Credit Blogspot

The time has long since past when you could consider a travel award to be anything close to free.    Even if you don’t think of the taxes and fees, there are still things you are giving up by using an award, such as the mileage that you would have earned if you had paid out of pocket.

What Is Your Award Worth?

It is refreshing to see this thoughtful analysis of the value equation of an award ticket over at the One Mile at a Time blog.   It is not that simple, however it is a nearly comprehensive view of the financial picture when you choose to redeem an award.

The first consideration in the post, “Realize the difference between actual cost and value to you” is a great point that I have yet to see mentioned elswhere.   The idea is that many people probably wouldn’t pay out of pocket for first class or even business class awards, so why figure the airline’s retail price as the value you are getting.   Instead, figure on what what the price would have to be for you to bother to pay for the seat out of pocket.   Sure, your airline might charge $1,200 for first class on a short flight, but it might not be worth it to you to pay more than $100 more for the upgrade, if that.     In that case, you should really figure only the coach price plus $100 more to determine your true value returned per mile spent.

The post also prompts you to consider the miles not earned by using an award.    I would also have to add a couple other thoughts here.   In addition to the air miles, consider the credit card miles.   While this may seem minor, it may be significant if you are using a card from the airline itself that will provide you with double mileage or more.     The other important consideration is the Elite Qualifying Miles you are forgoing.    Making the next elite level in a frequent flier program can have huge consequences for frequent travelers, including waived fees, and guaranteed upgrades.

All and all, it is a really good starting point for determining if an award is worth it.    In the end, you have to balance that out against what a point is worth.      If you are using a credit card to accumulate points, then you have to use a baseline of what your cash back card would have given you.

Tennessee Gets Progressive

The good folks in the Volunteer State are hardly known for their progressive, pro-consumer politics.   Yet the state that gave us Al Gore and voted against him in the 2000 election, has a few tricks up it’s sleeve.    Tennessee’s pro-business Senate Commerce Committee has taken up a bill that would actually be pro consumer, according to this story.     The idea is that credit card companies would be forced to consider the postmark on a payment rather than the date they feel like mark it as received.      This is an eminently reasonable bill is one that I am sure the credit card companies will oppose, even though more than one company has been caught holding payments and marking them as late.

Banana Republic Goes Bananas

It seems that a number of people are reporting that the clothing retailer, Banana Republic, has been reducing their lines of credit on their store credit cards.    That is not such a big deal these days, in and of itself.    What is interesting is that they are reducing to merely $100, less than the cost of much of their offerings, according to this story.

Now, I have to admit, I had no idea that Banana Republic even has a credit card.     The problem actually lies in the bank offering the card, GE Money Bank.   That said, $100 is an almost trivial credit limit.     As ridiculous as it is for shoppers, the real loser here is actually the retailer.    Their affiliated credit card has done a fantastic job of upsetting their customers while making it difficult for them to make purchases at their store.      It strikes me as exactly the opposite of what they probably had in mind when they decided to offer a credit card in the first place.

On the other hand, what do you expect from a company that names itself after the very epitome of incompetent beaurocracy.