My Big Fat Mileage Mistake

Yesterday, I called and closed my United Mileage Plus Visa card.  If you read my post “One Call — $1,000 Saved,” this was evil Card #3.  I called to lower the interest rate and got nowhere, so I transferred the $3598.20 balance to a 0% offer, paid my final $52.43 in interest, and closed the account yesterday.  Of course, yesterday’s supervisor was much nicer to me than the previous supervisor who had offered me a 0.75% reduction on the interest rate.  This one wanted to offer me several different deals, but she still couldn’t lower the interest rate.  So, I listened to her pitch and then happily closed the account.  Why did I open it in the first place?

Well, three years ago, I lived in Washington, D.C., flew more frequently, and had grand plans for this card.  I decided to charge everything on it, pay the balance in full each month, and rack up enough miles to never fly coach again.  While rewards cards may work for people who are responsible with credit, as we have seen, I am not one of those people!  I did redeem one flight in the first year.  What happened since then?

I saved my statements from July 2006 until April 2008.  For fun, I decided to tally up what I paid for the privilege of carrying around a United Mileage Plus card for those twenty-two months.  For the record, I currently have 24,483 miles.  By the time we book flights for our honeymoon, I’ll have 26,483.  I’m planning on buying the final 4,000 miles for $160 in order to get us first-class upgrades for the flight home.  But how much did I really pay for those upgrades?  Let’s take a look:

  • I never was responsible enough to use the card as I had intended.  Instead, I always carried a balance and used it for random purchases.  The lowest balance on the card was $2226.48.  The highest interest rate was 20.24%.
  • I spent $120 for in annual fees.
  • I spent $234 for one $39 late fee and FIVE $39 overlimit fees.  Oh, the shame!
  • I spent $1156.64 in interest fees, on average about $60 a month.
  • TOTAL:  $1510.64!!

That’s not for purchases; that is pure cash that I forked over to Chase bank for the right to have debt.  What would have happened if I had never opened that credit card and had instead saved $70 a month in a 4%-interest savings account for 22 months?

I would now have $1746 sitting in a savings account.  We’ll probably spend around $1500 for two coach tickets plus the extra for our upgrades.  Add that together and that’s pretty darn close to the $3600 needed to purchase two first-class, round-trip tickets for our honeymoon.  Remember, as it is, we’ll only be able to fly first-class for one leg of our return journey.

Amy’s Reward Account
Once I’m done with debt-reduction mode, I’m thinking about taking the $70 a month I used to spend on credit card interest and socking it away in my savings account.  I’ll call it Amy’s Reward Account.  Rather than getting sucked into another reward credit card, I’ll let it sit there, accruing interest for a couple of years, and then treat us to first-class flights for vacations or anything else I want.  The great thing is there will be no blackout dates, no expiration dates, and no extra fees.  Just our friend compounding interest, finally working for me rather than against me!!


2 responses to “My Big Fat Mileage Mistake

  1. Pingback: Weekly Accounting and Carnivals « My Daily Dollars

  2. Pingback: Lotta Links and a Couple of Carnivals « My Daily Dollars

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