The Truth About Airline Miles

Airline miles and credit card reward points feel like free money. So what's the catch... and who's really gaming who?

Two Cents on Twitter: @twocentspbs

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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.

Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Philip Olson, CFP® and Andrew Matthews
Produced by: Katie Graham & Amanda Fox
Images by: Shutterstock
Music by: APM

SOURCES:

[TwoCentsPBS]

Clarifications & Revisions:

The on-screen graphic at 1:10 reads "$163, 000, 000" but should actually read "$163, 000, 000, 000".

[Universal]

Treat a credit card like it's your debit card and pay off the balance on time. You'll be fine as long as you're smart about it.

[MarkWTK]

Wow, you guys are a one of a kind couple on youtube! thanks for All the Life Tips over the years !!!

and that's my 2 cents :)

[pymzojo]

Hope everyone's enjoying the flights I'm paying for :(

[QRSC-fhob]

Paying cash activates the areas of the brain associated with pain? That's funny 😂😂

Someone once said that spending borrowed money is like going to a wedding, but paying it back is like going to a funeral!

[muhammadbinnaeem]

I love how your titles are more close to click bait titles but the content is pure Gold. I have a playlist labeled "For Life" your videos fit into that list... always.

[tiago_mota]

I really want to see the blooper reel of this episode just to see him mispronounce "anaesthetized"... :)

[HaouasLeDocteur]

I agree with all of it but let’s not forget that you get more than rewards for that annual fee. Often, that comes with travel insurance, purchase protections, sometimes even roadside assistance... they can be life savers.

[Dipesh]

There is a new financial coach in town. Love your videos

[someone]

I'm so glad that I'm graduating college while watching this channel. You guys are giving me tips and help that I didn't know I needed! Keep up the fantastic work!

[flyingostrich]

Two Cents: "Credit cards aren't objectively good or bad"
Also Two Cents: *makes a video listing only negative things about credit cards*

[binaryorbitals]

For some reason YouTube hasn’t been recommended me these amazing videos for the last 5 weeks. After seeing this video, I’m glad that PBS is correctly spending their money by teaching me how to correctly spend my money!

[russelltennis]

That research must have been performed on a different generation. To me, I spend cash much more freely because it’s untraceable. Every time I swipe a card it gets automatically deducted from my online budget tool. The pain of spending comes from cards and not cash.

[JuanCarlos]

I havent paid interest on my credit card since 2006, and I've been cashing in on all my reward points every 2 months or so :)

[needlequill]

I closed my credit card because of overspending reason. Never paid a cent or a fee for interest, but spent way more than I did before owning a credit card

[paull]

i feel like this is true for an older generation. I tend to spend my cash more then a credit card... If i dont see the money in my bank account. its spending money, AKA cash in my wallet.

[Kyle]

My Amex, cap one, Citi, and others have no annual fees plus I always pay them off before interest is incurred. They also all have rewards.

As for the charging the merchant bit, that applies to all cards, even debit. Unless we all go 100% cash it's something everyone is marked up for, nothing an individual can do about that.

Also depending on how much you spend at a specific store, a branded card (like Lowe's synchrony) is a necessity. I'm building a home so 5% off basically everything is a big deal, especially where there isn't other stores within a decent driving range that offer similar products.

[weirdnomad]

I stopped using credit cards two years ago. I was shocked by how much money I saved by not spending as much. Forgoing those 'rewards' was the best thing I ever did.

[HikerHansen]

I paid my credit card off EVERY month, to get those Oh So Sweet Wells Fargo Rewards!

But I rationalized $1000 PC upgrades and buying a $2000 camera while in college all because I thought I could save on my next purchase with the rewards. But I found myself barely noticing 5% sales at the grocery store, so why was I paying so much attention to the 1.5% rewards?! I finally cut that dopamine inducing plastic up and I pay for things in CASH now.

[Okay_Is_Wonderful]

As someone under 30, cash doesn't seem like a better option though. I earn nothing, I don't build credit, and if it's lost or stolen, I have no recourse.

Rewards programs can be a trap though if you don't read that fine print. Miles would be wasted on me, so I stick with cash back. I also have one store card for a vendor I shop with frequently. If you let that discount/reward lure you into overspending, or can't pay it off on time for any other reason, you probably paid more than that percentage you got back.