By popular request (well, from a few readers), here is another post for you. Some controversy, a little bit of country, a little bit of rock-n-roll. But most importantly, I hope you find it useful. My goal is (and always has been) to encourage readers to question conventional wisdom of this hobby. Some notions are presented as gospel, indisputable fact. But are they really? Let me give you an example.
Some of you may remember the infamous “Fairmont lifetime status” deal. It was described as “hot’, “sizzling” etc. People went nuts trying to get in on it. So, the story goes like this. Groupon somehow messed up a deal from Fairmont hotel company. For $2,000 (some got it for $1,500), you were supposed to get their top-tier status that came with a free (not!) night and all kinds of super-duper awesome perks for one (and only one) year.
Except somehow, they ended up advertising it as a lifetime deal. Basically, a member is entitled to one night in a suite at any Fairmont property, a use of BMW while staying there, $100 dining credit and other goodies each year for life.
Sounds great, right? Luxury hotel, living like a rockstar… What’s not to like? Well, what I don’t like is that you had to fork over $2,000 upfront to get it. I’ve written about Fairmont credit card before. I actually consider it a good deal under certain circumstances. My problem is, there are very few properties in their portfolio.
So, each year, those who bought this Groupon deal will have to (without fail) plan a trip to a Fairmont property. How can they not? They have invested $2K into this scheme. If you live near NYC or another major metropolis that has Fairmont property in it, great! For the rest of the population, you will probably have to fly. To use your one “free’ night certificate. Then pack up your stuff and go elsewhere unless you want to continue paying exorbitant cash rate for your suite.
To be fair, this was a fantastic deal for some. For those who are young, in good health, have cash to spare, live on the road, and love Fairmont properties, it absolutely made sense to consider it. But for the rest of us mere mortals? No way, Jose! I can’t visualize a middle-class “one vacation per year” American family who should have jumped on this hot, sizzling, smoking deal.
Image courtesy of stockimages at FreeDigitalPhotos.net
Cheapblackdad, this one is for you!
With just a few new cards each year, a family can easily collect enough points for a trip without a need to PAY $2,000 ( never to receive back) to get ONE night in a suite in certain USA locations ONCE a year. OK, yes, there is $100 dining credit, fanciful gifts blah blah blah.
Of course, this absolutely is not meant as an insult to those who bought it. Many miles and points hobbyists are enjoying it and have no regrets whatsoever. I want to stress that I respect everyone’s right to spend their money, miles and points in whatever way they please. I really do. My problem with the common advice in this industry has always been the claim that it applies to a normal family. I will go out on a limb and say that 90% of it doesn’t.
There are many “Fairmont lifetime status” type deals in this hobby. They are great for some, terrible for others. Yet, they are often presented as great for everyone. Just a few examples:
1. Renewing Chase Sapphire Preferred is a no-brainer. Sigh… I’ve made it my mission to dethrone CSP card. I’m sad to say, for the most part, my advice fell upon deaf ears. Over and over again, I see it on the list of “no- brainer” cards to renew. What’s even more troubling, most readers in the comments section seem to agree. Sure, this card makes sense for some high-spenders, business travelers etc. For most middle-class families, it’s very much “weak sauce.”
If you are after flexible points, I strongly recommend you instead consider Amex Everyday Preferred. See this post for comparison to CSP card.
You may have heard that Membership Rewards will slash transfer ratio to Avios program this fall. Still, I stand by my claim that Amex Everyday Preferred is a winner for most low-spenders. No, I’m not saying it’s a no-brainer (more on that later).
2. Renewing Amex SPG is a no-brainer. This one could makes sense for some middle-class families. But it would be an exception rather than the rule. Once again, consider Amex Everyday Preferred unless you are mostly after Category 1 and 2 SPG redemptions.
For those who value SPG points at 2 cents each, I have a question. Why not use Fidelity Amex? You get access to many Amex promos and don’t have an annual fee to deal with.
3. Renewing those two cards plus 5 other cards (also with an annual fee) is a no-brainer. Are you saying that paying $500 in fees for the privilege of collecting flexible points makes sense for those who put $15K-$25K on cards each year?
If you have to pay a fee, it’s NOT a no-brainer, even if you get a perk in exchange. A new term: non-no-brainer. The only card that comes close is Chase IHG MasterCard. Love, love, love this card! But even I have to admit that it isn’t for everyone. Some simply hate staying at IHG properties. In that case, pass. You should do what makes you happy. It’s your vacation after all.
4. Having Hyatt top status is a no-brainer. There is no status which you have to pay for to attain that is a no-brainer. Period. Another non-no-brainer.
5. This sign-up bonus is a no-brainer! LIMITED TIME OFFER! GET IT NOW! ENDS SOON!
Very rarely this is the case. Most offers will come back, and even if they don’t, there will be another offer similar to that one. Most of what you see is driven by commission and the need to meet quota. I want to be clear, this is NOT a dig at hardworking affiliate bloggers! I personally put up credit card links on my site right away.
It would be hypocritical for me to criticize others for something I’ve been doing myself. My point is: This industry is no different from others. Affiliate companies want results or they will dump you. Those who depend on blogging to feed their family or pay employees are in a very tough spot. I really wish “I’m only in it for the love” nonsense would go away. This industry and readers would be much better off.
Have you seen all those calculator tools promising to help you pick best credit cards based on your spending patterns? I’ve tried several, and so far I’m not impressed. Once again, make no mistake about it, it’s a tool to sell credit cards, NOT help you maximize rewards. If you are a low-spender, I recommend you look at my list of best long-term choices I also offer free, no-obligation consulting service.
6. Participating in this hobby and going after sign-up bonuses is a no-brainer. If that were so, banks would go bankrupt. But they seem to be doing just fine. Be very careful when dealing with credit. There are many hidden dangers, biggest of all overspending.
And it’s not just credit cards that you have to question on a regular basis. There are many sizzling deals that may not be sizzling for your particular situation. Few weeks ago, I bought 4 tickets to Iguazu Falls. There was a sale from Orlando where roundtrip flights cost only $300 per person. I just couldn’t resist, so I got them. We would have had to spend a night in Peru both ways, which would only leave 3 days to explore the area.
It finally dawned on me: This is insane. I want to visit South America, but not for 3 nights and basically only see a waterfall. Also, while the tickets were cheap, we would have had to pay for lodging, visas, food etc. This would have been quite an expensive “cheap” trip.
Of course, $300 to fly all the way to South America is incredible or “redic” as Noob Traveler would say. For single traveler with a flexible schedule it was probably a no-brainer. But it was the wrong time for my family to attempt a trip of such magnitude, and truthfully, we can’t really afford it right now. I cancelled it (allowed within a certain time frame) and got my money back. I have no regrets.
Most deals in this hobby are of Fairmont-type variety. It doesn’t mean they are bad, they just might be bad for you at this particular time. Only YOU will be able to determine if you should go for this sizzling hot deal or let it go. One thing is for sure, there will always be something (or someone) else on the horizon to entice your wallet or application click.
P.S. I wanted to mention that I’ll be in Europe during second part of June. If you email me, I won’t be able to respond. Safe travels, everyone!