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.

[Robert Barlow]

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.