Credit card rewards are very valuable, but does that mean you have to pay taxes on them? If you did, how would each mile or point be valued? These are the questions that some people have every year when it comes time to submit their income to the IRS. Interest is also peaked by stories like this one in the Los Angeles Times that reveal that Citibank has been sending out 1099-INT forms to some of its savings and checking account customers who received American Airlines miles. In response, many people are concerned that their credit card rewards in the form of cash back, miles, and points may be taxable.

Cash Back

The IRS has always considered cash back rewards from a credit card to be a discount on the purchase price of goods and services. They view these rewards much like a coupon where the original price is marked down, and a lower price is paid. In all of those instances, the value of the discount is not reported as taxable income. Continue Reading »

Since its merger with Continental, United Airlines has become one of the largest carriers in the world. In addition to the services it operates under its own brand, customers can easily connect to flights on one of the 27 other airline partners within the Star Alliance. The result is an airline alliance with a truly global reach.

The United/Continental merger has created a circumstance where miles in United’s MileagePlus program have become increasingly valuable. Fortunately, there are many different credit cards that allow customers to earn these miles. The challenge is to find the credit card that provides the best rewards earning potential.

The obvious choice for earning MileagePlus Miles would be the United Explorer credit card from Chase. Continue Reading »

Choosing a credit card affiliated with an airline used to be a simple matter. Banks offered a product that earned frequent flier miles, and perhaps a slightly more expensive version that offered additional  perks. Today, Delta and American Express have taken airline affiliated credit cards to their logical extreme, offering five different versions to consumers, and three different products for businesses. At the entry level, Delta and American Express offer their classic SkyMiles and SkyMiles Options cards to customers who want to earn some rewards while paying the least amount of annual fees.

How These Delta SkyMiles Credit Cards Work

To earn a single mile in Delta’s SkyMiles program, holders of the Delta SkyMiles Options card must spend two dollars.  With the Options card, only one mile is earned per dollar spent on Delta purchases. Customers of the classic Delta SkyMiles card will normally earn one mile per dollar, with two miles per dollar being granted for spending on Delta purchases.  A very small 1,000 mile sign up bonus is awarded for the Options card and an equally lackluster 5,000 miles are awarded to classic SkyMiles card applicants. Continue Reading »

In a democracy with a decentralized economy, it can be very difficult for economists to determine the exact nature of consumer spending trends. One method that has become increasingly popular is the analysis of data reported by credit card processors. This data can be used to determine consumer spending in various sectors such as food, travel, and fuel. In addition, overall credit card spending can be used as a broad measure of consumer confidence.

For example, The Wall Street Journal reports that credit card use is on the rise as consumer confidence appears to be growing. They cite reports from both American Express and Capital One indicating that balances grew in the 4-5% range over the last year.

What Is Going On

Since the beginning of the recession in 2008, consumers have started to control their credit card debt. This recession in particular was characterized by businesses and consumers taking out too much debt, so it was only natural that many sought protection in more conservative methods of payment such as debit cards, checks, and cash. As time wore on and consumer confidence has begun to recover, shoppers are again feeling more wiling to use their credit cards. This holiday period in particular has been notable for increased consumer spending. Continue Reading »

When most people consider a travel rewards credit card they immediately think of one that earns frequent flier miles. Their next thought is often about the difficulty they will have booking award flights at the lowest mileage levels.

Sadly, most airlines have made it almost impossible to find multiple award seats to popular destinations anywhere near the peak season. Fortunately, members of American Airline’s AAdavantage frequent flyer program still have a reasonable chance of redeeming their miles for the flights they want. Via the Citi Platinum Select AAdvantage World MasterCard, American Airlines travelers can earn the miles they need to fulfill their award travel aspirations.

Citi AAdvantage Credit Card Overview

New Citi AAdvantage credit card applicants will earn 30,000 miles after making $750 worth of purchases within the first four months of opening an account. Customers can earn an additional 10,000 miles for spending $5,000 in the first six months card membership. Continue Reading »

Those who pay their credit card balances on time and in full each month  should be using a rewards credit card. Although many cardholders enjoy their rewards in the form of loyalty points such as frequent flier miles, cash back remains the most popular type of rewards card.

Unfortunately, while cash back rewards can seem like a simple concept, there are dozens of cash back reward cards being offered by nearly every bank.  Among all these cards are three basic types of cash back rewards.

Fixed Rate Cash Back Credit Cards

The simplest types of cash back credit cards are those that offer a fixed rate of return on all purchases. These cards typically offer between 1% and 2% cash back. Once cent per dollar spent is the most common rate of return, and it represents the minimum that any reward card holder should expect. Continue Reading »

Smart credit card users know how to cash in on frequent flier miles, cash back and loyalty points. But as cardholders have grow smarter about credit card rewards, credit card issuers have been forced to steadily increase the amount of points and miles their customers are earning for spending and as sign up bonuses. In many instances, account holders have become disillusioned with points and miles that, at times, can be difficult to redeem.

In response, credit card issuers have begun to add more perks to their hotel and airline reward credit card products that go far beyond mere points and miles. However, consumers often have multiple options with big travel branded credit cards and the most expensive options are not always the best.

Airline Credit Cards Offering More than Just Miles

Delta is leading the field of airline cards by offering the most non-mileage perks. For example, their Delta SkyMiles Reserve card from American Express grants cardholders priority access at check in, security, and during boarding, as well as checked bag fee waivers. Furthermore, it offers customers upgrade priority over others at the same status levels that do not hold this card. However, this card carries a hefty $450 annual fee. For those who want miles and free checked bags, the lower fee Gold Delta SkyMiles card is a much better option. Continue Reading »