Friday, July 29, 2011

Make Making Money


 


Surprisingly enough, AmEx’s 20% rebate is actually a good deal. They offer competitive rates on airfare and hotel booking, and allow you to pay entirely or partially with points.


Numbers, crunched


American Express points, when used through the Pay with Points program, are valued at one cent per point, so you could redeem 97,600 points for that $976 flight to Heathrow from San Francisco. After the 20% bonus is credited to your account (it happens after the fact, and takes 10-12 weeks, according to the Pay with Points website), you’ll have spent 78,000 points, or $780. That’s $185 saved over booking with Kayak or Travelocity, enough that only one-third of your England trip will be spent lamenting the weakness of the American dollar.


American Express Platinum is steadily earning our respect


We’re generally happy with American Express as a card for international travelers, especially since the Platinum and Centurion joined the ranks of credit cards with no foreign transaction fee. Now that you can redeem your points through American Express Travel and get 20% of those points back, we’re even happier.


The American Express Platinum is one of the best-known premium credit cards, and offers a number of perks for international (or domestic) travelers. There’s a 50,000-point signing bonus (worth $500), a base rewards rate of 1% and an annual fee of $450. And based on the numbers we ran above, it only takes a couple of international flights to make up for most of that hefty fee.


Skipping customs and sipping champagne: the joys of premium credit cards


Beyond the numbers, however, the true value of the AmEx Platinum (and, really, for all premium credit cards) lies in the lovely perks. The Platinum shells out $200 in refunds for travel-related expenses like baggage fees and in-flight meals, and a free Priority Pass membership that gives access to over 600 airport lounges worldwide. A special boon for international travelers is the $100 credit towards the government Global Entry program, which allows you to skip customs lines coming back to the US (after, of course, an extensive background check). You also receive one companion ticket a year, which allows someone to fly with you, round trip, in the same class, as long as you book a business or first class ticket.






The banks of America recently pitched enough of a hissy fit to effectively neuter swipe fee reform — after they raised rates, instituted fees and canceled rewards programs — claiming they'd be swiped into the poor house by the reduced fees. But not to worry, bankers are a clever folk and they always have a way to profit off your transactions. Like, for example, colleting information about your shopping habits.



According to CNN, Wells Fargo, Citi, Discover and others have begun gathering the information about your shopping habits — where you shop, what you but, how much you spend. Retailers contact the banks about the types of customers they want to target and the banks craft custom coupons which, if used, the bank sees a nice chunk of change from.



From CNN:

Say you use your Citi-issued debit card to buy a pair of shoes at Nordstrom, and then Citi sells that information to a series of retailers. As a result, you receive a coupon from Macy's for a 20% discount on shoes at its store. The coupon is delivered by Citi, however, not from Macy's.



To redeem the coupon, you must respond by text, e-mail or by checking off a box next to the offer on your online bank statement. Once you go into Macy's to buy the shoes, Citi will retroactively credit your account for the 20% discount. Some banks, however, only let you cash in your discounts via their online portals.



Retailers pay the banks somewhere between 10-15% of the purchase price when a coupon is used. The bank keeps about 25% of that fee with the rest going to a third-party service. So if you pay $1000, the bank could end up making upward of $37.50 from the retailer, on top of what they were paid for your original information.



Some banks have already started programs like this and in many cases the customer is automatically enrolled, though they are legally obliged to let you opt out.



And while some say the targeted discounts will increase customer loyalty with retailers and provide consumers with coupons they will actually use, experts warn against potential pitfalls, like fine print that excludes certain brands or adds restrictive conditions on getting the discount. If your bank applies the discount retroactively, you might not notice you didn't save any money until after you've made your purchase.



"There's a risk that you might not get what you're hoping to get — you're leaving the store and you don't know how much you were actually charged for something," the CEO of CardHub.com tells CNN. "Then if you don't see it on your credit card statement, what do you do? Call your bank? Call the intermediary company? Or call the merchant? If they start using fine print, the whole thing's just going to be a big mess."



As for privacy concerns, the companies that provide this service claim that retailers never see any identifying info about the bank customer, just a numeric code. Only the bank has the ability to match up that code with the customer's account. While this should inspire confidence, it means that your data is only as secure as your bank's account system.



While the idea of targeted discounts — assuming they actually meet your shopping needs — programs like this should be opt-in only. Wouldn't that be in the best interest of everyone? The customer signs up for a program; the retailer knows that the customer has opted in and thus interested in receiving the coupons; happy customer receives coupon, uses it and bank gets money.



Banks' billion-dollar idea: Sell your shopping data [CNN]







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