The End of Diners Club, I No Longer Recommend This Credit Card

This just in from Diners Club, points will no longer be able to be transferred to USAirways, Northwest, America West, or Continental* effective January 1. United transfers go away April 27.

Guess what they call this? Naturally, an enhancement.

They’ve added a program where you can pay points for travel directly, at a value of 1.25 cents per point. Don’t do it, it isn’t worthwhile. (Okay, it’s better than the 1 cent per point at Capital One but that’s not saying much!)

When Diners Club became a Mastercard, I accepted the end of two billing cycles to pay and higher foreign currency conversion rates. It was worthwhile to me in exchange for broader acceptance. But they’re clearly devaluing the program.

One of two things must be happening: either the programs being discontinued have exclusivity provisions with their primary co-branded credit card that forbid them from having a relationship with a Mastercard product, or the prices for miles being charged to Diners Club are simply too high now that Diners has to take the lower Mastercard intercharge fees.

Either way, this card no longer offers the full flexibility it once did having lost these airline transfer partners.

Now, I’m not going to cancel right away. I’m going to think seriously about the other transfer options and whether they’re worth the fee to me, reminding myself that there’s still the primary car rental insurance benefit. But I’m no longer recommending this card to others, the future situation seems unstable. More transfer partners may drop out if exclusivity clauses are the issue. Diners may cut off transfers to other programs if the price they’re being charged for points is too high, or they may devalue the transfer ratios. Either way, I’ll guess that there’s still another shoe to drop in this card’s future.

For a discussion of the other credit cards that I do recommend, please see Best Mileage Earning Credit Cards

(* Diners Club points can be transferred 1:1 into Amtrak, whose points can be transferred 1:1 into Continental up to 25,000 points per calendar year, so in some sense Continental transfers will still be available come January 1.)

So this is a hair OT (but still relevant), so I thought I’d post it anyway. Sorry! (If you get bored, skip to the second to last sentence. That’s my question.)

I recently applied for (no word on whether it was accepted yet) a Diners Club card for the sole purpose of using it on rental cars as it features primary collision damage waiver coverage. (Most other cards are secondary to any existing insurance you already have, meaning you’ll still need to file a claim with State Farm/Geico/Allstate/etc. and have your rates go up. I’m trying to avoid this.)

However, now that you mention that the DC card is turning into a rather useless piece of plastic, I started thinking again: maybe I shouldn’t even use it for car rentals.

Let me explain: I carry a couple of American Express cards. American Express sent me a flyer advertising their premium car rental protection plan. For $25 per rental, they’ll convert their standard secondary CDW coverage into primary coverage. I signed up, figuring that’d be cheaper than going with the rental company’s coverage.

I recently rented a minivan to carry some items around. When I returned the car, there was a long scratch on the left side. I have no idea how it got there–perhaps someone did it to me in a parking lot–but since I didn’t mark it down as preexisting, I was stuck with $548 bill. No worries, I used my American Express! Problem solved, right?

Well, I still owe $100 to the rental company.

American Express sent me a letter in the mail telling me they were issuing a payment of $448 to my American Express card. I called them up the day I got the letter.

“$448?” I said. “The damage bill was $548!”

“Unfortunately, sir,” they replied, “our policy does not cover loss of use fees or administrative fees.”

Sure enough, $50 of the damage charges were loss of use and $50 were administrative fees.

The rental company explained to me that the administrative fees were to cover the manager’s time in driving the damaged car over to the body shop, dealing with the paperwork and payment to the body shop, and the additional paperwork due to damages that needed to be filed with the car at lease return due to the diminution of value to the vehicle. The loss of use fees, they said, were there because the car was still technically being used by me–the damage I caused (well, that someone else did to me) resulted in the car sitting in the shop for a day, making it unable to be rented out to others. That made sense. They said I should be glad the loss of use fees were only $50–on major repairs or where parts need to be shipped from across the country, loss of use times can be several weeks. They also said they don’t usually charge for the diminution of value, although many other rental agencies do.

So, I’m glad I only owe $100. But that bill could have easily been $1000 or even more.

So now I’m in a fight with American Express. When I signed up for the program, I was told that I would be completely covered with no out-of-pocket expenses. Well, now I have out-of-pocket expenses, and I’m not happy.

The rental agency did (heh, heh) tell me that their coverage package covers all of these expenses that most credit cards and insurance companies won’t cover. I should have just gone with that. Turns out it’s not as expensive as I thought–I just rented a car in L.A. and paid $9 per day for their 100% coverage. I paid about the same in their coverage for the weekend as I would have paid with my American Express protection plan.

So, this is a long way of saying: Don’t bother with AmEx’s insurance. I also want to turn this into a question: does Diners Club say they’ll cover these fees? If so, it’s not worth the $95 annual fee and I’ll just stick with the rental agency’s coverage.

Comments

jackal says:

December 3, 2005 at 2:10 am

So this is a hair OT (but still relevant), so I thought I’d post it anyway. Sorry! (If you get bored, skip to the second to last sentence. That’s my question.)

I recently applied for (no word on whether it was accepted yet) a Diners Club card for the sole purpose of using it on rental cars as it features primary collision damage waiver coverage. (Most other cards are secondary to any existing insurance you already have, meaning you’ll still need to file a claim with State Farm/Geico/Allstate/etc. and have your rates go up. I’m trying to avoid this.)

However, now that you mention that the DC card is turning into a rather useless piece of plastic, I started thinking again: maybe I shouldn’t even use it for car rentals.

Let me explain: I carry a couple of American Express cards. American Express sent me a flyer advertising their premium car rental protection plan. For $25 per rental, they’ll convert their standard secondary CDW coverage into primary coverage. I signed up, figuring that’d be cheaper than going with the rental company’s coverage.

I recently rented a minivan to carry some items around. When I returned the car, there was a long scratch on the left side. I have no idea how it got there–perhaps someone did it to me in a parking lot–but since I didn’t mark it down as preexisting, I was stuck with $548 bill. No worries, I used my American Express! Problem solved, right?

Well, I still owe $100 to the rental company.

American Express sent me a letter in the mail telling me they were issuing a payment of $448 to my American Express card. I called them up the day I got the letter.

“$448?” I said. “The damage bill was $548!”

“Unfortunately, sir,” they replied, “our policy does not cover loss of use fees or administrative fees.”

Sure enough, $50 of the damage charges were loss of use and $50 were administrative fees.

The rental company explained to me that the administrative fees were to cover the manager’s time in driving the damaged car over to the body shop, dealing with the paperwork and payment to the body shop, and the additional paperwork due to damages that needed to be filed with the car at lease return due to the diminution of value to the vehicle. The loss of use fees, they said, were there because the car was still technically being used by me–the damage I caused (well, that someone else did to me) resulted in the car sitting in the shop for a day, making it unable to be rented out to others. That made sense. They said I should be glad the loss of use fees were only $50–on major repairs or where parts need to be shipped from across the country, loss of use times can be several weeks. They also said they don’t usually charge for the diminution of value, although many other rental agencies do.

So, I’m glad I only owe $100. But that bill could have easily been $1000 or even more.

So now I’m in a fight with American Express. When I signed up for the program, I was told that I would be completely covered with no out-of-pocket expenses. Well, now I have out-of-pocket expenses, and I’m not happy.

The rental agency did (heh, heh) tell me that their coverage package covers all of these expenses that most credit cards and insurance companies won’t cover. I should have just gone with that. Turns out it’s not as expensive as I thought–I just rented a car in L.A. and paid $9 per day for their 100% coverage. I paid about the same in their coverage for the weekend as I would have paid with my American Express protection plan.

So, this is a long way of saying: Don’t bother with AmEx’s insurance. I also want to turn this into a question: does Diners Club say they’ll cover these fees? If so, it’s not worth the $95 annual fee and I’ll just stick with the rental agency’s coverage.