car vs credit card vs free flights

[linda_travelbug]

hi everyone,

I am planning to make a big purchase that I've saved for a long time, which will cost me about 50K. I have money sitting in the bank, and the car dealer said I could pay with my credit card.

I am interested to know ( I do have a citibank gold and a anz frequent flyer gold card currently). what is the best combination, ( i am happy to apply for a new credit card), that will give me the maximum amount of frequent flyer rewards with QFF? I mean, I could pay cash for the car, but why not paying it with credit card considering if i can get some rewards out of it!!!

I am not planning to use AMEX as it would attract another 3%. so just visa and master. any recommendation/ or combination would be appreciated.

cheers

 

[medhead]

Firstly I'd suggest checking if the is a monthly points earning limit. I thought my anz gold FF card had a limit but no limit is showing for the new anz gold FF card, so I'm not sure.

I'd also suggest Amex might be better. Again with anz gold ff card assumin you have the new product. The visa is going to get you 25000 points for $50000. That is $2 per point. Using the Amex will get 62500 points for 51500 or 0.82 dollars per point. Sure 3% is a lot of money but thepoints earn is vastly increased.

Btw I'm surprised they will let you use a card. Well done

 

[Travel Guru]

Firstly I'd suggest checking if the is a monthly points earning limit. I thought my anz gold FF card had a limit but no limit is showing for the new anz gold FF card, so I'm not sure.

I'd also suggest Amex might be better. Again with anz gold ff card assumin you have the new product. The visa is going to get you 25000 points for $50000. That is $2 per point. Using the Amex will get 62500 points for 51500 or 0.82 dollars per point. Sure 3% is a lot of money but thepoints earn is vastly increased.

Btw I'm surprised they will let you use a card. Well done

No offence, but if you think paying $1500 (3% of $50k) surcharge is worthwhile to accrue an extra 37,500 points, send me a PM, i'll happily sell you as many points as you want at that rate :mrgreen::mrgreen:

TG

 

[auriga]

Agree with TG, 3% would be more than I am willing to pay.

 

[MAX_1]

Consider asking the dealer for 2% discount for cash. This would be worth $1000

 

[ejb]

Consider asking the dealer for 2% discount for cash. This would be worth $1000

$50K car, paying with cash I would offer $45K in this market and I am sure you will get it.

$5K saving is better than 25000 points.

ejb

 

[wxxnxs]

$50K car, paying with cash I would offer $45K in this market and I am sure you will get it.

$5K saving is better than 25000 points.

ejb

Agree with you, cash is king and you always can get bargain when you purchase from store.

 

[Hvr]

Would not paying cash for a $50k cause some concern to Austrac and give them some palpitations about possible money laundering? I believe any cash payment >$10k must be reported to them for further investigation. See paragraph nine for more information.

Sorry no ideas about what is best for you.

 

[MAX_1]

Would not paying cash for a $50k cause some concern to Austrac and give them some palpitations about possible money laundering? I believe any cash payment >$10k must be reported to them for further investigation. See paragraph nine for more information.

Sorry no ideas about what is best for you.

When we refer to cash, we certainly don't mean turn up with a brief case full of $$.
Cash means no credit card and no "subject to bank loan".
I purchased a car recently for cash and simply transfered the money from my account into the dealers. The next day,when the money had cleared, the car was ready.

 

[ejb]

Would not paying cash for a $50k cause some concern to Austrac and give them some palpitations about possible money laundering? I believe any cash payment >$10k must be reported to them for further investigation. See paragraph nine for more information.

Sorry no ideas about what is best for you.

You are correct that any transaction over $10K in cash must be reported but if the OP had been saving they would have proof that the money was not dirty and could provide such proof if ever asked.

ejb

 

[v8Statesman]

Firstly I'd suggest checking if the is a monthly points earning limit. I thought my anz gold FF card had a limit but no limit is showing for the new anz gold FF card, so I'm not sure.

I'd also suggest Amex might be better. Again with anz gold ff card assumin you have the new product. The visa is going to get you 25000 points for $50000. That is $2 per point. Using the Amex will get 62500 points for 51500 or 0.82 dollars per point. Sure 3% is a lot of money but thepoints earn is vastly increased.

Btw I'm surprised they will let you use a card. Well done

This citi card https://www.citibank.com.au/AUGCB/ICARD/appnew/showNext.do will give you 1.25 points per dollar. So 62,500 is up for grabs with this VISA.

I've read the T&C's and I so no limit on yearly earn for the business card either.

 

[Will]

Would not paying cash for a $50k cause some concern to Austrac and give them some palpitations about possible money laundering? I believe any cash payment >$10k must be reported to them for further investigation. See paragraph nine for more information.

Sorry no ideas about what is best for you.

Um, no.

Austrac has specific requirements for reporting, and they collect a large amount of data. They then analyse it and investigate it or act as appropriate. An individual paying for a car, once, will not be even a blip on their radar. Do you honestly think they will have 'palpitations' every time a $50k transaction takes place?

 

[Will]

Also, is buying new cars to then on-sell even remotely plausible as a 'money-laundering' operation? Maybe for the dumb-and-dumber crooks of this world.

 

[medhead]

No offence, but if you think paying $1500 (3% of $50k) surcharge is worthwhile to accrue an extra 37,500 points, send me a PM, i'll happily sell you as many points as you want at that rate :mrgreen::mrgreen:

TG

Well in terms of credit card earning that is a quite good. Remeber the comparison here that is being made. Between using the Visa or the amex. For the marginal extra cost of the surcharge they stand to get more than double the number of points, for the same spend.

But you have also made the equation extra good. 37500 points for $1500 - I'll buy that! Lets compare, I could buy, 25x sale fares ADL-Port Lincoln for $1500, that'll get me 25000 points (plus about 4000 points for my card spend). Umm gee not good enough. Please do tell me were it is I can earn a point for 4 cents?

Perhaps you are getting confused by the difficulty of obtaining 4 cents per point value when redeeming points. Sure you might be happy to selling me your points for 4 cents per point but that is a very different proposition to what generally has to be spent to earn points in the first place.

Of course, the suggestion of paying cash is a much better idea.

BTW, another general question what do

This citi card https://www.citibank.com.au/AUGCB/ICARD/appnew/showNext.do will give you 1.25 points per dollar. So 62,500 is up for grabs with this VISA.

I've read the T&C's and I so no limit on yearly earn for the business card either.

Well that is good to know. I was making my comparison based on the ANZ card, but I was sure someone would step in with the info on the citibank card.

 

[Travel Guru]

Well in terms of credit card earning that is a quite good. Remeber the comparison here that is being made. Between using the Visa or the amex. For the marginal extra cost of the surcharge they stand to get more than double the number of points, for the same spend.

But you have also made the equation extra good. 37500 points for $1500 - I'll buy that! Lets compare, I could buy, 25x sale fares ADL-Port Lincoln for $1500, that'll get me 25000 points (plus about 4000 points for my card spend). Umm gee not good enough. Please do tell me were it is I can earn a point for 4 cents?

Perhaps you are getting confused by the difficulty of obtaining 4 cents per point value when redeeming points. Sure you might be happy to selling me your points for 4 cents per point but that is a very different proposition to what generally has to be spent to earn points in the first place.

Of course, the suggestion of paying cash is a much better idea.

While I think the question of what SC's are costing you is a pertinent one, mainly because the ability to earn them is limited to flying, but I don't really think it's a valid comparison to compare what points are costing compared to what your fare would buy you because there are so many other opportunity aside from flying to earn them.

I think a far better comparison to make when determining whether its worth paying a CC surcharge is what value you're getting versus if you paid cash for the services you're using the points.

Assuming the OP is using the points for domestic flights, a worthwhile comparison might be:

Adelaide to Melbourne return in 'O' class (inc. taxes) - $257.71

Adelaide to Melbourne return using points - 16000 points plus $36.52 taxes

Therefore, each one of those 16k points is worth $.0138, and to pay any more than that as a surcharge would be throwing away money.

The cost of the CC points as compared to what they would cost through flying is irrelevant, as for the surcharge all you get is the points, whereas earning them through flying you're getting a service (the flight) and the points....so just because you would only earn 2000 pts from a $257.71 spend, doesn't for a second make the points worth 12.8c


Obviously there's other opportunities to use points and if you use them for J upgrades you're likely to value them higher than that, its merely a personal determination as to what theyre worth as very few people who take J upgrades with points are likely to pay the OTT fare price to fly J.


TG

 

[medhead]

I think a far better comparison to make when determining whether its worth paying a CC surcharge is what value you're getting versus if you paid cash for the services you're using the points.

Assuming the OP is using the points for domestic flights, a worthwhile comparison might be:

Adelaide to Melbourne return in 'O' class (inc. taxes) - $257.71

Adelaide to Melbourne return using points - 16000 points plus $36.52 taxes

Therefore, each one of those 16k points is worth $.0138, and to pay any more than that as a surcharge would be throwing away money.

The cost of the CC points as compared to what they would cost through flying is irrelevant, as for the surcharge all you get is the points, whereas earning them through flying you're getting a service (the flight) and the points....so just because you would only earn 2000 pts from a $257.71 spend, doesn't for a second make the points worth 12.8c

TG

But this is exactly my point because while each point is worth 1.38 cents via redeemption, it is false to compare that value to the cost of getting the points via credit card spend. If using the ANZ visa then the points cost 200 cents each. If it isn't worth spending 4 cents per point on the surcharge then it sure as hell ain't worth spending 200 cents per point. Of course, if using the ANZ Amex then the cost of a point gets down to 82 cents (odd) including surcharge. Still not worth it using your method. But you know I'd rather pay 82 sents per point than 200 cents. In either case one is still buying the same item.

Anyway, this is my point, it is invalid to use redeemption values as a basis for determining how much one should spend to get points. Points are always going to cost more than the value that is redeemed, otherwise QFF wouldn't be make millions of dollars of profit. In this case, it would cost $1500 to get the extra points at a rate of 4 cents per point. This is a competitive cost per point compared to other methods of earning points, such as flying as you've noted. Or if we consider the that goods and services are also obtained, then IMO it is invalid to compare flight earning and CC earning. But that gets back to my point there are not many other CC earning opportunities at 80 cents per point. In fact the best CC earn is 40 cents per point (2.5 points per $ on QF purchases) The worst is $2 per point (or even $4 per point if over the cap on some cards). I can't think of any transparent way to separate out the cost of the points when buying something from the cost of the something you buy. In general, we are buying something and getting the points as a bonus depending on the purchase method. If I can use one method for a little bit extra cost but earn points at a much better rate compared to the overall cost - then to me that is an easy decision. (of course, cars are the exception to the rule as much better deals can be done for cash)

Of course YMMV; some people may not consider the marginal extra cost worth it for the extra points. I do think it is worth it, and I'll take as many points as you can offer me at 4 cents per point.

 

[Nutcase]

When we refer to cash, we certainly don't mean turn up with a brief case full of $$.
Cash means no credit card and no "subject to bank loan".
I purchased a car recently for cash and simply transfered the money from my account into the dealers. The next day,when the money had cleared, the car was ready.

The next day? Why wouldnt you send an RTGS payment for this amount when its immediately cleared?

Also, if the dealer organises the finance, he makes money on that so cash isn't necessarily king like we all think

 

[serfty]

...
But you have also made the equation extra good. 37500 points for $1500 - I'll buy that! Lets compare, I could buy, 25x sale fares ADL-Port Lincoln for $1500, that'll get me 25000 points (plus about 4000 points for my card spend). Umm gee not good enough. Please do tell me were it is I can earn a point for 4 cents? ...

Note that in addition to any base or bonus QFF points directly earned by flying, each SC can be worth 11.1 points (pro-rata) in "Loyalty Bonus".

So 25 r/t will earn 500 SC's and an additional 5,556 QFF points.

 

[medhead]

Note that in addition to any base or bonus QFF points directly earned by flying, each SC can be worth 11.1 points (pro-rata) in "Loyalty Bonus".

So 25 r/t will earn 500 SC's and an additional 5,556 QFF points.

Well there I go, that is better.

Anyone interested in going to port lincoln

 

[equus]

But If using the ANZ visa then the points cost 200 cents each. If it isn't worth spending 4 cents per point on the surcharge then it sure as hell ain't worth spending 200 cents per point. Of course, if using the ANZ Amex then the cost of a point gets down to 82 cents (odd) including surcharge. Still not worth it using your method. But you know I'd rather pay 82 sents per point than 200 cents. In either case one is still buying the same item.

I have to disagree. The points do not cost 200 cents each on the ANZ, because if they do, then the car is free You are confusing the cashflow needed versus the "cost" of the components.

In this "transaction" you are acquiring two distinct items - points and a car. To really compare costs of each component, you need to factor in the real base cost of the car, then any difference is the cost of the points.

If the lowest possible cost for the car by any payment method is $50,000, then 25,000 QF points are free when obtained via the ANZ (no incremental cost). Using AMEX (assuming a platinum or black at 1.5 points per dollar), then the $1,500 surcharge results in a total of 77,250 points. You can cost these in two ways. Each of those points has cost 1.942c (for the lot) as your car was worth $50,000, and the remaing cost covered the points. When comparing to the ANZ earn, however, you have earn't an "extra" 52,250 points over the 25,000 free ones, at an incremental cost of $1,500, so those 52,250 cost you 2.871c each.

Things are different if the dealer has built in a margin to cover the card use in the first place. If you asssume you could actually get the car for $49,000 cash (only 2% off), then the 25,000 points via ANZ are costing you $1,000, or 4c each. The 77,250 points from AMEX are costing you $2,500 or 3.236c each.

It is this true incremental "cost" of points that you should compare against the value you place on "spending" them to determine what is worthwhile. The amount of cash you need to flow through the payment mechanism is only relevant with respect to how much you can expend for the tangible items (other than points) that you are acquiring.