Credit Card Debt Management

For most of us, the holidays mean travel. Don’t be a grumbling grinch about it. Use your credit card travel rewards to make the most out of that 300-mile trip to see Great-Aunt Bertha. Jason Giacchino has several tips on how to spend wisely during the holidays, one of which is to “develop a buying strategy.”

It’s a great idea. Gas purchases and hotel stays can rack up rewards to help you enjoy a little post-holiday stress release. Check out Mr. Credit Card’s post on Kiplinger’s recommended list of credit cards for various categories.

The Capital One Platinum Plus MasterCard came out on top in the travel card category, according to Kiplinger’s. Mr. Credit Card agreed with this choice, as well as the magazine’s choice on best gas card, the BP Rewards Visa. That card offers 5% rebates on BP purchases and 2% on other travel and dining expenses. But Mr. Credit Card makes a good point - not everyone uses BP to fill up. I certainly don’t; I think their gas tends to cost more than competitors.

For non-BP users, Mr. Credit Card recommends the American Express Simply Cash Card. It is a business credit card that pays 5% rebates on gasoline and certain types of business expenses. The site mentions that a person can obtain a business credit card without actually owning a business; they will simply be treated as a sole proprietor. It’s worth a try!

For those who will need to fly instead of drive, Kiplinger’s has a recommendation on that too. Here’s what Mr. Credit Card had to say about the magazine’s choice, the Citi Premierpass Card Elite Level.

While this is a very good card, I think there are just too many types of travel reward cards to simply pick one. What they failed to mention is that this card will only suit those who travel a lot because you can earn points from the dollars you spend and also from the miles you fly. For those of us who are not really frequent flyers, then this card may not be suitable. Plus, Citi’s ThankYou Network airline reward system could get complicated as they have “fixed options” and “flexible options” for redeeming points for airline tickets. Check out our review of Citi’s Rewards for more details.

Something else to keep in mind is that the Platinum Plus MC (best travel card) is for consumers with “excellent credit,” according to MasterCard’s web site. If you can get it, go for it - and happy traveling!

About 54 percent of taxpayers used credit cards to meet their 2006 tax obligation. The number is expected to increase this year, thanks to heavy marketing by credit card companies offering double reward points specifically for tax payments.

A desire to collect such reward points is the main argument people use to justify paying their tax bill with plastic. However, The Washington Post reports that poor planning also comes into play for small business owners, where using plastic to fit the bill for taxes and tax prep services is a growing trend. In fact, credit card spending on such expenses rose 80 percent over the last year, the Post reports.

The IRS has allowed taxpayers to pay with credit cards for about a decade, and many states allow credit card payments for state income tax as well. Convenient in a pinch, but fees make the long-term picture a little less rosy. In fact, Sound Money Tips blog features a pretty convincing argument against credit-backed tax payments:

“The biggest problem is that when you pay taxes by credit card, the charge comes with a 2.49% surcharge to third-party companies that process the transaction. Most people find this charge a surprise because processing surcharges are usually not allowed by credit card companies. This surcharge effectively wipes out any bonuses that credit card companies offer and often means you’ll lose money even with the added promotion incentives and if you pay off your credit card on time and in full.”

We’ve talked about charitable giving with the credit card. It is becoming much more popular for churches to jump on board the e-giving train as well. Congregation members see the value in collecting points while doing good. In some cases, they may simply have no cash or check on hand and will use their debit card as an alternative. Here’s hoping this doesn’t turn into a guilt-driven debt-enabling opportunity for irresponsible spenders. At any rate, church leaders are viewing the innovative payment options as a direct line to reach that group of consumers known as “Generation Plastic” - and they’re right.

Giving has increased at the many churches that have implemented the new technology. In the Dallas area, that amounts to 55 percent of 200 churches polled by the Dallas Morning News. Dr. Marty Baker, the Georgia pastor who is marketing the SecureGive electronic donation kiosk, said his church has seen a 20 percent increase in first-time givers after installing the machine in the church building.

MyChurchDonations.com, which some may consider archaic in its approach, offers churches Electronic Donation Payment Authorization forms to distribute to congregation members. The company’s web site enables church treasurers to withdraw the specified amount from parishioners’ bank accounts electronically. The site also offers this responsible advice:

“Make sure the treasurer pays attention to the credit card donations and watches for possible misuse by those who have trouble managing their finances. Responsible stewardship is not just about giving money, and a tactful educational intervention by the Pastor could be very helpful to the person.”

The church will need enough participation to make the fees worthwhile, but participation shouldn’t be a real problem. As church leadership is turned over to younger, more forward-thinking generations, you can probably expect to see these in about every church of considerable size within the next few years.