Community Magazine October 2014

tishrei 5775 oCtober 2014 55 3 to 5 points, out of a maximum of 850 points. Yet at the same time, getting a new card automatically increases your line of credit, which helps your credit utilization metric as it decreases the amount of available credit being used. Therefore, the immediate effect of a new credit card on a credit score is negligible, and on top of that, the pull affects your score the most within six months and is wiped off your score completely in two years. Still, those planning on applying for a mortgage or car loan in the near future should proceed with caution. Big Bonuses The first tip for the opportunistic card holder is to take advantage of credit card sign-up bonuses. The largest incentives are offered within the first months of signing up for a credit card. Typical sign up bonuses can range from 25,000 to 100,000 points or frequent flyer miles. Oftentimes, in order to cash in on the sign-up bonus, the card holder is required to spend a minimum amount within a certain timeframe. For example, Chase Sapphire Preferred Card, one of the top-rated airline miles credit cards, offers a 40,000-point bonus for spending $3,000 in the first threemonths, which can be easily achieved through normal expenditures in most households. The 40,000 sign-up bonus points yield $500 for travel when you book through Chase, which can be applied towards airfare, hotel, car rentals and cruises. (Also bear in mind that many credit cards that charge annual fees will waive it for the first year.) Since card bonuses are usually most attractive within the first year, a phenomenon called “credit card churning” has gained popularity. “Card Churners” refer to people who churn through credit card applications in order to maximize their rewards. They spend the minimum necessary to cash in on the bonus and then cancel the card a year later to avoid annual fees. For those without debt who pay their balance in full, credit card churning will not affect the credit score, as was explained earlier. In order to stay abreast of the most lucrative cards and latest bonus offers, Card Churners will frequent blogs, forums and websites that alert readers to new deals. Some try to outsmart this system by returning purchases after cashing in on the sign-up bonus points, thereby receiving a sizable payoff of points without any outlay. As a result of this scheme, the credit card company loses its merchant fees that would have been collected on the minimum purchase requirement. The moral and halachic propriety of these “strategic” returns is questionable, and one should therefore consult a posek for guidance. Another way to increase your rewards is by taking advantage of authorized user bonuses. An authorized user is the term for someone who is permitted to use a credit card but is not responsible for paying the balance. Usually an authorized user will receive a card in their own name for making purchases, but the balance will be linked to the primary card holder’s account. Many credit cards offer special rewards for adding authorized users, and families with multiple users making purchases can easily capitalize on this benefit. Chase Sapphire Preferred, for example, pays 5,000 bonus points after the first authorized user makes a purchase within three months. Creative Spending Strategic credit card users target their spending to maximize reward benefits. To review the basics, most credit cards award one point per dollar spent, and each point can be redeemed for 0.01 cents cash back (or 1 percent) and more lucrative rates if the points are redeemed for travel expenses. However, some cards also offer a Maximizing Your Travel Points The possibilities of maximizing travel points to cover vacation expenses are exciting and varied. A 2013 article in the Travel section of The Boston Globe mentioned some remarkable examples. One expert card user “earned more than 100,000 points and miles by paying for a Utah house he built, from construction materials to labor, using his Visa and American Express cards. He and his wife and two kids took a trip to Arizona using miles for flights and points for their Westin hotel, saving them $1,500.” Another shrewd traveler “flew roundtrip to Eastern Europe, Southeast Asia, and South America last year using miles acquired through his credit cards. His flights would have cost $5,500. Instead, with creative spending, sign-up bonuses for his two American Airlines credit cards, and some online research, it cost $170 in taxes and 65,000 miles.” And yet another savvy card holder “racked up 500,000 points from credit card rewards in one year. Using these points, he took a 10-day trip to Paris and the Seychelles worth $15,000. He also flew round trip to South Africa – in first-class seats valued at $7,500 – for $125 in taxes and 110,000 miles.” higher rate on specific services or commodities, with deals ranging from double points to five times the amount of points for spending in a certain sector, such as gas, groceries, dining, or entertainment. On top of that, card holders can participate in both fixed and seasonal promotions when credit card companies partner with merchants to offer point incentives for spending in those stores. In addition to granting points to cover travel expenses, credit cards offer many additional travel benefits for card holders. Even without rewards, using a benefit-rich credit card to pay for a flight can entitle card holders to luxury airport lounge access, lost baggage insurance, trip cancellation insurance, trip delay reimbursement, travel accident insurance, primary seating, free bag check-ins, and exemptions from foreign transaction fees. Some cards provide their own primary car insurance for rentals worldwide, which is advantageous because instead of paying out-of-pocket for minor rental car damage or using your standard car insurance, which will result in a higher monthly premium, the infraction is covered by the credit card. Some cards also provide a valuable return protection policy which allows card users to receive refunds for items within 90 days of purchase even when the store refuses the return. As we know, credit card companies are not interested in giving awaymoney, but once you learn towork the system to your advantage, the plastic in your wallet becomes your ticket around the world.