There is no introductory rate for purchases and the standard APR is 13.24-23.24%, depending on creditworthiness.

The card comes with no annual fee, making its competitive edge just a bit sharper. Also, for a limited time, you will receive an initial spending bonus of $100 when you make $500 in purchases over the first 3 months of holding the card.

Other Extras

Ally was named the Best Online Bank of 2016 and the number of customer-friendly benefits they offer with their products spills over into the new credit card domain. Namely, these include 24/7 customer service, as well as online and mobile access to all of your accounts.

The Drawbacks

No card is perfect, and the Ally CashBack is no different. While it offers a 0% balance transfer APR for 12 months, it does not have a 0% purchase APR, like the Chase Slate® card or the Blue Cash Everyday® Card from American Express.

Its 2% cash back on groceries and gas is a solid offering, though other cards may offer more at times. For example, Chase Freedom® and Discover it® with CashBack Match™ both offer 5% back on both gas and groceries — the caveat being that those are rotating, quarterly categories (so, you don’t get that rate year round). For some, the Blue Cash Everyday® Card from American Express may be the best option, with 3% back all year on groceries and 2% all year on gas (all other categories get 1% back).

Whether the Ally CashBack is the card for you depends on where you spend your money, but it’s certainly worthy of consideration.

In Summary

There are cards out there that offer a higher percentage of cash back, though only a few of them have no annual fee. While this is Ally’s first foray into the credit card realm, they are off to a strong start with the Ally CashBack, offering:

  • 2% cash back on gas and groceries
  • 1% cash back on all other purchases
  • 10% cash back bonus for redeeming into certain Ally accounts
  • Introductory 0% APR for 12 months on balance transfers
  • $100 initial bonus for making $500 in purchases in your first 3 months
  • No annual fee
  • Benefits such as 24/7 customer service and online/mobile account access

It will be interesting to see how the new Ally card competes in the cash back arena, but my gut tells me it will be a strong contender right out of the gate.

You can apply for the card here.


Change Is In The Air: How the AAdvantage Program Will Affect You

American Airlines is no stranger to the mileage rewards game. In fact, the AAdvantage frequent flier program is the largest and longest-running one around, and dates all the way back to 1981. Other airlines followed suit after its introduction, and a more competitive market of the sky was born.

The game has changed considerably since then. Airlines added expiration dates and fees to their rewards, redemption flights have become more miles-expensive, and elite tiers are even more difficult to climb. Now, American Airlines has rolled out even more changes to their program, which will affect every member of AAdvantage®.

Earn points based on what you paid, not how far you traveled

Until now, miles earned in the rewards program have been based on just that: the number of miles traveled. Beginning with flights on August 1, 2016, though, AAdvantage®  will begin awarding miles based on the actual cost paid for your travel.

This is either good or bad news, depending on what kind of traveler you may be. Flexible travelers and bargain shoppers (or CheapOair-frequenters, like myself) will be penalized by the new changes. These people are willing to alter their travel plans by hours or even days in order to save a buck, and typically plan ahead. They are often able to book long-haul travel for discounted prices, and their cost-to-distance ratio is the lowest.

Premium fliers and those willing to pay a bit more for their tickets will reap the most benefits. That includes most business travel, which tends to be last-minute or based on a rigid schedule. Price is less of a concern for these folks, who are willing to pay more for short-notice travel, particular flight schedules, and upgraded seating. As a result, they pay more per mile, and will enjoy greater benefits from the new AAdvantage® system.

For example, let’s take a discounted, $300 (base fare) round-trip flight from Washington, DC to Orlando. This flight covers 2724 miles of travel, which would have resulted in 2724 reward miles for a base level member. Under the new program, basic AAdvantage® members will receive 5 points for every dollar spent, which would result in 1,500 awarded miles for this same flight… a difference of -1,224 miles. That’s a substantial change.

If you’re a full-price flier, though, you may enjoy the new system. Take a short trip from Washington, DC to NYC, for instance. This 1,000 mile round-trip journey would have netted you 1,000 rewards miles with the old rules. Under the new program, though, a mid-week coach ticket (running about $350 base fare) now earns you 1,750 miles… a difference of +750 miles. This also doesn’t include any booking class or promotional bonus miles.

Depending on your elite status, you will earn more than 5 points per dollar spent. Here’s AA’s chart for travel rewards based on status:

aa1

New elite level: Platinum Pro

If you spend a fair amount of time in the skies, chances are you’ve made your way up the elite level rungs. Well, now you have a new goal with the Platinum Pro tier. It lies between the Platinum and Executive Platinum tiers, and will be available beginning in 2017.

This shiny new level includes oneworld® Sapphire status, 9 reward miles/dollar spent (an 80% bonus), two free checked bags per flight, and complimentary flight upgrades within North America and between the US/Central America. Upgrades can also be confirmed as early as 72 hours before a flight, compared to 48 hours for Platinum and 100 hours for Executive Platinum.

To meet the requirement for this new elite status, or any of American Airlines’ status level, one will need to acquire a number of both elite-qualifying miles (EQMs) and now, also…

Elite-qualifying dollars (EQDs)

While AA isn’t the first to add a qualifying dollar amount (Delta and United have already done this), it’s not a very welcomed change. In addition to meeting mileage (EQM) and qualifying-segment (EQS) minimums, AAdvantage® members will now also need to spend minimum dollar amounts (EQD) before gaining elite status. Here’s the breakdown:aa2

The one perk to the change? AA will be removing their former requirement that 4 segments must be traveled on American/American Eagle throughout the qualifying year in order to gain elite status.

Taking your status level into account, AA.com will begin displaying earned miles for flights during the booking process, beginning in late June of this year.

Upgrade prioritization

Under the new system, upgraded flights will be prioritized based on both elite status and EQDs. This means that if there’s one upgraded seat available, and two equal-level members request that seat, the one who spent the most in qualifying dollars over the past 12 months wins the upgrade. The EQD total taken into consideration will be on a rolling 12-month basis, sorted by tier.

Overall

The new AAdvantage® changes follow suit with many of other frequent flier programs out there, shifting the focus from how much and how far their customers travel with them, to how much they spend. The almighty dollar wins out in the end, and while there will be some winners, most will find that their mileage earned will take a hit.

Business and luxury travelers will be the most enthused with these changes, earning a greater percentage of rewards miles based on their fare cost. Early planners and bargain fliers will find that their dollars don’t stretch quite as far when it comes to miles accrued. Those attempting to climb the elite status rungs may be irked to learn that they now have three qualifying minimums to meet, the newest based on their monetary expenditure with the airline (EQSs, EQMs, and now EQDs). Oh, how the times are changing.

What do you think about the AAdvantage®  program changes? How will it affect your frequent flier usage? Sound off below.


Southwest Airlines Rapid Rewards Premier Credit Card Review

The Southwest Airlines Rapid Rewards Premier Credit Card offers 50,000 bonus points to new cardmembers who spend $2,000 within 3 months of opening an account. It also offers up to 2 points per dollar spent.

Rewarding loyalty, this card gives you 2 points per dollar spent on Southwest Airlines Purchases and participating Hotel and Car Rentals. Giving you 6,000 points after your Cardmember Anniversary and 1 point per dollar on all other purchases the Southwest Airlines Rapid Rewards Premier Credit Card offers its user the ability to earn many points to put toward flights with Southwest Airlines.

Southwest Airlines Rapid Rewards Premier Card Snapshot

  • Earn 50,000 points after you spend $2,000 on purchases in the first 3 months your account is open
  • Points Don’t Expire, there are no blackout dates, and bags fly free
  • 2 points for every $1 spent on Southwest Airlines purchases
  • 1 point for every $1 spent on all other purchases
  • 6,000 points after your Cardmember Anniversary
Learn more about this and other travel rewards credit cards, and apply online, at CompareCards.com.

Rewards Program

Earning Rapid Rewards Points

The Southwest Airlines Rapid Rewards Premier Credit Card benefits from a simple yet rich rewards program.

Bonus Points: Earn 50,000 points after you spend $2,000 on purchases in your first 3 months of opening an account. You also receive 6,000 bonus points after your cardmember anniversary.

2x Points: Earn 2 points for every dollar you spend on Southwest Airlines purchases and purchases at participating Hotel and Car Rental partners.

1x Points: Earn 1 point for every 1 dollar you spend on all other purchases.

Using Rapid Rewards Points

The most frequent use of Rapid Rewards Points is for free airfare on Southwest. Unlike some other airlines, there is no set number of points needed for travel. Instead, the number of points require for a free airline ticket depends on “destination, time, day of travel, demand, fare class, point redemption rate, and other factors and is subject to change,” according to Southwest Airlines.

To give you an idea of the value of the points, here are the redemption values on several flights (keep in mind that these can change daily):

From to Estimated Points
Dallas Los Angeles 22,074
New York City Los Angeles 29,250
New York City Chicago 19,890
New York City Chicago 19,890

You can also use points for rental cars, hotels, gift cards and other rewards. Here the points are typically worth 1 cent (e.g., $100 Best Western travel card costs 10,000 points).

Other Perks

The Southwest Airlines Rapid Rewards Premier Credit Card offers several additional benefits:

  • No Foreign Transaction Fees: No foreign transaction fees on purchases made abroad
  • No blackout dates or seat restrictions: Now you never have to worry about pesky blackout dates or seat restrictions when you redeem your rewards points
  • Bags Fly Free: Now your first and second checked bags fly free. Weight and size limits apply
  • No Change Fees: When you have to change your flight, some airlines charge up to $150 on top of paying a difference in fare. Unlike competitors, Southwest Airlines understand unexpected events may happen and don’t charge you a fee for changing

What we like about the Southwest Airlines Rapid Rewards Premier Credit Card

  • Earn 50,000 bonus points for new customers after spending $2,000 on purchases within 3 months
  • Earn 2 points/$1 spent on Southwest Airlines purchases and participating Hotel and Car Rental partners
  • Points never expire, no blackout dates, no seat restrictions
  • No rewards cap

What could be better

  • $99 Annual Fee
  • Requires Excellent Credit
    Excellent Credit
    Credit cards for excellent credit are
    intended for those with a credit score of 700 or Higher.
    Get Your Free Score

Summary

  • Earn 50,000 points after you spend $2,000 on purchases in the first 3 months your account is open
  • Points Don’t Expire, there are no blackout dates, and bags fly free
  • 2 points for every $1 spent on Southwest Airlines purchases
  • 1 point for every $1 spent on all other purchases
  • 6,000 points after your Cardmember Anniversary
  • Regular Purchase APR: 15.99% Variable
  • Penalty APR: None
  • Annual Fee: $99
  • Late Payment Fee: $15, $27, or $37
  • Foreign Transaction Fee: None
  • Ideal for those looking for a card that provides Southwest Airlines points on all purchases
  • Ideal if for using Southwest Airlines and its travel partners frequently
  • Great for those traveling internationally with no foreign transaction fees
  • Requires Excellent Credit
    Excellent Credit
    Credit cards for excellent credit are
    intended for those with a credit score of 700 or Higher.
    Get Your Free Score
Learn more about this and other travel rewards credit cards, and apply online, at CompareCards.com.

How to Value Your Miles and Points With the CPP Formula

A common question I see when discussing rewards cards from various issuers is how to compare the different rewards redemptions available.  For example, which is more valuable: 50,000 Chase Ultimate Rewards points, or 50,000 Starwood Preferred Guest points?

The answer in many cases is, unfortunately, “it depends”.  Let’s walk through some quick back-of-the-napkin calculations that you can do to determine the value of your points or the value of your redemptions.

Defining the CPP Metric

The easiest way to value points redemptions is to look at the cash value, or “cents per point” metric.  If you’re able to purchase a $50 gift card for 5,000 points, that gives you a CPP of $0.01 or 1¢ per point.  It’s a very simple calculation: simply take the dollar value of your redemption, turn it into cents (shift the decimal), and divide by the number of points you used for redemption.  Some examples:

  • $250 night hotel stay for 12,500 points: 2 CPP ($250 / 12,500 * 100)
  • $450 flight for 15,000 points: 3 CPP ($450 / 15,00 *100)
  • $100 Bluetooth speaker for 10,000 points: 1 CPP ($100 /10,000 * 100)

Naturally, you want to be looking at rewards that maximize your CPP, so we’ll examine some below.  First, though, a note on “points” vs. “miles”: Many airline cards use “miles” as their metric instead of points.  Treat them as equals; they use the word “miles” because it has marketing value for them and can be immediately and subconsciously associated with flying, but miles and points are one and the same.

The Bad Redemptions

You can go ahead and scratch off certain categories or redemptions as an effective usage of your points.  Redeeming for cash back, gift cards, or merchandise are all generally a terrible usage of points.  In most of these scenarios, you will be redeeming points at 1 CPP at the most.  If you’re in desperate need of one particular item, or have a rare need for a gift card or statement credit, by all means use your points.  But if you’re finding yourself doing that regularly, you’d be better served switching to a cash back credit card instead of a rewards card.

Travel Redemptions

In general, redeeming your points and miles for travel rewards will provide you the best return.  For example, an American Airlines round-trip flight from Richmond, VA to New York City would cost around $500.  Using AA miles, it comes out to 15,000 points with $86.20 in fees.  It’s important to factor in those fees when counting CPP, so here’s how:

(Travel value – reward fees) / points

It’s very similar to the original formula, but discounts the associated fees to reflect the pure value of the points you’re using.  In our American Airlines example, we’re still coming out at 2.75 CPP, which is a pretty reasonable return for your miles.

Your points can actually become more valuable when looking at business or first-class redemptions.  A round-trip first-class flight from NYC to London could cost you over $9,000.  Using American Airlines miles again, you’d be looking at around a $1,100 outlay in fees and 170,000 miles.  That works out to around 4.6 CPP, nearly doubling what you’d get from an economy redemption.

Related: Read our Review of the Citi®/ AAdvantage® Platinum Select® MasterCard®

The First Class Trade-off

Redeeming for more luxurious flights can be really enjoyable, especially for longer trips.  I know I wish I’d flown first-class when I traveled a couple of years ago from DC to Seoul, South Korea.  You should consider, however, the trade-off in quantity.  For the price of a first-class flight, you could usually redeem at least 2 (and usually 3!) economy or saver flights.  While the economy flights may not be as great of a value for your points, you’ll stretch your miles further and be able to travel more by going economy.

Taking it Further

In future articles, I’ll explore the value of cash back cards, and compare rewards points from different issuers.  The rewards landscape is competitive, but some types of points, for example Starwood Preferred Guest points, are widely considered to be more valuable than others.  We’ll take a closer look at which points are best to accrue and how to redeem them for maximum value.  Stay tuned!


Starwood Preferred Guest® Credit Card — 25,000 Bonus Starpoints

The Starwood Preferred Guest program, or SPG for short, is one of the most rewarding travel programs available. From free stays at 5-star hotels to free air travel on almost any airline with no black out dates, Starwood Preferred has become synonymous with first class travel. And with the Starwood Preferred Guest® Credit Card from American Express, it’s easy to earn Starpoints quickly.

Starwood Preferred American Express

This card offers one of the fastest ways to build up Starpoints. From the 25,000 Starpoints bonus to earning Starpoints with each purchase, it’s an ideal card for those who frequently stay in Starwood properties. Starpoints are also considered by many to be the most valuable points, in part because they can be transferred to airline miles programs on a 1 to 1 basis.

Learn more about this and other travel reward credit cards and apply online at CompareCards.com.

Starwood Preferred Guest® Credit Card from American Express Snapshot

  • Our highest Starpoints® offer ever. Get 25,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months.
  • No Foreign Transaction Fees on international purchases.
  • Receive free in-room, premium internet access. Booking requirements apply.
  • Enjoy complimentary, unlimited Boingo Wi-Fi on up to four devices at more than 1,000,000 Boingo hotspots worldwide. Enrollment required.
  • Get free nights at over 1,200 hotels and resorts in nearly 100 countries with no blackout dates. Some hotels may have mandatory service and resort charges.
  • $0 introductory annual fee for the first year, then $95.
  • Terms and limitations apply.
  • More details: Starwood Preferred Guest® Credit Card from American Express

Rewards Program

There are three components of the Starwood Preferred Guest® Credit Card from American Express rewards program: (1) the 25,000 bonus Starpoints; (2) 5 Starpoints on select purchases; and (3) 1 Starpoint on everyday purchases.

1. 25,000 Bonus Starpoints: Get 25,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months.

2. 5 Starpoints: Earn up to 5 Starpoints® for each dollar of eligible purchases at participating SPG hotels – that’s 2 Starpoints for which you may be eligible as a Card Member in addition to the 2 or 3 Starpoints for which you may be eligible as an SPG member

3. 1 Starpoint: Earn 1 Starpoint® for all other purchases.

Other Perks

The Starwood Preferred Guest® Credit Card from American Express offers several additional benefits:

  • Starwood Elite Status:As a Card Member, receive credit for 5 nights and 2 stays each year toward SPG Elite status. That’s just 20 nights away for SPG Gold status and 45 nights away for SPG Platinum status in a calendar year.
  • Free In-Room Premium Internet:Receive free in-room, premium Internet access while staying with SPG Participating Hotels.
  • Stay Connected: Enjoy complimentary, unlimited Boingo Wi-Fi on up to four devices at more than 1,000,000 Boingo hotspots worldwide.
  • No Foreign Transaction Fees: Use your Starwood Preferred Guest® Credit Card from American Express globally without incurring foreign transaction fees.
  • Turn Starpoints into Airline Miles: Redeem Starpoints for free flights on over 150 airlines with SPG Flights with no blackout dates. Transfer Starpoints to nearly 30 airline frequent flyer programs, mostly on a one-to-one basis.Receive a 5,000 Starpoint bonus when you transfer 20,000 Starpoints to a participating frequent flyer program.

What we like about the Starwood Preferred Guest® Credit Card from American Express

  • 25,000 Bonus Starpoints
  • Up to 5 Starpoints on select purchases
  • No foreign transaction fees
  • Transfer of Starpoints to airline miles

What could be better

Summary

  • Our highest Starpoints® offer ever. Get 25,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months.
  • No Foreign Transaction Fees on international purchases.
  • Receive free in-room, premium internet access. Booking requirements apply.
  • Enjoy complimentary, unlimited Boingo Wi-Fi on up to four devices at more than 1,000,000 Boingo hotspots worldwide. Enrollment required.
  • Get free nights at over 1,200 hotels and resorts in nearly 100 countries with no blackout dates. Some hotels may have mandatory service and resort charges.
  • $0 introductory annual fee for the first year, then $95.
  • Terms and limitations apply.
  • More details: Starwood Preferred Guest® Credit Card from American Express
  • Regular Purchase APR: 15.49%-19.49% (Variable)
  • Penalty APR: 29.49%
  • Annual Fee: $0 intro annual fee for first year, then $95
  • Late Payment Fee: Up to $37
  • Foreign Transaction Fee: None
  • Ideal for those who want to earn Starpoints
  • Requires Excellent Credit
    Excellent Credit
    Credit cards for excellent credit are
    intended for those with a credit score of 700 or Higher.
    Get Your Free Score

Learn more about this and other travel reward credit cards and apply online at CompareCards.com.