Category Archives: Reward Cards

Chevron and Texaco Credit Cards Add New Benefits

Reward Cards

Chevron and Texaco released a redesign of their personal credit cards yesterday, along with several benefits for new cardholders:

  • Complimentary road service provided by GE Motor Club during the first year to assist with free towing, fuel deliveries, jump start and/or tire services.
  • ATM access through the Cirrus network
  • Zero fraud liability
  • A bonus 20 cents/gallon for 90 days
  • $20 Chevron or Texaco gift card after first purchase

The free road service offer is valid on new accounts until the end of the year, while the gift card offer is valid on new accounts opened between April 1 and May 31, 2008. More details can be found at http://www.chevrontexacocards.com.

It should be noted, however, that you’ll still be better off in the long term instead using one of the many gas cards rebating at least 5%, since the Chevron/Texaco cards do not offer rebates past the initial 90 days.

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Hilton Amex or Starwood Amex? The Choice Just Became Harder

American Express, Reward Cards

Hilton HHonors recently announced that it was allowing award redemption without blackout dates for all of its members. Previously this benefit, which guarantees that any standard room can be reserved with points as long as it is available, was only provided to its Diamond and Gold-level members.

As a consequence, this move makes the Hilton Amex an even stronger competitor with the Starwood Amex for hotel award redemptions. For transfers to airline programs, the SPG card is still far superior to Hilton’s, but there are many arguments to be made in favor of Hilton when it comes to hotel awards.

By lifting its restrictions on blackout dates, Hilton matches one of SPG’s major selling points. And with more than 2,900 Hilton Family hotels worldwide, compared with Starwood’s 860 or so, there are more than three times as many places where your points can be redeemed. The Hilton Amex also offers bonus points on everyday purchases, awarding 5 points for each dollar spent at supermarkets, drugstores, gas stations, and dining establishments, and 3 points everywhere else. In addition, it does not carry an annual fee, while the SPG Amex charges $45 after the first year.

All in all, there are points to be made in each card’s favor and much of it comes down to personal preference. For maximum flexibility, you could carry both cards, which is what I actually plan to do.

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Apply for a Kohl’s Charge Card Online

Reward Cards

I have actually never shopped there, so I can’t personally comment about how big of a deal this is, but the folks at SD seem pretty excited that you can now apply for a Kohl’s credit card online.

With the Kohl’s charge card, you’re eligible for for extra discounts 12 times a year, as well as savings on sale and clearance-priced merchandise. There is no annual fee. If you are approved instantly online, you will be provided with your account number that you can begin to use immediately. (Current discount codes include MVCPICKADAY valid for 15% off until March 12, and MVC4242 for free shipping.)

Link (via SD)

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IRS Hassle is Your Gain: Why a Business Miles Card is Better than a Cash Back Business Card

Business Cards, Cash Back Cards, Reward Cards, Travel Cards

I’ve been noticing that Amex has been running a lot of TV ads for the Plum Card recently and it got me to thinking: What is the true value of its 2% early pay discount? Aside from the time value of money aspect, are there tax implications for small business owners that reduce its usefulness even further?

The tax argument against business cash back cards
It’s commonly accepted that any cash rebate that you receive from personal credit cards is not taxable, as it just another form of a discount to you. In the case of a business, however, when the cash rebate is treated as a discount, it reduces the cost basis of your purchase. As a result, this decreases your effective rebate by your marginal tax rate.

To make this concrete, consider this example: You purchase merchandise for $100. You resell it for $150. Your credit card gives you 1% cash back. Your cost basis is actually $99 then. So your profit was $51 instead of $50, and you’ll be taxed on that extra dollar you earned as a rebate. If your effective tax rate of your business is 40%, after tax you made $30.60 ($51 x 0.6) instead of $30 ($50 x 0.6). Your effective credit card rebate then is 0.6% rather than 1%.

What about business miles cards?
Now then the question becomes: is it any better when you earn points or miles instead of cash back? The answer, I believe, comes from IRS Announcement 2002-18:

Most major airlines offer frequent flyer programs under which passengers
accumulate miles for each flight. Individuals may also earn frequent flyer miles
or other promotional benefits, for example, through rental cars or hotels. These
promotional benefits may generally be exchanged for upgraded seating, free
travel, discounted travel, travel-related services, or other services or benefits.

Questions have been raised concerning the taxability of frequent flyer miles or
other promotional items that are received as the result of business travel and
used for personal purposes. There are numerous technical and administrative
issues relating to these benefits on which no official guidance has been provided,
including issues relating to the timing and valuation of income inclusions and the
basis for identifying personal use benefits attributable to business (or official)
expenditures versus those attributable to personal expenditures. Because of
these unresolved issues, the IRS has not pursued a tax enforcement program
with respect to promotional benefits such as frequent flyer miles.

Consistent with prior practice, the IRS will not assert that any taxpayer has
understated his federal tax liability by reason of the receipt or personal use of
frequent flyer miles or other in-kind promotional benefits attributable to the
taxpayer’s business or official travel. Any future guidance on the taxability of
these benefits will be applied prospectively.

This relief does not apply to travel or other promotional benefits that are
converted to cash, to compensation that is paid in the form of travel or other
promotional benefits, or in other circumstances where these benefits are used for
tax avoidance purposes.

Essentially what the IRS is saying is that because it’s too much of a hassle to put a value on your points or miles, they won’t make an attempt to tax them. If, however, you convert them to a cash equivalent, you should pay tax on them.

So, on the one hand you have cash back rebates that are taxed; on the other you have mileage and point rewards that the IRS will not pursue–if all other things are equal, which card are you choosing?

Let me take the time to issue a disclaimer: I am not an accountant, and you should not take this as tax advice. Consult a professional before taking any action.

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Pet Credit Cards: PetSmart Pet Perks Visa, PetRewards Visa

Balance Transfer Offers, Bank of America, Reward Cards, WaMu

As a doting pet owner, this post at SD about the PetSmart Pet Perks Visa caught my eye. It offers:

  • 3 points per $1 spent at PetSmart, petsmart.com and Banfield, and 1 point per dollar everywhere else,
  • 0% intro APR for 6 months on purchases and balance transfers (with no fee within the first 90 days)
  • $20 PetSmart gift card after first purchase
  • Personalize your credit card with your pet’s photo

As you can see, the offer is not much to “woof” about. (Compare this to the Chase Freedom card, for instance, which trumps this offer in nearly every respect.) But it did remind me of the Pet Rewards Visa, a card which I had previously panned. When looking at the Pet Rewards offer with fresh eyes, however, it actually looks to have a good niche use:

  • Earn 2 points per dollar spent at participating veterinary clinincs, pet food retailers, farm and feed stores, and neighborhood pet stores; 1 point per dollar anywhere else
  • 0% intro APR for 6 months on purchases and balance transfers (with no fee)
  • 500 points after first purchase
  • Personalize your rewards card with your pet’s photo

Now, on the surface these benefits look pretty similar to the Petsmart card. The redemption opportunities for the PetRewards credit card, however, make the difference. You can redeem 1000 points for $20 worth of vet expenses at any veterinary office, turning this card into a 2% card for general use, or 4% if your pet care expenses are with participating vendors. The main issue with redemption, of course, is the convenience factor, as you’ll have to fill out a form and return receipts in order to be reimbursed. For those with pet expenses who don’t mind sending in receipts, however, this card represents a reasonable option.

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Transfer Membership Rewards Points with 50% Bonus

American Express, Reward Cards

Looking for a good way to spend your MR points? Until November 30, 2007, you can get 50% more hotel points when transferring your Membership Rewards points to hotel frequent guest programs. This offer is valid for the following hotel partners:

Hotel Program Standard Transfer Rate Special Transfer Rate
Gold Crown Club International 1000:1000 1000:1500
Hilton HHonors 1000:1300 1000:1950
Priority Club Rewards 1000:1000 1000:1500
Starwood Preferred Guest 1000:333 1000:500

While the offer says that it’s valid for only solicited members, according to this post on FT, it should be possible for any accountholder in good-standing to be eligible.

Link (via FT)

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Double Membership Rewards Points between October and December 2007

American Express, Reward Cards

Solicited Amex Green/Gold cardmembers can earn double Membership Rewards points between October 15 and December 15, 2007. Enroll by December 15 online at either:

Alternatively, targeted Rewards Green Card or Preferred Rewards Green Card cardholders can call 1-800-794-1308 and enter the code 106150001. Solicited Rewards Gold Card, Preferred Rewards Gold Card, or Rewards Plus Gold Card holders can call 1-800-794-1308 and enter 106150002 as the code.

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Citi Tweaks Perks for AT&T Universal Cards

Citibank, Reward Cards

Citi is in the process of rolling out changes in benefits for its AT&T co-branded credit cards. As part of these changes, the card names have also changed. The AT&T Universal Platinum Card will be renamed the AT&T Universal Savings Platinum Card and the AT&T Universal Rewards Card will be known as the AT&T Universal Savings and Rewards Card.

Both cards will now offer 10% savings for the first 12 months and 5% thereafter on eligible AT&T products and services equal to the amount spent on their other purchases. The savings will appear as a billing statement credit during the billing period the purchases were made. Cardmembers can earn up to $350 in savings each calendar year.

While both cards will offer a no-fee introductory balance transfer for 12 months, the Platinum card will no longer offer a 0% intro period on purchases. Other perks such as two free directory assistance calls each month, up to 30 prepaid phone minutes each month and free mobile phone insurance, will also remain.

Full details of all changes are currently reflected at Citi’s website here and here, but are not expected to appear on http://www.universalcard.com until September 12.

For current details on these cards, see these links:
AT&T Universal Savings & Rewards Card
AT&T Universal Savings Platinum Card

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