Page 82 - issue
P. 82
Credit cards have profoundly changed our personal must be factored into any calcula-
financial lives, not to mention the global economy. tion of benefits. You have to figure
out if the benefits are worth paying
interest rate. Do this only if you pay off to use? It depends on which perks the fee.
your balance every month. you want. You need to check a few
other factors, too, like whether the I am often asked what these
Questions and Decisions card is free or has an annual fee. points are worth in dollars. You can
How do you decide which credit card The annual fee, usually under $100, assume they are worth a penny
apiece, although they could be worth
more or less, depending on how well
you use them. People also wonder
whether the airline will devalue their
miles: that is, a trip that would have
cost you 10,000 points now costs
15,000. I don’t have an answer to
that one. It has happened.
Are these miles subject to income
taxes? The position of the IRS is that
they are not. Remember, the points
are a rebate of the purchase price of
the items you buy. Let me offer my
own insight into the IRS’s “generosi-
ty” on this issue. It seems to me that
Uncle Sam wants you to use credit
cards. Perhaps the banks have good
lobbyists, but I think something else
is happening: When people use cred-
it cards instead of cash, the govern-
ment makes money. This is because
78 u www.wherewhatwhen.com u
financial lives, not to mention the global economy. tion of benefits. You have to figure
out if the benefits are worth paying
interest rate. Do this only if you pay off to use? It depends on which perks the fee.
your balance every month. you want. You need to check a few
other factors, too, like whether the I am often asked what these
Questions and Decisions card is free or has an annual fee. points are worth in dollars. You can
How do you decide which credit card The annual fee, usually under $100, assume they are worth a penny
apiece, although they could be worth
more or less, depending on how well
you use them. People also wonder
whether the airline will devalue their
miles: that is, a trip that would have
cost you 10,000 points now costs
15,000. I don’t have an answer to
that one. It has happened.
Are these miles subject to income
taxes? The position of the IRS is that
they are not. Remember, the points
are a rebate of the purchase price of
the items you buy. Let me offer my
own insight into the IRS’s “generosi-
ty” on this issue. It seems to me that
Uncle Sam wants you to use credit
cards. Perhaps the banks have good
lobbyists, but I think something else
is happening: When people use cred-
it cards instead of cash, the govern-
ment makes money. This is because
78 u www.wherewhatwhen.com u
