Credit Card Surcharges versus Points

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A couple of points to add into the mix :-

1. The best "value" for points may very well be had in international upgrades, but what is the opportunity cost? The only time I have booked business awards was back in the days when they were dirt cheap (e.g. the round Oz award), or I had upgrade credits. Nowadays I try to accumulate points for 2 economy awards to the UK every 2 years. Yes - these could be valued at 2-3 cents per point, but if I instead purchased the flights and then tried for an upgrade it would cost me around $4K to double or triple the points "value". Is this worth it????? As a contented cattle-class traveller I would say definitely not. Another issue in my case is that when travelling in a family group it is not feasible to have only some people up the pointy end.

2. Although there is some financial benefit out of the interest free period, I avoid CC surcharges whenever possible. I don't like to pay them out of principle as compliance means acceptance, and then the banks have won that battle and will move on to screw us in other ways.


In summary, I do not want to pay more to supposedly enhance what should be a free benefit gained from my loyal patronage.


Cheers,

Andrew
 
serfty said:
Now, here's a personal example....

I currently have a return fare booked for MEL-HKG-MEL in upgradeable discount WHY. Cost was under $1,300; even that out at $650 each way. If requested upgrades for each leg at 40K points each come through, at that rate I would save $3366 per leg and each point would be effectively worth $0.08415 or over 8.4¢ each.

Now the point was made in a previous that these upgrades often do not come through. I am confident that one will as it sas been showing U2 for a week or more and the flight is in ~3 weeks;that's 2 award Business availability which implies an expected light load in J, hence a greater chance of award upgrades ... it's aloso showingT9/X9 so little chance of an op up). The other flight is showing D9 so I have a good chance there.
but have you actually "saved" $3366 per leg? Would you have paid the extra for business class if you did not have the FF points available? If not, then you have not really saved the money. You have used some FF points to travel in more comfort.

Don't get me wrong, I still see that as good value use of the FF points. But if it was me in your situation, I would see the upgrade to business class as just that - an upgrade to a more comfortable product, rather than a saving of money I would not have otherwise spent. I would consider if I am happy to exchange part of my FF points balance for the more comfortable travel, and quite likely would come to the conclusion that I was happy with that as a value proposition. I would not consider that I have saved thousands of dollars.

Of course I would be content travelling in the cabin I was ticketed for since that is the fare I had paid and the upgrade was not successful. So my cost is the ticket price I had paid, and any upgrade is a nice bonus not a fare cost saving.

That is why I don't put a dollar (or cent) value on my points, but make a value judgement each time I redeem points regarding whether or not I want to use my points for that particular reward.
 
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NM said:
but have you actually "saved" $3366 per leg? Would you have paid the extra for business class if you did not have the FF points available? If not, then you have not really saved the money. You have used some FF points to travel in more comfort.

Far too sane a statement. An upgrade is ony worth the amount which you would have been prepared to pay extra in order to travel in the front cabin

Dave
 
NM said:
but have you actually "saved" $3366 per leg? Would you have paid the extra for business class if you did not have the FF points available? If not, then you have not really saved the money. You have used some FF points to travel in more comfort.

Don't get me wrong, I still see that as good value use of the FF points. But if it was me in your situation, I would see the upgrade to business class as just that - an upgrade to a more comfortable product, rather than a saving of money I would not have otherwise spent. I would consider if I am happy to exchange part of my FF points balance for the more comfortable travel, and quite likely would come to the conclusion that I was happy with that as a value proposition. I would not consider that I have saved thousands of dollars.

Of course I would be content travelling in the cabin I was ticketed for since that is the fare I had paid and the upgrade was not successful. So my cost is the ticket price I had paid, and any upgrade is a nice bonus not a fare cost saving.

That is why I don't put a dollar (or cent) value on my points, but make a value judgement each time I redeem points regarding whether or not I want to use my points for that particular reward.
Dave Noble said:
Far too sane a statement. An upgrade is ony worth the amount which you would have been prepared to pay extra in order to travel in the front cabin

Dave
That's why in relation to international upgrades I discounted them as in post #20 ... only included in earlier posts for reference and only then by making specific assumptions.

As far as that personal example goes; I needed to travel and the opportunity to upgrade is a bonus. So as to relevance to this thread it's moot.

What is relevant to this thread however is whatever the 'notional' value of points used is in relation to the approx. cost of attaining said points. To reiterate the award fare examples:

WHY award flight MEL-SYD: 1¢ each.

J flight award MEL-SYD: 2.4¢ each.

WHY award flight MEL-HKG: 4¢ each.

J award flight MEL-HKG: 6.7¢ each.

So to pay a 1% or 2% fine for using a CC and such points are used for an economy MEL-SYD flight may not make economoc sense; to use such points for a MEL-HKG trip may make more economic sense (but only if you have a use for a MEL-HKG trip).

I think that the summary by the OP illustrates their main point of this thread, "... I do not want to pay more to supposedly enhance what should be a free benefit gained from my loyal patronage."
 
serfty said:
So to pay a 1% or 2% fine for using a CC and such points are used for an economy MEL-SYD flight may not make economoc sense; to use such points for a MEL-HKG trip may make more economic sense (but only if you have a use for a MEL-HKG trip).

I think that the summary by the OP illustrates their main point of this thread, "... I do not want to pay more to supposedly enhance what should be a free benefit gained from my loyal patronage."
I still look the more like this. If, in earning the CC points, I have paid an extra say $250 in surcharges, annual fee etc, then my upgrade has cost me $250. If the upgrade required me to surrender 25,000 points from my FF account, then the only value I can apply to those points is that they cost $250 and I redeemed them for a more comfy seat and better in-flight amenities.

I then need to consider if I am willing to spend $250 more than I would spend if I was paying with some other form of payment in order to have the points in my FF account to use for such an upgrade if and when it is available. My consideration is usually done on a case-by-case basis and generally results in me being willing to pay a small amount extra on the occasional transactions that demand a surcharge. And the only one I can remember in recent time is Telstra and each bill quarterly bill has included a surcharge of less than the cost of a beer at an airport bar.

So for me, the biggest cost in earning points on my Amex card is the annual fee which is higher than I could pay on some other cards. My personal value judgement is that I am willing to pay that higher annual fee in exchange for the points earning. I guess I could then value the cost of the points something like this:

If I pay an extra $200/year in CC fees for a high points-earning card like Amex Rewards Maximiser, and if I earn say 60,000 points in the year, then they have cost me about a third of a cent each - oh yes, and 4 beers for my four Telstra bill payment surcharges in the year. So extrapolating, that $200 could have purchased say 5 cases of reasonable quality beer at the local bottle shop, meaning my 60,000 points have cost me 4 x 24 beers, plus the 4 for Telstra bills making it an even 100 beers, or 1.67 mB/p (milli Beers/point).

Now that seems a much more logical way to value point to me :mrgreen:.
 
NM said:
... an even 100 beers, or 1.67 mB/p (milli Beers/point).

Now that seems a much more logical way to value point to me :mrgreen:.
However logical it my be, 'tis fraught with danger as whenever I am observing a glass of HP, it appears to be a very volotile asset. There appears to be one or more other influences present and the liquid generally dissappears at a rate somewhat greater than 1.67 mB/h (milli Beers/hour).

Maybe if the next time we are at a QP, a proper analysis could be made and we could correlate the reationship of Points to Hours when milli Beers are used as the conduit. :p
 
serfty said:
However logical it my be, 'tis fraught with danger as whenever I am observing a glass of HP, it appears to be a very volotile asset. There appears to be one or more other influences present and the liquid generally dissappears at a rate somewhat greater than 1.67 mB/h (milli Beers/hour).

Maybe if the next time we are at a QP, a proper analysis could be made and we could correlate the reationship of Points to Hours when milli Beers are used as the conduit. :p
See, I knew we could bring this back to topic :mrgreen:.
 
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serfty said:
However logical it my be, 'tis fraught with danger as whenever I am observing a glass of HP, it appears to be a very volotile asset. There appears to be one or more other influences present and the liquid generally dissappears at a rate somewhat greater than 1.67 mB/h (milli Beers/hour).

Maybe if the next time we are at a QP, a proper analysis could be made and we could correlate the reationship of Points to Hours when milli Beers are used as the conduit. :p
Which QP? And when?

I will be looking at getting out of SYD next weekend (12/13AUG), as I need to deprive my friends and relatives of the opportunity of hosting my 40th burpday party - so any suggestions as to which QP might be worth looking at?

Dave
 
one9 said:
I think Australian banks greatly need to increase the ATM card daily withdrawal limit.

I never pay with a credit card if there is a surcharge unless it is going to be inconvenient by another payment method. Normally I would use EFTPOS card, but it has a $1000 daily limit.

Points are worth far less than 1 cent each, so I would definately not consider paying a 1% surcharge.

When people pay using credit cards at my business, we must pay a 0.08% (and a whopping 2.5% for Amex) surcharge. We get a bill for thousands of dollars each month. If people paid by ATM card, it would cost less than $100. So I can see it being reasonable to charge a surcharge. But as Visa/Mastercard is less than 1%, we don't charge a surcharge as this is similar to the administrative hassle of cheques and cash.


I require a merchant facility, can you please advise what bank offers you the .08% fee. This will save me shopping around.
 
johnsmith said:
I require a merchant facility, can you please advise what bank offers you the .08% fee. This will save me shopping around.
I expect the rate is more based on volume than the specific bank that provides the faility.
 
Well I use my FF points to get business class awards either RTW or BNE-JFK return.I purchase such tickets once or twice a year and to JFK costs me $6500 on JAL.Therefore I value my QF points at 2.4 cents and my AA points at 4.9 cents because that is how much I do spend.I would not risk upgrades as I have no status and definitely do not want to fly economy.
An interesting aside.At a recent family reunion my 7 year old grandaughter was talking to cousins who had flown from south africa in economy.She replied Whats economy?Now thats a proper upbringing!
 
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