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 »

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 »

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 »

Chase Freedom cardholders, particularly those with large gas station bills, will likely be quite pleased with 2012′s Chase Freedom 5% cash back reward categories. While there are a handful of differences between the 2012 schedule and that of last year, 5% cash back categories are probably easier for many to max out this year.

First Quarter: Beginning January 1st and running until March 31st, cardmembers earn 5% at gas stations and on purchases made at Amazon.com. Because 5% cash back can be earned on up to $1,500 of spending, an individual or family that spends $125 a week on gas can max out rewards during this quarter.

Second Quarter:  From April until June 30th, cardmembers earn 5% cash back at grocery stores and movie theaters. This is generally the easiest quarter to max out, as most families can easily spend the $125 a week on groceries (though a couple would need to see about 50 movies during this period to max out earnings on movie theater purchases). Continue Reading »

For the second year in a row, Discover is running a limited time 0% APR no fee balance transfer promotion. This is presently the only no fee balance transfer offer on the market.

Consumers who apply and are approved for this Discover card (see online application here) pay no fees to transfer balances and are granted a 0% APR on balance transfers and purchases for 12 months. Because balance transfer fees typically range from 3% to as much as 5% of the amount being transferred, opting for this offer saves consumers $30-$50 for every $1,000 transferred. On a $3,000 balance transfer, this works out to an additional $90-$150 of savings in addition to what can be saved with a 0% interest rate. Continue Reading »

Loyal customers of American Express have, on occasion, found that their accounts in good standing have suddenly been suspended. Only later have they learned that they are the subject of American Express’s financial review process. In order to have their accounts reinstated and to receive any pending rewards, it is imperative that cardholders succeed in satisfying American Express.

The first step to passing an American Express Financial Review is to take the procedure seriously. In some cases, cardholders are initially informed of this process by a poor quality call from an overseas representative. That person claims to be from American Express and asks cardholders to verify personal information. Understandably, cardholders are reluctant to divulge this information to unverified individuals. Nevertheless, cardholders should hang up, and call the number on the back of their card. When they reach American Express, they should ask for their Financial Review department. Continue Reading »