Hawaii Upgrades Made 20% Cheaper [Roundup]

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About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Cashback being slashed – inflation is hitting the rewards business. The interest banks have to pay on the free float they give pay in full customers is starting to hurt. One of the reasons credit card fees were high in the first place was free float in the 1980s, and there banks needed to pay the 18% annual interest to get money for floating balances for about a month. A 1.5% monthly interest the bank is paying to borrow money starts to hurt quickly.

    As interest rates dropped, banks started looking at what they could do with the fee income to convince people to move more of their spend to credit cards. I wonder what interest rates would need to be before the whole rewards proposition doesn’t make sense.

    On the other hand, higher interest rates start to make the convenience fees paid when making official payments via credit cards less painful when it means one can keep money in an interest bearing account longer. On airline credit cards which allow gaining status at least partially from spend, essentially the transaction fee can be considered spending money for status. If one already has to pay rent or property taxes, the convenience fee is a cheap way of doing it, certainly cheaper than flying. Combined with delaying repayment and keeping the money in an interest-bearing account, it gets even cheaper.

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