Credit Card Surcharges

[darrencb]

Hi there my first attempt at this

When do you draw the line on paying credit card surcharges vs. the benefit of reward points.

Some places now charge 1% but some are charging 3% on Amex

Is it best to never pay a surcharge? Or as I am earning 3 points to the dollar is 1% ok.

Any info would be great

Thanks.

 

[serfty]

Hi darrencb, welcome to AFF.

Basically, it is up to you and how you value reward points.

If you get < 1¢ per point value then a 1% surcharge can be a loser.

If you get > 1¢ per point value then that 1% surcharge may be viable.

As to the point value, this depends upon several factors including:

• how you redeem them,
• different programs,
• What they are redeemed for
• Likelihood of being able to redeem and
• Personal circumstances.

For example, with Qantas frequent Flyer points, I try to redeem mine for upgrades as these provide the best value of them for me.

Take HHonors points, I might spend 40,000 on a stay at a hotel where the cheapest available rate is $600 but would not spend 25,000 on a stay where a room can be had for $175.

 

[coco50]

I use my mex where there are no surcharges in places like the supermarket, bottle shop and servo. Where there are surcharges I use the Visa card. Both cards accrue points. There are some places e.g.Local Government where the filthy, rapacious, decadent, capitalist b*stards apply a surcharge to all cards. When this happens, I send a cheque (yes! I still have some) and make them send me a receipt. This must cost them some amount in processing. One day they will get the message.

 

[Jeffrey O'Neill]

i also factor in the amount of interest free period i will get n that this money is still in my home loan saving me interest.

i wont pay 3%, but 1% i think is still viable as the points tend to b worth about 1c and then the interest i can save tilts it in favour of using the card.

 

[pongie]

Getting married in Dec and I'm currently considering whether or not to pay the reception venue on my credit card. The surcharge is 2.5% so if the amount was around $16k, the surcharge will be about $400. Is 16,000 points even worth $400?

 

[notzac]

Is 16,000 points even worth $400?

If you value points at 2.5 cents or more per point, then yes.

Congratulations, btw

 

[zzyss]

Getting married in Dec and I'm currently considering whether or not to pay the reception venue on my credit card. The surcharge is 2.5% so if the amount was around $16k, the surcharge will be about $400. Is 16,000 points even worth $400?

If you banked the cash in a high-interest savings account, you'd probably earn just a bit over $50 interest (if my dodgy math is correct). Overall, if you have enough cash to pay for it and still have some left over for the honeymoon, then probably not.

 

[pongie]

I could put it in a saving account but the interest will be taxed. It's currently in my variable rate home loan which I can redraw anytime. Much better to save 5% of interest than to earn 3% (after tax) interest.

Isn't 16,000 point for $400 is 0.4pts/cent? So that's way below the 1 cent, correct?

 

[Diesellife]

I could put it in a saving account but the interest will be taxed. It's currently in my variable rate home loan which I can redraw anytime. Much better to save 5% of interest than to earn 3% (after tax) interest.

Isn't 16,000 point for $400 is 0.4pts/cent? So that's way below the 1 cent, correct?

Hi Pongie, your calculation is correct.
For me, I'm willing to pay up to 5% surcharge (Discount price adjusted). coz I value my points around 0.06-0.07.

 

[Schebesta]

Outside the box idea: Ask them if they accept Paypal and connect your credit card up to your paypal account.

 

[Mal]

Outside the box idea: Ask them if they accept Paypal and connect your credit card up to your paypal account.

Then again, if someone signs up to Paypal (UK), and then funds their account using an Amex (AU) - transactions seem to go through ok...

Something to consider if people have access to a UK address to use as part of the Paypal signup.

 

[Schebesta]

@Mal - Nice Tip