I’ll cut to the chase. If you ever miss a credit card payment and are socked with big fees and interest charges, you can call the bank and ask them to waive the fees and charges.
Don’t make a habit of this. But if it is a rare occurrence, and a genuine mistake, the bank may forgive your lapse.
If You Miss a Payment, Call the Bank
This month, my husband was set to pay his Chase United Mileage Plus card via an electronic payment. He had scheduled the payment, but failed to “verify the details.”
As a result, he missed the payment deadline, and was socked with a $25 late payment fee and over $32 in interest charges.
The statement warned that if he was late on another payment, they could charge him a $35 late fee and an interest rate of 29.99 percent. What’s more, a lapse like this could adversely impact his credit score.
In this case, he called the bank and offered to pay the bill in full immediately, The customer service rep said they would remove all the fees and interest charges, and that they would not report anything to the credit bureaus. Phew!
If you are prone to this kind of error, the points and miles game is not for you. You will end up paying more in fees than you earn in rewards.
To be frank, I have also made this mistake. Last summer, when we were traveling, a bill came due and I missed the payment deadline. Since it was a one-time mistake, the bank graciously waived my excess fees.
Just remember, most everything in life is negotiable, especially when dealing with banks.
Have you made a similar mistake? What was your outcome?
Click here to compare current rewards credit card offers.
I love to read those silly What’s in My Wallet blog posts. I guess it’s because before I got into points and miles, I would not have believed that you could open an insane number of rewards credit cards without ruining your credit.
It does raise some questions, though:
How could the banks keep extending you credit?
How many times can you earn big bonuses?
How do you remember which card to use for which purchases?
How could you possibly keep track of all those credit cards without missing a payment?
15 is My Limit on Schnitzengruben, I mean Credit Cards
I recently counted 14 credit cards in my wallet from five different banks. That is crazy! I don’t recommend that for anyone.
Miss a single payment and you will be socked with a $35 fee and a major ding to your credit score.
With fourteen active credit card accounts, it is taking too much of my time to track expenses and pay the bills. Let’s face it; my office is cluttered and my wallet barely closes.
I am looking to thin out my collection.
Rewards Credit Cards Aren’t for Everyone
Travel rewards credit cards aren’t for everybody.
First off, you need to have a stellar credit score to be eligible for the best offers.
Most people prefer to carry only one or two cards, to simplify things and minimize the hassle. There is merit to this approach, particularly if you are disorganized and don’t keep current with paying your bills.
A perfectly reasonable strategy is to earn free travel is to focus on one airline or one type of flexible rewards such as Chase Ultimate Rewards points or cash back travel cards like the Capitol One Venture Card, or the Barclaycard Arrival Plus™ World Elite MasterCard®.
But if you have a credit score in the excellent range, and you pay your bills on time and in full every month, rewards credit cards can be incredibly lucrative.
Once you have experienced the large bonus offers for opening a new credit card, which can be worth $500 or more, it is easy to get sucked into to opening more and more accounts to earn free travel.
Know Your Credit Score
From personal experience, I have watched my credit score progressively improve the further along I got in this game. Barclay’s bank offers its credit card customers free access to their official FICO credit score once every three months.
My most recent FICO score is 837, with 14 open accounts, and five additional credit card accounts that I have closed in the past year or so.
That is because my credit line has increased dramatically with all these cards, and my monthly spending is just a small fraction of the available credit.
The banks appear willing to extend me credit well beyond my annual income. Be careful. Like with the mortgage crisis, a lot of people get in debt over their heads from credit cards and can’t make the payments, or end up paying exorbitant amounts of interest, at rate as high as 28 percent annually.
This much is clear: the banks are making plenty of money, but probably not from people like me.
Starting Out with Rewards Credit Cards: The Chase Freedom Card
When I started my environmental consulting business 15 years ago, I opened the Chase Freedom credit card in order to keep my business expenses separate from my personal expenses. Chase Freedom is a personal, not a business credit card but I was using it for business purposes. It carries no annual fee, and earns 5x rewards on select categories of spending. This is a card that I would highly recommend for someone just starting out. The points can be taken as cash back on your next statement, or used as Ultimate Rewards Points. Ultimate Rewards Points are quite flexible and can be transferred to many airline and hotel loyalty programs but you need to have one of the premium credit cards from Chase to enable transfers.
If you are just starting out with travel hacking, the Chase Freedom card is a great place to begin because you can earn cash back or travel rewards, depending on your needs. Because the card has no annual fee, you can keep it forever, thus increasing the length of your credit history over time. This card earns 1x points on all purchases, and 5x points on select categories, that vary each quarter on up to $1500 of purchases per quarter. Generally, the 5x points is good for gas purchases for six months of the year. This spring, the card offered 5x points on restaurants, and sometimes you can get 5x points on Amazon.com, Lowes, or Kohls.
Right now, Chase is offering a $100 bonus for new applications, but I have seen this bonus go as high as $200 after spending $500 on initial purchases within three months. From time to time there is an extra $25 incentive for adding an authorized user to your account. There are cards with bigger bonuses but they usually entail annual fees and larger initial spending requirements.
Pick a Card, Any Card!
Whenever I show anyone what credit cards are in my real wallet, they look at me like I am crazy. I often get looks as I fumble through my wallet looking for the card that earns bonus points at this store or that.
Because I run a small business, I am eligible to apply for business credit cards. This allow me to “double dip” on account bonuses. I travel for both business and personal reasons and must keep my expenses separate for tax purposes. I caution you that business cards can only be used for genuine business expenses and they lack some of the consumer protections of personal credit cards.
What’s in My Wallet?
Here’s a quick rundown of what is in my wallet and why, and which cards are candidates for culling.
Chase Rewards Credit Cards
Quicken Rewards,personal (authorized user): The credit card I’ve had the longest is the Quicken Card issued by Chase Bank. We opened this card over 15 years ago because at the time, it was the one of the few cards that allowed you to download your statements into the Quicken personal accounting software. The Quicken Rewards card pays cash back rewards and carries no annual fee. This cash back card pays 2x drugstores, restaurants, and office supply stores, and 1x points on other purchases. Redemptions for airline tickets can be worth up to 1.25 cents per point, but only if you redeem at the top of a price bracket, e.g. a $500 ticket for 40,000 points. This is a keeper.
Freedom,personal:I love the Chase Freedom card because I can earn 5x points on practical things like gas and restaurants and there is no annual fee. It is a keeper because it pads my Ultimate Rewards point balance, and contributes to the length of my credit history, which is a factor that improves my credit score.
Ink Plus,business: The Chase Ink Plus is my primary business credit card. When I opened the card, I earned 50K Ultimate Rewards points after spending $5,000 in 3 months. This card pays 5x points at office supply stores and on telecommunications and 2 points on gas stations and hotels. The points easily transfer to Amtrak, Southwest Airlines, and United — three of my preferred carriers. Chase offered me a fabulous retention offer which I declined, but I plan to keep the card open.
Ink Bold,business: This is a charge card, not a credit card. The differences is that balances must be paid off every month. I opened this card for my blog business in June 2014 when there was a special bonus offer of 60,000 Ultimate Rewards points after spending $5,000 in three months. This card has a $95 annual fee which is waived the first year. This card has the same bonus categories as the Ink Plus. The usual bonus is 50K points.
Southwest Rapid Rewards,business:I opened the Southwest Rapid Rewards card for the 50,000 mile bonus. That is an offer that rolls around every couple of months. Southwest claims that you can get two roundtrip flights for 50K miles, and that has been my experience. The Southwest Rapid Rewards card has a $69 annual fee that is not waived the first year. You get 3,000 bonus miles every subsequent year. Last year, I was offered an additional 3,000 points as a retention bonus, and this year I received this offer again! I highly recommend the Southwest Rapid Rewards card for budget domestic travelers because of the excellent availability of award tickets on Southwest Airlines.
United Mileage Plus Explorer,personal (authorized user): This is my husband’s card. He opened it because there was a targeted offer for 50,000 miles. The card carries an annual fee of $95 which is waived the first year. When the fee came due, he was offered a retention bonus of 15,000 miles which offset the annual fee, and then some.
Barclays Reward Credit Cards
Barclaycard Arrival™ World MasterCard®, personal: I have the no annual fee version of the Barclaycard Arrival. I opened it because of a targeted offer for 40,000 bonus miles and the ongoing benefits including 2x points on restaurant and travel spending. You get a ten percent rebate on your travel redemptions, so this card effectively pays 2.2 percent cash back. I love the access to my free credit score and the free TripIt Pro subscription. The card now pays a bonus of 20,000 miles for new applicants. This is another keeper.
The US Airways® Premier World MasterCard®, personal:I opened this card because it offered me 35,000 miles after making a single purchase. There is an $89 annual fee which is waived the first year. My version of the card awarded 10,000 bonus miles on your anniversary. It has a number of additional benefits such as one free checked bag for up to four family members, a free lounge pass, and 5,000 fewer miles needed for reward tickets. With this card, you can get 2 companion passes for $99 each, but there are lots of strings attached. I just received the 10,000 mile annual bonus. I called to cancel the card because I did not want to pay the annual fee. This card currently pays a 40,000 mile bonus after the first purchase, but does not offer the annual 10,000 bonus points. It has an $89 annual fee which is waived the first year.
US Airways Dividend Miles,business:I opened this card by “accident.” I had applied for a different version of the US Airways card, but was informed that that it was not possible to have two different personal cards. I was able to switch my application to this business card, and earn 25,000 Dividend Miles upon the first purchase. The annual fee of $89 is waived the first year.
If you have a reluctant spouse, maybe you can sympathize with this story. My husband’s Chase United Explorer Card was coming up on its first anniversary. On this month’s statement, he was hit with the $95 annual fee.
The last time he faced a similar situation, he told the Chase customer service rep that he wanted to cancel his Southwest Rapid Rewards credit card because he no longer flies Southwest. No, no no! He should have said that he loves to fly Southwest but was concerned about the $69 annual fee. Chase was happy to cancel his Southwest credit card.
The fact of the matter is that we do fly Southwest. When my Rapid Rewards credit card came due for the annual fee, I asked to speak to the retention specialist and was offered an extra 3,000 miles (6,000 total miles) for the $69 annual fee.
So this time, I offered to make the call for my husband.
Reports are popping up about targeted bonuses for credit card spending between now and the end of the year. The bonuses are targeted to select holders of various credit cards issued by Citi, Barclays, and Chase banks. These deals offer extra points for general or category-specific spending over the next three months. The offers typically are capped at a certain spending limit.
I received an offer from Chase and Southwest Airlines for 3,000 bonus points if I spend $5000 on my Southwest Rapid Rewards credit card between October 1 and December 31, 2013. The bonus is on top of the regular 1x point you earn on purchases. You must pre-register your card to receive the bonus points.
In effect, the bonus boosts the earn rate on eligible Rapid Rewards credit cards to 1.6x points for the last quarter of 2013.
I opened a boatload of travel rewards credit cards in 2012 — and now it’s time to pay the piper. For many rewards cards, the annual fee is waived the first year, but the fee is due in full on the one year anniversary.
I read about retention bonuses, and wanted to give it a try. If you call the number on the back of your card to say that you are considering canceling — because you are concerned about the annual fee coming due –the bank may offer you a variety of incentives to keep you as a customer. If you tell them you want to cancel the card because you no longer need it — they will probably just cancel it without offering any retention incentive.
In November 2011, while changing planes in Denver, I was lured by a vendor offering to sign me up for a Southwest Airlines credit card. Southwest was celebrating their expansion in the Denver market by offering 50,000 “Rapid Reward” miles as a sign-up bonus. I had a few minutes to kill so I talked to the vendor about the offer. He convinced me of the value of these Southwest frequent flyer miles by mentioning that the miles could be used on any flight — there are no blackout dates on Southwest. The annual fee for the card, issued by Chase bank, was $69.