Monday, August 26, 2013

2B or 22B

A few weeks ago, I started hoarding miles and points from different airlines and hotel programs through credit card spend. My AoR went pretty well and the miles and points did start pouring in. While I am enjoying the process and the miles are coming in thick and fast, I am stumped by what to do with those miles. With the spend bonuses, the actual spend miles, my personal flying miles and other bonus you get from various sources, I have enough miles to buy myself some free flights.

Question is, do I want to have one flight in 2B (Business Class) or 2 flights in 22B (Economy Class).
Let’s do the math- a free ticket from EWR to DEL in United will set me back by 40,000 miles if I fly economy. That’s 16.5 hours in a Boeing 777 with a 31” seat pitch clubbed with 18” inch widths, 4.0 recline and the economy class service (source: Add an additional 20,000 miles, and now I have a flat bed with 20” widths, 76” pitch and the full blown business class service. A return flight this way would set my back by a total of 40,000 miles, which is good enough for another free economy ticket. While this may not seem much, but when this is multiplied in favor of 10 return business flights anywhere in the world, it boils down to this – do I want to visit a few places in style or do I want to a few more places in the regular way.

Photo source: CNN travel - Cathay Pacific Gallery
The question is not for those who have been in the game for years and years and those who churn and burn a million miles an year and travel all alone. They probably don’t care. But for people like me, who are relatively late to the game, have to spend miles not just on self but also on our family members sometime, trying to play the game where the bonuses are dwindling and the rapid devaluation of the miles is only making matters worse, it’s a huge dilemma.

I gave this considerable thought and reached the following conclusion for my own purpose – I can do a bit of both. I have BA miles to burn, but they charge huge surcharge on their redemption tickets, specially the one’s flying out of LHR. So why not use my BA miles, when I fly BA on a paid fare, and use it to upgrade myself to business class. On the other hand, United miles, the best of the miles out there have little surcharge on them, so should use them to buy coach tickets for a vacation. So what if I am in coach for a vacation. Won’t be my first time in coach and won’t be my last for sure. The idea is to use them as fast as I earn them. With the speed at which miles are being devalued, they are best spent now than later. And it takes a lot more time to earn miles for 2 people flying to-fro in business class than coach class. And isn’t that the whole point of earning miles – using them up and not saving them for that flight of fantasy that might never happen.

But what works for you? How do you prefer spending your miles?

Tuesday, August 13, 2013

How Am I Meeting Those Spend Requirements

2 months ago I plunged head first into my first A-O-R. Before I knew it, I was approved for 5 credit cards and was looking at meeting hefty spend requirements to get those mouthwatering bonuses. It was scary. $12,000 to be spent in 6 months. That was a lot of money to be spent really fast. But once the enormity of it had dawned and then passed away, I sat down to devise a plan to meet this requirement.

The first and foremost thing I did was lay my cards out in the order in which I would meet the spend requirements. Amex SPG had the heaviest amount but also the longest tenure - $5000 in 6 months. So it went right to the bottom of the pile. But it also had a first spend bonus. So I made a mental note to make one small charge on the card. The other 4 cards each had 3 months to meet the various spend requirement. So I laid them in order of amount. Net result

1.      First expense on Amex SPG
2.       Chase Marriott ($ 1000)
3.       Chase United ($1000)
4.       Amex Gold ($2000)
5.       Citi AA ($3000)
6.       Amex SPG ($5000)

And now the game began in earnest.

The first thing to do was put the cash in my wallet - away. Every dime from this point onwards was to be spent through credit card. $2.13 for grocery - credit card; $0.99 in Dunkin donut – credit card. This approach made sure that every cent helped me reach my sign up bonus. In the last one month, I have spent just about $27 in cash. The rest all went to my credit card sign up bonus fund. I also got add on card for all the credit cards and gave it to my wife. Since she is not down on the Credit Card game yet, all her expenses were also going towards my purpose.

Once I had this sorted, the next thing to do was find out big expenses that I could channel to my credit card. This is where friends are really helpful. Having lunch with friends? Offered to pay for it with my credit card and collected cash from everyone. Friend needed to borrow cash? Paid through Bluebird cheque and Amazon payments. Friend needed to make some expense online but didn’t have a credit card – offered mine! My friends who knew what I was doing were supportive. The ones, who didn’t know, couldn’t care less. So it was a win-win. Overall I made more than $3000 in payments to friends and group lunches and only $60 of it was actual expense. The rest was just expense on my credit card that my friends paid for.

Next up, pre-paid expenses. I looked for store and accounts on which I made regular expenses to see if I could pre pay something. Telephone bills, grocery store, online stores, anything that we knew we would be spending at any which way. There was just one for us – Movie. My wife and I love watching movies, so I purchased $100 worth of fangando gift cards. They also had an offer on, so I paid just $80 to buy $100 worth of cards. That is what I knew I would easily spend in 4-6 weeks.

But this was still not going to cut it out and I needed to pull out the big guns – enter Amazon Payments and Amex Bluebird.

Amazon payment is an online payment system introduced by Amazon to pay for goods and services to others, specifically for purchases that are not through Amazon website. So if I needed to pay my house help her payment and she has an Amazon payment account, I could pay her through Amazon payment. The beauty of it lies in the fact that you can make the payment through a credit card. Upto $1000 every month, without incurring any charge. This was really helpful in channeling a lot of payments that I would have otherwise made in cash. Any purchase, from a second hand TV to a payment for household help, all could be channeled through Amazon payment. The other person can withdraw the cash to their bank account at no charge.

And the biggest weapon in the arsenal – Amex Bluebird. It’s a checking account alternative by Amex that was the most important to meeting those spend requirements. Bluebird allows loading cash on the account through Vanilla Reload card, which in turn can be purchased through a Credit Card. The VR cards do cost $3.95 for each card, upto a maximum of $ 500 per card. Once I had the money in the bluebird account, I could pay bills online, pay rent, taxes or any other such amount that required a check payment. How ? - Bluebird gives you a check book for payments. And the check books were free till 8/13. So now my rent, which was being paid through check from my checking account, without earning me any points, was now paid through my BB account, helping me get my spend bonus. There is ofcourse the additional 0.79% cost for loading the VR cards, but that’s an expense I chose to bear. Whether I would do it after I have met the spend requirements, is something I haven’t thought about yet. This is the single biggest expense method through the credit card that could be the difference between meeting all the spend requirements and not being able to meet the spend requirements. However, being able to load BB through VR is highly dependent on finding the VR cards at a store that accepts CC as a payment method. And you also run the risk that your credit card company MIGHT classify the transaction as a cash advance. So one needs to be careful.

How I am tracking my expense !!
I made some big mistakes in the process and I would be careful next time around. I was afraid I will not be able to meet the spend requirements and so I went all out in the first month itself. Amazon payments, Bluebird, prepaid expense, group lunches, loaning money, paying for others – everything in one month. My BB could have been locked for excessive transactions. Same for my Amazon payments, thereby locking me out of my money. I could get pulled for financial review. There could also be a fraud alert on my account. Thankfully nothing happened, but it doesn’t mean it couldn’t have happened. I needed to pace myself. If my average requirement was $ 7000 in first 3 months and $ 5000 in next 3 months, then that is what I should have done. Spending $ 5000 in first month, $ 4000 in second month and $ 3000 in third month, got my work done quicker, but also gave me a constant headache. So I would need to be better behaved next time. I also ignored the percentage of my total credit limit that I am using and was way above my personal 20% mark. Infact at one point I was 30% which is too high for me.

Last word of caution to anyone planning to use BB or AP for spending – Please be mindful of what you are doing. There are a lot of blogs out there which give a details risk and reward analysis of these payment methods. There are a lot of grey areas of what is legal and/or allowed in the terms and conditions and what is not. Make sure you read as much as possible and are aware of the risks and the terms and conditions before you make your move. This entire activity for me is one big game. I wouldn’t like to risk a dime of my money or my security, credit report or legal file for this game. I have acquired the knowledge out there to determine what I think is right and wrong and made my choices accordingly. You need to make yours an informed choice.

Next up – What am I doing with those sign up bonuses.

Friday, August 2, 2013

Credit Score Tools

Last time I wrote about how I got started on a credit score. To follow it up, here are the 4 best tools I have come across for finding out your credit report and credit score. If you know of any other and better tools, do tell.

1.       Credit Bureaus (Experian, Equifax, Transunion, – The most accurate way of getting your credit report and credit score, is directly from the credit bureaus. You can go online to the website of these credit bureaus or to and order your score. From what I understand, you are entitled to one free credit report from each bureau every year. But that report doesn’t include your score. The score you need to buy. But the report is a great place to start and make sure that all the information is correct. And if you need more than one report in a year from the same bureau, there is a way for that too. If you apply for a credit card, the bank will send you a letter with your credit score and the bureau they used for getting your score. You are allowed to call them within 60 days and demand the credit report. This I believe is over and above your own annual entitlement of the credit report. If there is anything on the report that you think is wrong, you can contact the credit bureau and get it rectified. Also, has a free 10 day trial. So you can get your score for free one time and then cancel, if you don’t want to continue the subscription. The subscription is $14.95/month.

2. and – These are your true blue FREE credit report website. They will give you your score and your credit report online for free. Creditkarma pulls its details from Transunion, while Creditsesame uses Experian. Take the scores here with a pinch of salt, as these websites use own scoring mechanism to build the score. But it’s a great indicator of what your actual score might be.

3. – If you have an American express account then you can access and have your credit score form all three bureaus. Its $ 14.99 per month, but it also comes with a trial for $ 1 for first 30 days. If you want, you can get your score one time and then cancel the subscription, if you don’t want to continue after 30 days.

4. – Another website that offer to get you all 3 bureau score for $29.95 per month. But again, there is a free trail for $0 for first 7 days. Haven’t got any reviews on this website yet. If anyone does, do share.