January 20,2009
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CC ‘Reward Points' Toward Retirement, Pt.3
– What's the path?American Express Blue Cash: Amex is moving toward features that will be more attractive to the ‘baby-boomers'. For general credit card purchases, they start by offering a nice 1.5% rewards program. Getting to the useful side of things, they will now offer a full 5% (rebate) for things these people frequently need to buy – gas and medical prescriptions. When purchased on this credit card, 5% of the purchase will be returned in rewards for basic necessities of life like livelihood and health. Paying off the credit card balance each month is still a good idea.
Aetna Healthy Living Card: Aligned with B of A, this credit card rewards plan truly does reward people nearing retirement who also have medical needs. At the standard 1% level, this plan works off most all types of purchases on the credit card. However, when purchases are for medical reasons like drugs and vitamins, physicians' fees, dental charges and even hospital treatments, the benefit jumps up to 3%. These rewards benefits can be delivered for medical purposes like co-pays, HSAs (tax exempt) or even directly into your checking account (taxable, of course).
Just remember, these rewards pay off best if you pay off the account with every credit card billing statement. Finance charges will eclipse your savings if you keep a running balance. If you plan to keep a running balance anyway, they may help you out a little bit but, depending on other options, you may prefer lower APRs found elsewhere. When you compare your APR to the ‘rewards' percentage conversion, the APR will almost always dwarf the APR of the finance charge. As far as what's tax deductible, some of these new programs are just being tested now. If this is a big concern, you may want to consult your tax advisor for your particular situation. Not all of the IRS rules have been finalized yet.