Earning points at a 1.75% Surcharge, Worth It?

[petermac123]

One of our suppliers accepts credit cards but passes the surcharge on to us - 1.75% ouch!

Now we spend a significant sum (mid 2 commas worth) - it makes me grimace to cover that surcharge, but it's still gotta be worth it $1750 per 100,000 points? Just looking for some self-justification I guess.... If I can find SYD>LAX FASAs for 150k then gotta be worth it...I guess at that rate, just earn enough to top up for my requirements on top of ATO and other payments we make that...

Also, if anyone does a lot of business with Aus Post - they are trialling a CC payment program starting now...in their words
Surcharge fees for credit card payments will differ and are not fully finalised but will be in the vicinity of 0.7% to 1.5% depending which credit card is used.

(just to clarify - this is for account customers - nothing to do with Aus Post retail outlets)

Cheers,
Pete

 

[casanovawa]

I guess its all how you are going to use the points.

If redeeming for higher classes of travel (J/F) then yes i imagine you can justify that surcharge as those tickets are so much more than just double and triple the cost of a domestic ticket... That's without going into things such as tax advantages of paying for tickets outright vs using points but will leave that for knowledgeable commentators... Also not sure how much, if any, the taxes and surcharges go up in those higher classes...

If flying in Y and for personal travel, which is what I do it may be another story... I recently signed up for Rental Rewards for my rent and although they charge something like 1.7% or so surcharge for the arrangement, by using my Amex Platinum card (1.5pts/$) allows me to get 600 points per week for my $400 rent adding up to about 1.1 cents per point... I was still debating whether this was a decent deal as the main goal of my QFF's is to use them for 140K OW RTW Y awards and 140k x 1.1c = $1666 and then add another $800-1000 for tax/fuel surcharge and its mid $2500s for which you could probably buy a RTW ticket and get SCs and FFP as well, maybe not quite the number of km's/stops etc but still an ok RTW itinerary... So for me, unless somewhere in that 140k i factor in a few credit card bonus point offers at a cheaper earn rate/Woolies shopping points etc and the rent is used as a top up to achieve my 140k goal sooner I was leaning towards pulling out and just buy cheap tickets or maybe US Air Dividend Miles awards...

As i said, for J/F tickets i think its probably justifiable if you do the sums... Although if you look at US Air's Dividend Mile program an F return trip from anywhere in Oz to anywhere in the US/Canada is 140,000 miles and if buying those during one of their 100% bonus offers i have to believe you would come pretty close to getting a return ticket for $3,000 or so... The QFF FASA your talking about = 2 x $2625 plus say $1000 tax/surcharges so about $6,250 return so spending your cash with US Air might be better??? Just some food for thought...

 

[Stephen65]

Two points:

- YASAs, JASAs and FASAs include surcharges, fees and taxes in the points cost

- if you are using a card to make business purchases then the CC surcharge is probably tax deductible

 

[casanovawa]

Ahh, ok, the ASA's do don't they, so $3000 compared to $5,250...

And as i said the business people will know more about the tax implications...

 

[petermac123]

Two points:
- if you are using a card to make business purchases then the CC surcharge is probably tax deductible

Oh - so it's tax deductible for all purchases if card is in credit - not just ATO?

Cheers,

Pete

 

[petermac123]

I guess its all how you are going to use the points.
As i said, for J/F tickets i think its probably justifiable if you do the sums...

Thanks for the feedback - as you say - with the JASA/FASA flights - i should be in front, just a matter of booking a long way out with QF... Will spread some love to SQ for (hopefully) better late availablity.

P

 

[Stephen65]

Oh - so it's tax deductible for all purchases if card is in credit - not just ATO?

Cheers,

Pete

With the disclaimer that this isn't legal or accounting advice:

It doesn't matter if the card is in credit or not. If you are using a card for business purposes then any fees or surcharges associated with that use are a business cost and usually deductible to the business. You should confirm with your accountant.

PS: The issue about the card needing to be in credit for ATO payments is due to some special rules that apply when the taxpayer is a salary earner paying their tax via CC.

 

[petermac123]

With the disclaimer that this isn't legal or accounting advice:
You should confirm with your accountant.

Will do.

Thanks,

Pete

 

[cove]

With a bit of negotiating you should be able to get that supplier to charge you less than that.
If not then they are being wacked by their bank so tell them that so they renegotiate their processing fees. None of my friends pay anything like that if they have a high turnover business.
It is not unusual to be able to find redemptions that produce many cents per point so enjoy the front of the plane.

 

[petermac123]

With a bit of negotiating you should be able to get that supplier to charge you less than that.
If not then they are being wacked by their bank so tell them that so they renegotiate their processing fees. None of my friends pay anything like that if they have a high turnover business.

Thanks Cove,
Yeah - have had that discussion with them - apparently they were getting charged 2.25% and negotiated down to 1.75%... Their banker is telling them it because of their merchant category... anyway - might see if I can hassle them into getting a quote from CBA instead of NAB....
Pete