Paying 1% Credit Card Surcharge on $500k just for points?

[Johnstone]

Hello all - I've just discovered the world of Frequent Flyers/ Credit Card rewards so please bear with me!

I am in a position where I can potentially put $500k a year on the credit card every year as I have my own business. My supplier has a 1% credit card surcharge on Visa/Mastercard, but I'm thinking that the cost may be worth it if I can get the points?

I've done a bit of research, and looks like my best bet is the personal Diners/Mastercard, where I can get 1.25 points per dollar spent on Mastercard, which equals to 0.625 Starwood points, which then can be converted to 0.78 American Airlines/Singapore Airlines etc points. Here's the link

Diners Club Australia

I have 2 questions:

1) Does anyone have any experience in putting company expenses in a personal card - do credit card companies generally care? Could Diners not give me the points as it is for a company transaction?

2) Is the 1% surcharge on the credit card transaction ($5000) worth the 625k of Diners Club points? My main purpose for the points is to convert it to frequent flyer points and use it for full priced economy international flights (as I have no status on any airlines). Main reason I'm leaning towards Diners is so that I can convert it to numerous airlines, instead of being locked into Qantas or Virgin.

Thanks in advance! I've done a weeks research on this, and it's all becoming quite addictive!

 

[Mumfreqflyer]

$5000 credit card fee.....

6.25 points/$1 = approx 310,000 points

I'll use a route in familiar with and points im familiar with....

139,000 points each way from Perth - LA in business Class via hkg on Cathy Pacfic plus around $800 in taxes. Total points 278,000.

Value of airfare around $7000.

Can too up Qantas points through wollies, optus etc......

On a different note.....if you were to purchase points using say Alaska Air Miles when they have a 40% bonus points campaign on you would need 120,000 points return for Per - LA via HKG.

120,000 points only during a 40% promo including the service charge and now lower Aus $$ would be around $3600 plus about $263 in taxes.

So if you were to do the same flight but buy Alaska air miles you would be around $1100 better off.

However, we own our own business as well and I put everything through on our credit cards. Through this forum I never fly economy....the thought sends shivers downy spine unless it's a per - dps flight and I don't really have a choice.....

We use our credit card points and also purchase air miles however, most of our normal suppliers where the bulk spend goes through don't charge a credit card fee so effective the points are free to us bar the annual card fees.

Mix it up, and only use points to fly in premium cabins not economy.

 

[ermen]

its a no brainer for me. i would be buying miles a 1c / point all day long...

fyi if you research only throws up diners / MC combo... i think you haven't researched hard enough *
also, if you strictly wanted to be redeeming economy flights, the equation may change (it may not be the no brainer for myself)...


*issue is that nobody knows how business expenses on personal cards will be viewed going into the future as it is actually a breach of the strict T&C

 

[robd]

...fyi if you research only throws up diners / MC combo... i think you haven't researched hard enough *...

This.

Suggest reading some more

 

[Johnstone]

Mumfrequentflyer - thanks for your reply. I'll certainly have to get used to flying Premium Economy/Business class in the future - I've never managed to justify it to myself before using my own money!

Ermen & robd - thanks for your feedback. Quite interested on your inputs about other CC rewards! I've done a lot of research and the Diners/Mastercard seems to be the best option. I've used the CC comparison aggregators to compare my options. The other best options I've seen include Westpac Platinum Business - but that's only converts to 0.5 points per Airline point, or NAB Business - that's 0.66 QFF points per dollar spent, but that will lock me with Qantas. Unfortunately my supplier doesn't accept Amex

 

[Alanslegal]

I'd easily recommend getting a Citibank Signature card.

You earn 1.5 citibank points per $1.00. You can then transfer those Citibank points at 1.5 to 1.0 to Singapore Airlines Kris Flyer, so spending $500K in Australia, gets you 500,000 KF flyer points.

For example, 450,500 KF will get you get two seats First Class from Melbourne to Paris return

You can get the care fee-free for life, so saves you up to $395 per annum.

Citibank Australia

 

[Alanslegal]

Or if you think First Class is too much You could always slum it in business class and go to Paris three times each year, just because you can now

 

[andye]

Hello all - I've just discovered the world of Frequent Flyers/ Credit Card rewards so please bear with me!

I am in a position where I can potentially put $500k a year on the credit card every year as I have my own business. My supplier has a 1% credit card surcharge on Visa/Mastercard, but I'm thinking that the cost may be worth it if I can get the points?

I've done a bit of research, and looks like my best bet is the personal Diners/Mastercard, where I can get 1.25 points per dollar spent on Mastercard, which equals to 0.625 Starwood points, which then can be converted to 0.78 American Airlines/Singapore Airlines etc points. Here's the link

Diners Club Australia

I have 2 questions:

1) Does anyone have any experience in putting company expenses in a personal card - do credit card companies generally care? Could Diners not give me the points as it is for a company transaction?

2) Is the 1% surcharge on the credit card transaction ($5000) worth the 625k of Diners Club points? My main purpose for the points is to convert it to frequent flyer points and use it for full priced economy international flights (as I have no status on any airlines). Main reason I'm leaning towards Diners is so that I can convert it to numerous airlines, instead of being locked into Qantas or Virgin.

Thanks in advance! I've done a weeks research on this, and it's all becoming quite addictive!

The Diners MC is not a bad option for Economy flights as (as far as I know) it is the highest earning card that transfers to an airline with low taxes (eg Alaska AA).
However as other posters will tell you, the value is in premium cabins and Citibank seem to be leading the way for Visa/MC spend.
I have the Diners and it does have some advantages (DC very good for IHG hotels and good earn on DC on flights).
The main reason for me choosing it is that I have a largish family and it is difficult to (a) find availability get 6 premium seats (b) accumulate enough points to buy 6 premium seats (c) because of this low taxes are a priority.

I doubt you will regret the 1% surcharge (especially as the surcharge will be a business expense so nearer net 0.7%)

 

[MEL_Traveller]

a family member has a small business and accrue a lot of points... but the problem is they can never use them, or the awards they can redeem are extremely bad value.

if you have top tier QF status, and can ring to have award seats created and released for you, I'd say 'do the spend'.

but if you spend $5000 to get a '$7000' airfare, but can't get availability for the dates you want, on the route you want... what's the point?

and while it is nice to fly business class on cx or QF, you can often pick up business class to europe for less than $5000 if taking a smaller carrier, or even a major carrier out of asia.

 

[andye]

The Diners MC is not a bad option for Economy flights as (as far as I know) it is the highest earning card that transfers to an airline with low taxes (eg Alaska AA).
However as other posters will tell you, the value is in premium cabins and Citibank seem to be leading the way for Visa/MC spend.
I have the Diners and it does have some advantages (DC very good for IHG hotels and good earn on DC on flights).
The main reason for me choosing it is that I have a largish family and it is difficult to (a) find availability get 6 premium seats (b) accumulate enough points to buy 6 premium seats (c) because of this low taxes are a priority.

I doubt you will regret the 1% surcharge (especially as the surcharge will be a business expense so nearer net 0.7%)

VA (also a Citi transfer partner) does have low taxes of course.

 

[Johnstone]

Thank Alanslegal - I haven't seen that one before so I'll definitely look into it.

Andye - I'm pretty much in the same boat as you. I've got a family of four, so it's going to be hard to find premium seats for most reward flights. Also, I've found that taxes are so different across airlines. For flights to the US, the taxes on QF are double that of Alaska or AA so.

I'm hoping to get enough points for the family to go to Europe this year - do you know of an Airline which has low flight tax charges to go there?

Edit: Great - I'll look into Virgin Airlines flights as well!

 

[medhead]

For those recommending other cards, the OP specifically mentioned transferring to AAdvantage via SPG. It is entirely possible they want points with AA. Something to keep in mind when suggesting cards.

 

[Warks]

I'd easily recommend getting a Citibank Signature card.

You earn 1.5 citibank points per $1.00. You can then transfer those Citibank points at 1.5 to 1.0 to Singapore Airlines Kris Flyer, so spending $500K in Australia, gets you 500,000 KF flyer points.

For example, 450,500 KF will get you get two seats First Class from Melbourne to Paris return

You can get the care fee-free for life, so saves you up to $395 per annum.

Citibank Australia

That's a good link - I've been looking at various cards on here and there is another with a $395 fee reduced to something like $250 but the word on the street (or AFF) is that you can get it fee-free for life but for the life of me I can't find where that is.

It's a toss-up between a card like this and one of those giving a big chunk of points for the signing up.

 

[Johnno101]

Also to be taken into consideration is that the $5000 spend on credit cards is a write-off against tax.

 

[Johnstone]

Mel_Traveller - you're definitely right - there's no point on spending good money to chase flights which might not even be available. For example, I was searching up business reward flights on QF and Virgin to Europe in October and there seem to be very few.

Medhead - You're right - the main reason I think the SPG route looks enticing is because of the conversion to AA which seem to have significantly lower taxes when travelling to the US. I'm hoping another airline will have low taxes to Europe, but will need to do more research on this!

 

[MEL_Traveller]

Re: Rumour:[Denied by RR] Qantas to ban JQ SYD-MEL pax from F lounges & send to J lou

Mel_Traveller - you're definitely right - there's no point on spending good money to chase flights which might not even be available. For example, I was searching up business reward flights on QF and Virgin to Europe in October and there seem to be very few.

Medhead - You're right - the main reason I think the SPG route looks enticing is because of the conversion to AA which seem to have significantly lower taxes when travelling to the US. I'm hoping another airline will have low taxes to Europe, but will need to do more research on this!

any award flight, save for BA, is cheap through AA. BA flights (and of course Iberia) charge fuel surcharges, others don't. so from australia you could fly cathay Pacific to europe, or Japan airlines, and it will be cheap like the USA.

but... availability is the problem. the advantage of QF is the ability to book Emirates flights... which seem to have more availability. but then you're slugged with qantas imposed charges. while qatar airways is oneworld, you can't book a flight to Europe from Australia as a single award via AA. It must be priced as two awards.

 

[andye]

Thank Alanslegal - I haven't seen that one before so I'll definitely look into it.

Andye - I'm pretty much in the same boat as you. I've got a family of four, so it's going to be hard to find premium seats for most reward flights. Also, I've found that taxes are so different across airlines. For flights to the US, the taxes on QF are double that of Alaska or AA so.

I'm hoping to get enough points for the family to go to Europe this year - do you know of an Airline which has low flight tax charges to go there?

Edit: Great - I'll look into Virgin Airlines flights as well!

VA works out about $225 in taxes return if not going to UK. Accumulating enough points for 6 may be a challenge as the VA points needed is higher than some. As with many economy redemptions the value per point on reward tickets is not very high although can be helpful in high season (if you book early to get availability). As an aside, family pooling is a big advantage for the VA programme when you buy revenue tickets as a family.

Redemptions via Krisflyer and Asia Miles have lower points requirements but mid-range taxes I understand

Sadly the days of being able to get 6 seats in Business for a round-trip on MH for 102K points (+taxes) each has gone since the Enrich programme devalued

 

[andye]

Another thing to bear in mind when considering choosing DC is that there is a strong suspicion that AA will devalue in the next year. This may well change the maths of its benefit

 

[Johnstone]

Mel_Traveller & Andye - thanks for your input! Great to hear there are airlines which offer low surcharges to Europe!

 

[legroom]

For the figures quoted by the OP (500K p.a.), I'd lean towards the Citi Prestige despite the hefty annual fee of $700.

The difference in KF points over the fee-free Signature is about 165,000 pts which would allow you to enjoy Suite travel all the way from SYD to CDG (Paris, that is) with another SYD SIN in J thrown in for good measure.

You can always bank the remaining 5,625 KF points for another rainy day.

Is that worth the extra $700 p.a. ?

That's for you to decide, but it is to me [assuming the OP wants to see Eiffel Tower annually].

I'd easily recommend getting a Citibank Signature card.

You earn 1.5 citibank points per $1.00. You can then transfer those Citibank points at 1.5 to 1.0 to Singapore Airlines Kris Flyer, so spending $500K in Australia, gets you 500,000 KF flyer points.

For example, 450,500 KF will get you get two seats First Class from Melbourne to Paris return

You can get the care fee-free for life, so saves you up to $395 per annum.

Citibank Australia