travel troubleshooting
Ronald Duben plans to quit using credit cards. He thinks there’s something better out there. And it almost certainly exists.
Duben dutifully pays $120 a year for a co-branded airline rewards card that promises him a “free” flight if he pays enough. It was a good deal at first. After collecting about 60,000 points, I was able to cash in my rewards for a flight to Asia.
But when Duben recently tried to redeem his loyalty points for an economy class ticket to Japan, he was stunned to find that the airline more than tripled the amount of miles he had to pay. He then asked for 200,000 points plus $375 in taxes and fees.
So much for “free”.
“I feel like I’m deeply involved in rip-offs, and I want to get out,” said Duben, a former chef who lives in San Rafael, California.
It turned out that teeth An escape route.
U-turn to point credit card
Credit cards with rewards, especially high-interest credit cards with high fees and miles, aren’t for everyone. You’ll probably pay an exorbitantly high interest rate, and that rate could go up. $1 trillion in credit card debt It’s like getting a “free” flight ticket.
The government is also concerned about these cards. This month, the Consumer Financial Protection Bureau We have published a report on point cards. We have identified multiple issues with these payment systems. Consumers complained that benefits were often reduced or denied even after meeting program conditions. And consumers who hold revolving balances often pay more in interest and fees than they receive in rewards.
CFPB and Department of Transportation also A public hearing regarding point credit cards was held.may be a precursor to regulating these programs.
So if this is the beginning of the end for points credit cards, what happens next?
Click here for alternative benefits cards
If you read travel blogs, Instagram accounts, or the travel sections of newspapers, you might think that the only way to travel is with an expensive travel card. However, there are other payment methods as well.
debit card
A debit or bank card takes money directly from your bank account. You don’t usually have to worry about spending more than you have, as you can’t over-withdraw. “Debit cards are an easy option,” says Sean Plummer. financial expert and those who travel frequently. “This system is widely accepted and allows people to spend only what they have, eliminating the risk of accumulating debt.”
Many debit cards also offer travel benefits, such as no exchange fees, but there are limitations. Car rental companies and hotels may not accept debit cards.
Credit card with no annual fee and low interest rate
You shouldn’t pay an annual fee for your credit card. If you do a little research, you can find cards with annual interest rates of 10% or less. Tip: Contact your credit union. Many of these cards come with all the perks you need for your trip, including car rental and medical evacuation coverage, and no exchange fees.
By the way, if you want to pay your dues, try joining a warehouse club like Sam’s or Costco. Peter Hoagland, a consultant in Warrenton, Virginia, vows to get a Costco visa. He says it’s a practical payment system with relatively reasonable fees.
“We use cards everywhere,” Hoagland said.
Remittance service
services like Revolut or wise It allows you to send money to businesses or individuals, bypassing credit card networks completely. These companies are at the forefront of digital banking. I recently visited Wise’s headquarters when I was in London, and I loved their plan to remove “all the friction” between you and your money. That means many of the high fees you’ve paid over the years will no longer be necessary.
Andy Abramson, a communications consultant in Las Vegas, uses both and likes the speed of transfers and favorable exchange rates when moving dollars from one currency to another.
“They’re both great,” he says.
What does the future hold for payment systems for travelers?
Are reward credit cards obsolete? Have high swipe fees, exorbitant interest rates, and empty promises of free tickets made them bloated and inefficient? Some industry watchers say Some believe the answer is yes.
As an intermediate step, many travelers are switching to debit cards or digital payment systems. This allows you to lower your interest rate and make smarter purchasing decisions, rather than spending money recklessly to accumulate points or devoting all your loyalty to one airline.
Financial experts see a better future just around the corner. This is where you can send money for virtually free using a digital peer-to-peer payment system. In that future, cards will be as obsolete as traveler’s checks. All transactions are made with a simple tap on your phone and a biometric “OK” press. And loyalty programs have evolved to be more sophisticated than today’s bait-and-switch cards that simply get you to spend money.
Will the government regulate point credit cards?
After this month’s joint hearing between the CFPB and DOT, one thing is certain. That means reward credit cards will soon be regulated by the government.
Congress can act even if regulators do not.A new bill called credit card competition law It could bring some much-needed competition to credit cards. In particular, it could force networks to compete for fees and reduce merchant swipe fees. That could restore some sanity to credit card rewards programs and benefit consumers.
