Talking Points with Thrifty Traveler: April 20th
Our weekly series, Talking Points with Thrifty Traveler, is designed to help readers answer any questions they might have for the Thrifty Traveler team. The questions can be anything from credit card points & miles, travel recommendations, flight questions, or anything you want us to answer. Have a question? Email me at [email protected] to be featured in our Friday Talking Points segment.
How does converting one credit card product to another effect my credit score? – Aaron M.
There are many situations in which it makes sense to convert a credit card product that you have open into an entirely different credit card product with the same financial institution. The most common reason this is done is to avoid an annual fee. By doing what is referred to as a product conversion, the bank will see this as the same line of credit which will keep your credit history intact.
If you do a product conversion to a no annual fee credit card product, you are now avoiding an annual fee without affecting your credit score. This is definitely an option that needs to be considered before you cancel a credit card outright. The length of your credit history is a factor that makes up a part of your credit score. For more information on how your credit score is calculated, see our guide to Understanding Your Credit Score.
What is the best way to use the $200 airline credit offered from the American Express Platinum Card? – John S.
One of the benefits offered from the American Express Platinum Card is an annual $200 airline credit that can be used on your selected airline. Each year, you will select an airline that you can apply the $200 credit towards.
The credit is meant to pay for things like airline incidental fees such as checked bags, change or cancelation fees or lounge access. There have even been reports of the credit working for the taxes and fees associated with an award ticket, however, your experience may vary depending on the airline you select.
While these are all decent ways to use the credit, my favorite way to use it is buying gift cards for my selected airline. This won’t work on all airlines, but I can confirm that it has worked for Delta for the last four years.
Each year, after January 1st, I head to the Delta website and purchase 4, $50 Delta e-gift cards ($200 total). After doing this, my $200 statement credit is triggered and I am reimbursed for the charge. The best part of this is that the benefit is a calendar year benefit while the annual fee on the credit card is on a cardmember year benefit.
What that means is if you were to apply for the American Express Platinum Card today, you could take advantage of the $200 airline credit as soon as you get the card. Since you would be opening the credit card in April of 2018, your second annual fee for the credit card would be due in April 2019. Because the airline credit is a calendar year benefit, you can receive the $200 airline credit in January 2019; 3 months before your second annual fee would be due. That is $400 in airline credits before the second annual fee is due. Not to mention all of the other benefits the card provides.
What is the best no annual fee travel rewards credit card? – Lindsay M.
The answer to this is a bit subjective as many people will have a different opinion on this topic. Before we delve into the best options, I will say that generally speaking, cards with no annual fee have subpar reward structures. Even though a card has an annual fee, it is highly likely you can get more value than the fee is costing you by redeeming the points at a good value. Understanding your total cost of ownership for a credit card product you hold is crucial.
That being said, my favorite no annual fee travel rewards credit card out there right now is the new PenFed Pathfinder Rewards Credit Card. Pentagon Federal Credit Union (PenFed) launched the card in January of this year and it contains a number of benefits that you will typically only find on cards that carry an annual fee; such as a $100 airline credit and free Global Entry or TSA Pre✓.
The one caveat to holding the card is that you must be a PenFed member. However, becoming a member is relatively effortless. You can simply donate $17 to the National Military Family Organization or Voices for America’s Troops, and you will be eligible to join. Once eligible to join, PenFed requires opening a savings account with a minimum $5 deposit for membership. There are no fees associated with having this account. These are one time fees that will not apply after initiaiton.
For a full list of our favorite no annual fee credit cards, see our guide here.
Have a question you want answered? Send them to [email protected] to be featured in our weekly segment, Talking Points with Thrifty Traveler.