It’s pru­dent to send your affin­ity card pack­ing

The Washington Post Sunday - - TRAVEL - El­liott is a con­sumer ad­vo­cate, jour­nal­ist and co-founder of the ad­vo­cacy group Trav­el­ers United. E-mail him at chris@el­ CHRISTO­PHER EL­LIOTT

A re­cent poll bears out some­thing I al­ready be­lieved to be true, and am happy to see: Con­sumers are fi­nally los­ing their en­thu­si­asm for air­line and other affin­ity credit cards. Bankrate, an ag­gre­ga­tor of financial rate in­for­ma­tion, re­ports that its Money Pulse sur­vey found that card­hold­ers “ex­press lit­tle en­thu­si­asm for ac­cu­mu­lat­ing ex­tra re­wards.” In fact, half the re­spon­dents said they wouldn’t care if their card stopped of­fer­ing loy­alty re­wards al­to­gether.

Affin­ity cards, for the unini­ti­ated, are credit cards of­fered by a bank and co­branded with an­other com­pany, such as an air­line or ho­tel, that of­ten al­low card­hold­ers to col­lect miles or points for ev­ery dol­lar spent. Crit­ics say the cards prod con­sumers to spend ever more money so they can col­lect points to­ward perks such as free air travel, re­duced ho­tel rates or pref­er­en­tial treat­ment at travel des­ti­na­tions.

Who wants out? Peo­ple like Dick Martin, a re­tired in­for­ma­tion sys­tems su­per­vi­sor from Moses Lake, Wash. Frus­trated by black­out dates, high mileage re­quire­ments for award tick­ets and an an­nual fee, he re­cently cut ties with his plas­tic.

“There were too many black­out dates,” Martin says. “The points re­quired for any flight were quite high, and I also paid $70 per year for the priv­i­lege of hav­ing the card.”

Mil­ton Kidd, a re­tired pro­fes­sor from Wash­ing­ton, D.C., says he felt strung along by his air­line-branded affin­ity card. He paid a $79 an­nual fee and obe­di­ently col­lected miles for years. But when he fi­nally had a chance to book a seat from Port­land, Maine, to Tal­la­has­see, his air­line told him he needed to buy more miles. He had to re­deem all of the miles he’d earned and pay the air­line an ad­di­tional $326. “The en­tire thing was a rip-off,” he says.

Kidd is al­low­ing his re­main­ing miles to ex­pire and has cut up his card.

Only a lim­ited num­ber of cus­tomers ac­tu­ally ben­e­fit from th­ese pay­ment sys­tems in a mean­ing­ful way over the long term, ex­perts warn. You’re prob­a­bly not one of them.

But end­ing the re­la­tion­ship isn’t easy. Trav­el­ers are some­times bound to their cards by ir­ra­tional fears, Web sites that ex­toll the virtues of point­col­lect­ing and, of course, by the debt they’ve ac­crued by over­spend­ing.

Even when trav­el­ers know the cards over­promise re­wards and have the po­ten­tial to dam­age their per­sonal fi­nances, they still don’t want to give them up, says Thomas Nitzsche, a spokesman for ClearPoint Credit Coun­sel­ing So­lu­tions, a non­profit agency of­fer­ing con­sumer credit coun­sel­ing. They don’t want to lose the abil­ity to earn more miles or the elu­sive “free” ticket. Nearly half of ClearPoint’s clients at least ini­tially refuse to part with their mileage-earn­ing credit cards, he says. The big­gest rea­sons: un­founded fears that their ex­ist­ing re­wards will be deleted or their credit rat­ing will be af­fected.

“It’s some­thing close to ad­dic­tion,” Nitzsche says. “In some cases, clients just leave with our ad­vice and then come back months later when the cards are com­pletely maxed out or de­faulted and closed by the cred­i­tor.”

Did he just say “ad­dic­tion”? Yes, and it’s not hy­per­bole. Michele Paiva, a psy­chother­a­pist and neu­ro­mar­keter in Down­ing­town, Pa., says com­pul­sively col­lect­ing miles is akin to drug de­pen­dence. (Neu­ro­mar­ket­ing is the study of con­sumers’ cog­ni­tive re­sponses to mar­ket­ing stim­uli, such as lower prices or pro­mo­tions.) “An affin­ity card cre­ates a false sense of re­la­tion­ship, of be­ing spe­cial,” she ex­plains.

My ex­pe­ri­ence with re­port­ing about th­ese cards as a con­sumer ad­vo­cate sup­ports both Nitzsche’s and Paiva’s as­ser­tions. Af­ter my first col­umn on the topic ap­peared, I was sur­prised by a bar­rage of e-mails from an­gry card­hold­ers who crit­i­cized my story with play­ground in­sults.

Many of them ap­peared to be com­ing from the read­ers of sev­eral small travel blogs, whose pub­lish­ers were un­der­stand­ably an­gry. Af­ter all, they were pock­et­ing gen­er­ous com­mis­sions from credit card com­pa­nies for each new cus­tomer they re­ferred, and my sto­ries were bad for busi­ness. Even more dis­turb­ing was that some of th­ese blog­gers had been cited as travel ex­perts by col­leagues in the me­dia.

The main­stream view on affin­ity cards varies. Some industry-watch­ers say card­hold­ers can win the game by learn­ing the sys­tem and pay­ing off their cards ev­ery month. “Those who al­ways pay their bal­ances in full and on time will usu­ally come out ahead,” says Ja­son Steele, a credit card ex­pert at Com­, who says he is not com­pen­sated by credit cards for his ad­vice.

“But that’s only about half of all card­hold­ers.”

Oth­ers say an affin­ity card is worth it only if you’re a fre­quent busi­ness trav­eler on an ex­pense ac­count — and even then, it can be risky.

“Credit card com­pa­nies em­ploy hun­dreds of lawyers and MBAs to en­sure that the rev­enue is much greater than the re­wards you re­ceive,” says K. Alexan­der Ashe, the chief ex­ec­u­tive of Spen­dol­ogy, a com­pany that de­vel­ops bud­get­ing apps. Even in the hands of an ex­pe­ri­enced user, it’s easy to in­ad­ver­tently carry a bal­ance, such as when there’s a de­lay in get­ting a re­im­burse­ment from your em­ployer. “Many credit cards ac­crue in­ter­est on a daily ba­sis,” Ashe warns.

Matthew Coan, pub­lisher of the financial Web site, says trav­el­ers such as Martin and Kidd can’t be blamed for sign­ing up in the first place.

“Peo­ple get ex­cited when they get the of­fer for a branded card and feel like they need to take ad­van­tage of it,” he says. The catch — that the re­wards cards carry a higher in­ter­est rate and fees than com­pa­ra­ble pay­ment sys­tems — tends to get buried in the fine print.

“If you de­cide to carry a bal­ance on your branded card, then the in­ter­est that you pay will greatly out­weigh any re­wards that you will be earn­ing,” Coan says.

Of course, talk like that is prob­a­bly con­sid­ered blas­phemy in the Church of Miles, but facts are facts. Un­less you pay all your bills on time and have time to master the com­plex rules of this game, you’re bet­ter off with­out th­ese cards.

“It’s some­thing close to ad­dic­tion. In some cases, clients just leave with our ad­vice and then come back ... when the cards are com­pletely maxed.”

Thomas Nitzsche, ClearPoint Credit Coun­sel­ing So­lu­tions spokesman

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