Frequent Flyer Credit Card Whoes

The Fjords, Norway

**UPDATE** – While still frustrated by the experience I had, I recently decided to give FF programs another go.  While I have continued to face frustrations with the process, booking and usage of my points, there is value there for those willing to play the game.  It is important, however, that you be prepared to play that game and do your research.

A few years ago I signed up for an Alaska Airlines Frequent Flyer Credit Card.  It seemed like a great idea.  After all, I fly internationally 2+ times a year, love travel, and put most of my expenses on my credit card. They were offering a 20,000 mile signing bonus which was solid at the time and a few additional perks including a large partner network. Unless something drastic changes I’ll never sign up for another frequent flyer card again.

It’s now 3 years later and I still have those 20,000 points. As well as another 18,000 or so I picked up before I stopped using the card out of frustration and transferred over to a Capital One cash back card. Each year as my December trip approaches I sit down and try and use my miles.  Each year I end up wasting 30-40 minutes on the phone before hanging up disgusted.

Let me tell you a bit about this year’s adventure.  I’m pretty flexible about where I want to visit.  My main criteria is time based.  My window this year starts on December 15th and ends on January 4th.  That means that I’m willing to depart December 15th-17th and return January 1st-4th.  In the grand scheme of things, that’s a far more flexible schedule than most people have. Also, I’m not overly picky about where I end up going.  A good deal in the general region I want to explore is usually good enough for me.

With nearly 2 months to go before my date of departure I called the Alaska Airlines Frequent Flyer Concierge service and got a very friendly associate. I gave her my dates and gave her a few countries – not cities, but entire countries – I was interested in while specifying I didn’t mind which city I ended up in.

We searched Peru without any luck.  Then Bolivia, Ecuador and Columbia. From there it was on to Argentina and Chile before adding Panama, Costa Rica, Puerto Rico, Aruba and the Netherlands Antilles.  You would think, given that she was searching all partner airlines with flights from Phoenix that at least ONE flight to at least ONE of these countries would have been available.  No such luck.

Annoyed but not overly surprised I groaned at the ridiculousness of it – after all – I’d essentially searched 2/3s of an entire continent and been unable to find so much as a single flight that would work.

So, I expanded my search to Asia. After all, there had to be at least some availability to somewhere. The search continued; Thailand?  Nope. Cambodia, Malaysia or the Philippines?  Nope.  Vietnam?  Another nope.

So…Asia was out. In a final act of desperation I figured I’d check two off-beat destinations in Europe I wouldn’t mind visiting – Greece and Turkey.  Want to guess the results of the queries?  You got it – nope, and nope!

So, I gave up.  She was apologetic and suggested I try to make my reservations further in advance in the future or considering upgrading to a business class ticket.  Apparently ~2 months isn’t enough lead time.  I’m sympathetic to the fact that December 14th-January 10th is a peak travel period…but seriously, with 2 months lead time, semi-flexible travel dates, searches across 3 continents and in 18 countries you can’t find me a SINGLE flight? That’s straight pigswill.

Oh, did I mention that for the privilege of being a Miles Rewards customer I get to pay a $75/year fee?   I’m sure there are a few people out there making these programs work for them, but if you’re an average consumer and you’re using a mileage plan, it’s a pretty safe bet you’re essentially being robbed.  Hell, did you know that the vast majority of “travel” cards still charge the exact same transaction fees as a normal credit card?

My advice for non-business travelers?  Tell em’ to go to hell, switch banks and pick up a Capital One cash back card that doesn’t have an annual fee, puts actual $ back in your account, and which doesn’t charge 3% on every purchase you make while abroad.  In the long run those are perks you’ll actually be able to use and which will leave you with real, tangible benefits no matter when you choose to travel.

Travel Tip – International Credit Card Fees

It’s something you don’t hear talked about regularly.  One of those little surprises that the diligent and thorough will discover after returning from an international trip as they pore over their credit card statement.

Most travel blogs and credit card companies warn you about the importance of calling your credit card company immediately before an international trip to notify them that you’ll be out of the country and that it’s acceptable to approve international charges.  What they usually don’t talk about is currency exchange fees, transaction fees, and international ATM fees – all of which add to the cost of travel.

In preparing for my upcoming trip I made a few calls and did a bit of research.  What I have learned  is that all banks have slightly different policies and approaches to international fees and the only way to truly know where you stand is to call and ask.  Luckily, while some of the agents don’t have the rates memorized they can pull them up and let you know quickly and easily.  Just call the service number listed on the back of your credit or debit card.

As I prepared to travel I dealt with my three providers: Citi Bank, Bank of America and Chase Bank. It’s interesting and perhaps important to note that none of the banks were willing to wave or negotiate the fees (and believe me I tried).

There are two different fee structures to be aware of.  One for international Credit Card use.  The other for international debit card/ATM use. These fees are especially obnoxious because you’re probably getting hit in 2-3 areas.

Debit Cards:

Chase told me that international use of their Visa debit cards came with a 3% currency exchange fee and a $3 ATM use fee.  Then on top of that add on whatever ATM transaction fee the international bank chooses to charge for supporting an out of network bank. Unfortunately, I failed to confirm what the use fee was for retail transactions using the Chase Visa debit card. I believe they are at least 3%.

Bank of America was a bit more thorough in providing me with a breakdown of specifics.  A Visa debit card through them results in a 1% currency exchange service fee. The gal I talked to failed to give me the specifics on their out of network ATM fee, which I assume is between $2-$4.  She did note that the  B of A fee is waved if you use one of their partner bank ATMs. Unfortunately there is no escaping the 1% conversation fee. Interestingly, she did note that they have 29,000 “Visa” ATMs and 19,000 “Plus” ATMs in Spain.  If you use your debit card anywhere besides their ATM they charge a 3% currency exchange fee for retail transactions using the Vista debit card.

The only way you can get the ATM fee waved seems to be if you tie it to a rather large bank account. Definitely not an option most 20 somethings will be able to take advantage of, though it is a possibility for families or retirees looking at traveling.  You might also be able to leverage a business account to get the fees waved.

Credit Cards

For convenience reasons when traveling in Europe, I prefer to use either Visa or MasterCard. Unfortunately, Discover isn’t accepted internationally,  and AmEx  seems to have significantly less coverage.  I highly recommend researching what cards are most commonly accepted in the region of the world you’re planning to visit.

In calling, I found that both Bank of America and Chase set their Credit Card transaction fee at 3% on every transaction for their Visa cards.  Contrary to some of the material I’ve read on the web, the 3% fee seemed to be fairly common across the banks I talked to when dealing with Visa cards.  Again, despite raising a considerable fuss about the issue, neither bank was willing to adjust the rate.

I was able to confirm that B of A and Citi both place a 1% transaction fee on their MasterCard credit cards. While not positive, the way the B of A representative referred to the fee it’s set by MasterCard.  Though it’s also probably subject to the individual credit card/bank contract.

My experiences seem to line up fairly well with the following survey done by IndexCreditCards.com which found:

How do the major credit card issuers stack up? Below are the international transaction fees from each issuer (for banks that issue Visa or MasterCard branded cards, these numbers include the Visa or MasterCard fees):

  • Capital One: 0% transaction fee. (Capital One not only doesn’t impose its own fee, but it also eats the 1% fee that Visa or MasterCard impose.)
  • Discover: 0% transaction fee
  • American Express: 2% (Increasing to 2.7% January 1, 2009)
  • Pulaski Bank: 2%
  • Barclays/Juniper Bank: 2%-3%, depending on card
  • Bank of America: 3%
  • Chase: 3%
  • Citibank: 3%
  • GE Money 3%
  • HSBC: 3%
  • U.S. Bancorp (U.S. Bank): 3%
  • Wells Fargo: 3%

I prefer using a debit card for cash withdrawals over currency exchangers or travelers checks, and a credit card for the lion’s share of my other purchases.  For this trip I’ll use my 1% cash back MasterCard which – when the dust settles – should negate the 1% fee they’ll be charging on every purchase.  A side note: Don’t assume that airline miles cards have better travel rates.  From what I’ve seen they’re treated exactly the same as any other card…so as much as it may pain you, you might be better off leaving the Mileage card at home.

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