3355

Dave Says: Great Theory, But It Doesn't Work

Dear Dave,

I live in Alaska, and I’m considering using a credit card for the airline miles. This would make it easier and cheaper for me to visit my family in the Lower 48. Is this a good idea?

Adam

Dear Adam,

What you’re talking about sounds great in theory. The problem is that it doesn’t work out so well in the real world. Did you know that 78 percent of all airline miles are never redeemed? And, if you’re one of the 22 percent who attempt to cash in on them, you’ll find that the airlines make it virtually impossible for you to travel when you want, how you want, or even where you want.

Now, let’s look at the credit card side of things. Did you know that studies have shown that you spend more when you use plastic than when you pay with cash? Cash has an emotional element to it. When it leaves your hand, the pain centers in your brain activate. A study at MIT actually proved this to be true. They also found that those pain centers are not activated when you pay with plastic.

Here’s the bottom line: With a few very rare exceptions, you’re much better off not chasing airline miles by using a credit card. The vast majority of people who play this game find themselves with nothing but debt at the end of the day. If you’re really interested in airline miles, I’d suggest looking into a debit card program that offers this perk. With a debit card, you’re not borrowing money. You’re spending your own money straight from your own bank account.

If this credit card airline miles thing worked so well for the consumer, the card companies would be going out of business. More than anything, it’s a bait and switch. And the bait is attached to a hook that takes money out of your pocket and puts it in theirs!

—Dave

* For more financial help, please visit daveramsey.com.
Comments and feedback can be sent to feedback@ldsliving.com