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Financial Feud: Earn reward miles vs. Avoid the bills

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In Dispute:

$5,000 a month

The Argument:

Debbie

My husband keeps signing up for airline credit cards, but the extra bills are making it hard for me to balance our budget. He has five open accounts at the moment and spends about $5,000 on them each month. He says he wants to accrue miles and will close the accounts before we have to pay any fees. I say they're not worth the hassle, because the bills often come as a surprise and don’t get paid on time. AM I RIGHT?

Expert Opinion:

Financial Feud

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Debbie

The Argument:

I'm still operating like the frugal grad student my husband and I both were when we met. My family always saved and paid up front. His family always bought expensive items on credit. Everything got paid by both methods, but the comfort level is different.

My husband’s intentions are good. He says he hopes to save enough airline miles for an overseas trip for two to Europe or a family emergency across the country. He also plans to close the accounts after the miles have posted or just before the "no fee for the first year" offers expire.

The monthly spending on all these cards varies, but my husband insists that he isn't using the new cards any more than we used the single card we shared before. We also make it a habit to pay off all the credit cards in full every month.

My problem is that my husband doesn't tell me when he opens a new card, so I can’t plan for those expenses. Sometimes the bills get paid late. Others wipe us out for the rest of the month.

We’ve got two things going on here: lack of disclosure and lack of common sense.

I love rewards cards. Really, really, really love them. They’re paying for our Hawaiian vacation this summer.

But they only make sense if you can easily pay your balance in full every month, and if you’re not spending more than you would otherwise. If you’re paying interest or late fees, you’re offsetting -- if not wiping out -- any value from those supposedly free miles. If you’re overspending -- which your husband certainly is when paying the credit card bill wipes you out for the rest of the month -- then rewards cards are downright dangerous.

Opening and closing a bunch of accounts can also hurt your credit scores, which could cause you to pay more for an auto loan or a mortgage.

If you’re the one who is “good with money” in a couple, though, it’s important not to take on a scolding, parental role. That just causes the other person to dig in. You might try explaining to your husband that these unexpected bills cause you great anxiety. That takes the focus off him and puts it on yourself. Then you can talk about ways to deal with your concerns.

If you’re handling your money jointly, it makes sense to discuss any credit application before it’s submitted. Both of you should have online access to any accounts that are opened so that you (the bill payer) can keep track of balances and budget accordingly.

It also can help to have a “honey check” amount -- a dollar figure where you check with the other before spending. That dollar amount can vary according to your circumstances.

Another good idea is to work together to develop a plan for using the miles he’s already accrued. Rewards are constantly being devalued, which means you need more miles to get the same flights. The best approach often is to “earn ‘em and burn ‘em,” rather than letting them sit and lose value. Also, you may lose accrued miles if you close an account.

Again, rewards cards can be great, but only if you’re smart about how you use them.

About the author

Liz Weston is one of the most-read personal finance columnists on the Internet. Her columns appear on MSN Money and in newspapers across the country, including the Los Angeles Times and Stars & Stripes.

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