MONEY Travel

When Airport Clubs Are Worth the Money (and When to Save the $500)

The Sky Deck at the Delta Sky Club
Flight delayed? An airport club like the Delta Sky Club in Atlanta can ease your pain. courtesy of Delta

True frequent fliers can kick back at an airport lounge for free. Some high-end credit cards give you access too. For everyone else, that privilege comes at a high price.

When you fly several times a month, as Gabriella Ribeiro Truman does, finding a comfortable place to wait for a flight and grab a snack can make traveling a lot more enjoyable.

She used to have free access to co-owned American Airlines and US Airways lounges through her American Express card, but with that program over, she now pays $500 a year to be a member of American Airlines’ Admirals Club, which gets her access to private airport lounges around the world through the oneworld alliance. “It was worth it for me to pay for it,” says Truman, 39, a New Jersey-based travel marketing executive.

Travelers have a wide range of options when it comes to the airport clubs, whose lounges can offer some peace from often chaotic, warehouse-like airport terminals. Snacks and drinks are available for the taking, seating tends to be more comfortable, and there’s free Wi-Fi and lots of power outlets.

But whether it is worth it for the cost depends on how you are getting access and whether you are paying extra for it. Airport lounges are run by either airlines or a handful of private operators. While some are restricted to top-tier flyers, most allow travelers a variety of ways to get in.

  • Membership through airlines or airline alliances: For instance, if you achieve gold status in the Star Alliance (which includes United Airlines, Air Canada, and Lufthansa ), you are permitted access to more than 1,000 lounges worldwide as long as you fly on a member airline. Otherwise, you will pay about $300 to $700 a year, plus initiation fees (air miles can be used).
  • A day pass: Prices are typically about $50, but advance-purchase deals for some can cut that in half.
  • Route-specific: Some travelers are given entry to an airline’s lounges along the route they are flying if they fly internationally on a first-class or business-class airline ticket or on certain transcontinental flights.
  • Membership through cards: Fewer credit cards offer the perk now. Among those that still do: the American Express Platinum Card, through which you receive a complimentary membership to Delta’s Sky Club network when flying on that airline, and you can apply for a free membership in the independent Priority Pass lounge network (worth $399) as part of the card’s $450 annual fee. Also, Citi Executive/AAdvantage card holders get a membership worth $500 in American’s Admirals Club included as part of their $450 annual fee.

What You Get

At the estimated 2,000 lounges worldwide at more than 500 airports, services and amenities vary. One way to keep track is with a free app like LoungeBuddy, available for iPhone and Android, with data on nearly 1,800 lounges. Users can input their travel information and get ratings, lists of amenities, and photos for the lounges they can access.

For food, U.S. clubs will typically offer basic snacks like carrots, pretzels, and apples, with a bit more in the mornings like pastries and yogurt, according to Tyler Dikman, founder of LoungeBuddy, who says he has personally visited 600 to 800 lounges. Beer and wine will be free, but travelers usually have to pay extra for top-shelf liquor domestically. Nearly half of lounges will have showers, he adds.

In smaller airports, marketing executive Ribeiro Truman says she finds that many lounges resemble hotel bars—not much more than a separate seating area with some snacks.

But in larger airports, expect to find more, especially overseas.

At Cathay Pacific Airlines’ The Bridge Lounge in Hong Kong, for example, there is an enormous, elegantly decorated space divided into two wings, and spacious shower suites. Food includes fresh-baked bread, pizza, soups, and sandwiches on one side and a range of high-end hot and cold food for self-service on the other.

Access to that lounge is available to Emerald- and Sapphire-level members of the oneworld alliance, which includes American Airlines.

Private shower rooms, in particular, win wide praise from those who have used them. “It’s something you’ll find in a nice hotel,” Dikman says, who has enjoyed plush towels and fancy toiletries.

For the infrequent traveler or someone stuck waiting a long time for a connection, buying a day pass to a lounge could be a big benefit, particularly if you have work to do. Road warriors report that paying about $500 a year is money well spent to regroup when it is inconvenient to check into a hotel.

Sonita Lontoh, a Silicon Valley technology executive who flies regularly to Asia and Australia, prizes her lounge access. She says after being on a plane for 15 hours, having a place to decompress and take a shower is a real benefit.

On the other hand, Becky Pokora, 28, the Richmond, Va.-based writer of The Girl and Globe blog, says her credit card just discontinued free access to lounges and her 15 round trips a year do not warrant paying extra.

“The value proposition was different when there were lounges in nearly every U.S. airport participating in their program, but now I doubt I’ll be renewing the card when next year’s annual fee comes due,” she says.

MONEY credit cards

AmEx’s Battle With the Feds Could Mean Lower Costs for Credit-Card Users

The American Express Co. logo, along with those of Visa Inc. and Mastercard Inc., are displayed in a shop window in New York, NY
Scott Eells—Bloomberg via Getty Images

American Express is facing off against the Justice Department today in a court battle that could shape the future of the credit card industry.

The suit, which concerns the fees merchants pay every time a customers uses plastic, is the culmination of a four-year war between federal authorities and the New York-based credit card giant. Its outcome won’t just affect the way American Express does business, but will likely impact consumers at the checkout counter as well.

Currently at stake is AmEx’s “take it or leave it” policy. Every time a customer pays with a credit card, the merchant must pay a processing fee, generally between 2% and 3% of the total purchase. American Express — which, according to the government, charges the highest merchant fees of any card network — forbids its merchant partners from offering customers incentives to use cards that are cheaper for the vender to accept.

The Department of Justice argues that the policy is anti-competitive because AmEx—which accounts for 26% of all money transacted through credit cards in the U.S.—is too important for most businesses to drop. It also claims customers, even those who use a different card, end up paying for AmEx’s higher rates because merchants compensate by increasing prices.

American Express, of course, disagrees. The company says it is too small to have an anti-competitive effect on the market. Court documents show that there were 53.6 million AmEx cards in circulation in 2013, compared to 178 million MasterCards and 254 million U.S.-issued Visa cards. It also argues these higher fees are necessary to provide merchants with services like fraud reduction programs, financing and marketing, and data analytics.

This is the latest battle in a four-year-old war over credit-card company business practices. In 2010, the Justice Department filed a lawsuit against MasterCard, Visa, and American Express for various merchant restrictions that the department found ultimately result in consumers paying more for their purchases. Visa and MasterCard quickly settled, later agreeing to a record-high $5.7 billion antitrust settlement with U.S. merchants over alleged fee fixing. But AmEx held out. In 2013, it reached a separate peace with merchants, allowing them for the first time to add a surcharge to AmEx purchases as long as they added the same charge to all credit-card transactions — the “take it or leave it” policy. But the settlement failed to satisfy the Justice Department, which now seeks to force AmEx into the same deal it cut with Visa and MasterCard.

For AmEx, the stakes are high. Merchant fees make up 65% of the company’s revenues, and it depends on high processing rates to offer its customers benefits like discounts and frequent-flyer miles. A loss would allow merchants to offer customers incentives for using a competitor’s card, and could cut into AmeEx’s profits by pushing the company to lower its merchant fees.

For consumers, a D.O.J. victory could potentially mean lower prices. Many businesses have historically priced in credit-card processing fees by raising the cost of their goods by 1% to 3%. Past settlements have allowed merchants to pass on these fees directly to credit card users, theoretically sparing cash and debit customers from having to share in the cost of accepting credit cards. However, many have questioned whether merchants are actually passing their savings onto consumers.

If American Express loses, merchants would be allowed to offer additional discounts to credit-card users with cards that charge lower fees. This won’t pacify those who say customers are paying the same prices as before plus new credit-card processing fees, but it does mean certain credit-card users might pay less than others.

Don’t expect AmEx to give up. The company may “need those rules in place to remain competitive with Visa and MasterCard,” Darren Bush, an antitrust law expert at University of Houston Law Center, told Bloomberg. “They’re willing to put more on the line.”

MONEY credit cards

The One Credit Card You Need to Ease Pain at the Pump This Summer

paying for gas
The right credit card can provide an antidote to pain at the pump. Ana Abejon—Getty Images

You can get as much as 5% back if you swipe it right.

If you’ll be spending part of this July 4th weekend in the car—whether that’s for a day trip to the beach or a 500-mile drive to visit the in-laws—be prepared to pay more at the pump this year than last. A gallon of regular gasoline sits at $3.70, according to the U.S. Energy Information Administration, or about 9% higher than in 2013.

Those in the know, however, will be able to get a discount that mitigates the price escalation. How, you ask? With a cash back rewards card that gives them some extra juice at the gas station.

The picks that follow can get you up to 5% back on your purchase at the pump. You’ll notice something about these selections: None of them are gas-station-branded cards. The ones below offer more flexibility and more money back.

If you want to get the most money back possible…

We at Money are pretty big fans of the class of credit cards that offer 5% cash back in rotating categories. Within the category, both the Chase Freedom and Discover It offer 5% at the pump from July to September on the first $1,500 spent. That means if you spend $250 a month on gas, you’ll end up saving almost $40.

If you’re planning a cross-country road trip, it might pay to sign up for both. The Freedom and It cards are fee-free, so there’s no downside to doubling up.

But if you’re only planning on getting one, go for the Chase Freedom, which offers a $100 sign-up bonus after you spend $500 in the first three months, says CreditCardForum.com’s Ben Woolsey.

If you’d rather have an all-purpose card…

Managing a number of credit cards for specific categories can be daunting for some consumers. If that’s you, check out solid cash back cards that offer good rewards throughout the year. BankAmericard Cash Rewards holders, for instance, earn 3% on the first $1,500 spent at gas stations the entire year without having to pay an annual fee. There’s also a $100 sign-up bonus once you spent $500 in the first three months.

Also consider Money’s Best Credit Card winner American Express Blue Cash Preferred. While this card comes with a $75 fee, you receive 3% back at gas stations in addition to a $150 sign-up bonus if you spend $1,000 in the first three months. Where it comes out ahead of the BankAmericard is if you’ll also use it at the supermarket, since the best feature of Blue Cash Preferred is the 6% cash back you get on the first $6,000 spent on groceries.

MONEY Travel

Summer Vacation 2014: 10 Ways to Get More Bang for Your Travel Bucks

Oheo Gulch and Seven Sacred Pools. Part of the Haleakala National Park, Hana, Maui, Hawaii.
Oheo Gulch and Seven Sacred Pools. Part of the Haleakala National Park, Hana, Maui, Hawaii. Carl Larson Photography—Getty Images

Tops on the summer travel hot list: which dream islands have suddenly become affordable, the airlines that offer the best value, and where a thirsty traveler can turn for cheap beer on a hot summer day.

Summer starts this weekend, and to mark the season’s kickoff we bring you 10 of the best ways to make your vacation dollar go farther.

Most Unexpected Bargain Spot for Budget Travelers
Normally, the sunburnt Greek islands flood with tourists in July and August, and with the crowds come soaring prices. Not so this year. The country’s “ongoing financial crisis has caused visitor numbers to decrease and, as a result, prices have dropped in an effort to woo back travelers,” explains Lonely Planet, which named Greece as its top European destination for backpackers in 2014. Earlier this year, the Backpacker Index estimated that a budget traveler could get by on $55 per day on the popular island of Santorini, making it cheaper than Athens ($62).

Dream Island That’s Suddenly a Steal
According to Priceline, the average nightly room rate in Maui this summer is $188, a 10% drop compared with the same period a year ago. Other data have indicated that Hawaii’s visitor numbers are down, and that tourist spending is on the decline as well, likely related to an economy that continues to be lackluster—or at least is perceived as such.

Most Cost-Effective Place to Vacation
No need to complicate things: It’s the beach. Expedia surveyed travelers around the globe about a number of vacation topics, including which kind of trip offered the most bang for the buck. Beach vacations got the top ranking, with 40% of those polled naming it as the most cost-effective option. Meanwhile, 12% said cruises , and 7% named theme park vacations.

Poland Warsaw Old Town beer advertisement person disguising beer mug
Old Town, Warsaw, Poland. Urs Flüeler—age fotostock

Where to Find the Cheapest Beer
GoEuro, a travel search site based overseas, ranked 40 world cities in terms of that all-important feature: beer affordability. Warsaw, Poland’s capital city, gets bragging rights for selling the least expensive beer of all, at £0.64 ($1.08) a pop. Berlin, Prague, Lisbon, Dublin, and Mexico City aren’t far behind, all featuring brews for under $1.35. Unfortunately, the per-beer prices are what tourists will encounter in a regular store, not at a bar, pub, or club, where prices are far more expensive. In Dublin, for instance, a pint of Guinness in a touristy pub will probably run about $10.

Most Affordable Business Class
The recent launch of JetBlue Mint, a premium service available on select coast-to-coast routes, brings spacious, fully-flat seats, high-end food and drink, and other business class amenities within reach of plenty of fliers. Fares between JFK and LAX or SFO start at $599 one way, and are readily available at around $1,600 round trip, compared with $2,500 and up for other airlines’ business class seating on the same routes.

Best Airline Seat Space for the Buck
The flight-planning site Hopper crunched the numbers and concluded that AirTran Airways, which is owned by Southwest, offers the best value per dollar of any airline in terms of what a passenger gets in the way of seat area and pitch. As for overall customer satisfaction per ticket price, that award goes to JetBlue.

Las Vegas Strip shot from the Trump Tower. Brian Jones—Las Vegas News Bureau

Least Expensive U.S. Destination City
The fact that the average daytime high in July is 106 degrees may have something to do with why Las Vegas was named the cheapest U.S. destination city of the summer by TripAdvisor. But hey, it’s always delightfully chilly in the air-conditioned casino of your choice. Researchers added up expected costs such as hotel, taxi, and dinner and cocktails for two, and estimated that a night in Sin City would run $276, about $230 cheaper than the most expensive U.S. city, San Francisco.

Best Home Base for Travelers
Travelers who live in the vicinity of Chicago and Washington, D.C., are in luck: They have the best flight departure options in the U.S., according to WalletHub, which factored in the cost, duration, and directness of routing on flights both within the U.S. and abroad. It’s no coincidence that travelers in both of these cities have more than one airport to choose from when booking flights.

Best Credit Card for Travelers
The answer as to which credit card provides the best perks and bonuses for travelers is heavily dependent on the cardholder’s spending habits and vacation desires. CardHub lists a dozen good options, broken down into categories for travelers who prefer rewards focused on hotels, flights, and more. In terms of all-around travel bonuses, among the top-named cards is the Barclays Arrival Plus, which gives 40,000 bonus miles—the equivalent of a $400 statement credit—after a new cardholder spends $3,000 during the first 90 days. NextAdvisor also says the Barclays card is tops in travel rewards. The card has an $89 annual fee, but it’s waived for the first year. Another feature to factor in when deciding on a credit card to use for travel purposes: Some cards are safer when going abroad.

Cheapest Flight to Europe Before It’s Too Late
Low-fare carrier Norwegian Air has been aggressively trying to expand service between Europe and the U.S. The airline, which has offered transatlantic round trips for under $500 (taxes included), recently brought its low-cost service to more U.S. cities, including Orlando. After a strong lobbying effort on the behalf of rival carriers and airline union workers, however, in early June the U.S. House of Representatives voted to block Norwegian’s expansion plans, reportedly due to concerns the airline wouldn’t be complying with labor laws. Since the Norwegian subsidiary that operates its transatlantic service is working with a temporary permit, the future of the airline’s international flights is up in the air.

MONEY Leisure

WATCH: George Takei Talks Marriage, Money, and the Right Way to Pronounce His Name

Actor George Takei tells Money's George Mannes how he handles his finances — and how he's fighting rising ticket prices on Broadway.

MONEY Careers

Work for the Man? That’s So Over, New College Grads Say

With banks dissing them and peers largely underemployed, Millennials are finding an alternative financial future.

Big companies still have many high-paying positions, and with the job market perking up those opportunities will expand. But young adults are still having trouble establishing basic financial security—or landing a decently paying entry-level job. Instead, they are forging different paths to financial success.

This search for alternatives starts with checking and saving. Banks haven’t figured out how to serve this new generation. Millennials have big debts from college, and instead of a single, steady full-time job, a recent grad may have four or five paying gigs. Banks can’t fit them into an existing box. But this new generation still needs credit and banking services.

Faced with this inflexibility, one third of Millennials seek to cut ties with traditional banks and financial companies, according to market researchers. Half say they are counting on start-up firms to overhaul how banks work, and 75% say they would prefer financial services from the likes of Google, Amazon, and PayPal. They are also turning to alternative financial firms like Square, Betterment, Robinhood, and Wealthfront to manage their payments and manage their money.

In their search for financial options, young adults are also finding new ways to launch their careers. Millennials have seen under-saved Boomers delay retirement, while corporations have shed workers and their peers are settling for jobs below their ability. As a solution, more twentysomethings are turning to entrepreneurship. Six in 10 recent college graduates are interested in starting a company, according to a new survey by CT Corp., a small business services firm. Those results mirror similar findings by other polls.

Entrepreneurial pursuits offer the potential to put individuals squarely in charge of their future. This is the mindset that the Thiel Foundation capitalizes on with its 20-under-20 fellowship, which seeks to develop entrepreneurs right out of high school and convince them they don’t need college or the student debt that comes with it.

The problem is that while many recent college graduates say they want to be their own boss, a large portion doesn’t really understand what that entails. So while 61% say they’d like to start a company, only 45% believe it’s feasible, CT found. Meanwhile, 67% display a knowledge gap around practical aspects like incorporating, registering a business name, securing a domain, and marketing their products or services.

Still, the entrepreneurial spirit runs deep in this crowd. One in five recent grads started a business while in college, and even among those who don’t believe they’ll ever start a company a third dream about doing so. More than half believe that being their own boss offers greater rewards and more financial security over the long run. Let’s hope they are right because in the new normal this is the path often taken.

TIME Saving & Spending

The Credit Card Bomb Just Waiting to Go Off

Last quarter, Americans collectively paid down $32.5 billion worth of credit card debt—but don’t pat yourself on the back just yet: That’s actually way less than we paid down at the end of the recession five years ago, and we’re on track to end this year with almost $42 billion more credit card debt than last year, which one credit expert warns could backfire big time.

CardHub.com‘s new quarterly credit card debt study shows a worrying return to pre-recession carelessness about debt, says Odysseas Papadimitriou, the site’s CEO. “Unfortunately, we’re a little bit worse than we were last year and significantly worse than we were in 2009 and 2010,” he says.

Americans historically pay off the most debt in the first quarter of each year, as we pay down our holiday spending and take advantage of early tax refunds to chip away at those debts — an average of $6,628 per household, according to CardHub. But in the years following the recession, we’ve been paying down less and less. This year, we paid down 28% less debt than we did in the first quarter of 2009.

In the period during and immediately after the recession, we were essentially scared straight and dumped our debt as fast as possible. We appear to have gotten over our fear, and that’s not necessarily a great thing, Papadimitriou says.

Right now, the default rate is around 3.3%, not bad by historical standards, but Papadimitriou points out that it’s coming off years of higher rates — during the last two quarters of 2009, it shot up above 10%. There’s less delinquent debt to go into default, following a period when credit card companies dumped those customers, charged off the losses and sold them to collection agencies for pennies on the dollar.

But that’s starting to change, as card issuers begin loosening credit restrictions and lending to people with blemished credit once again. We’re borrowing more as banks loosen the purse strings — CardHub predicts we’ll end this year with 8% more total credit card debt than last year, 14% more than just two years ago.

It’s not just credit card debt, either. Data earlier this year from the Federal Reserve Bank of New York found that overall consumer debt stands at a whopping $11.52 trillion, the highest it’s been since 2011, although it’s still below pre-recession figures. (Student loan debt — which can’t be discharged in bankruptcy the way credit card debt can — is a big culprit.)

This kind of trajectory puts us on a worrying cycle of accumulating more debt, year over year, which means any kind of financial hiccup — job loss, medical bills, illness — that hits makes us extremely vulnerable to falling behind on our debts. Papadimitriou urges Americans to build up an emergency fund so if the unexpected does happen, they won’t fall behind on their debts and be stuck paying penalty interest rates when they can least afford it.

“It seems like we need to get reminded on a constant basis of the risks of this behavior,” he says.

 

MONEY identity theft

Hackers and Identity Thieves Are Everywhere. Here’s Your Best Defense

Wallet exposing social security card
8.3 million: How many private records have been exposed to thieves so far this year. Olivia Locher; Prop styling by Linda Keil

Millions of private financial records have already been exposed this year. Follow this simple plan to stay safe.

Social Security numbers. Medical data. Credit card information. At least 8.3 million private records have been put at risk in 250 separate data breaches revealed this year, says the nonprofit Identity Theft Resource Center. One upshot of the leaks (up 23% over 2013 through late April): greater awareness of the threat of identity theft. Follow this three-tiered plan to defend yourself.

1. Take Advantage of Free Tools

Visit annualcreditreport.com every four months to get a credit report from a different one of the three major reporting agencies, advises Ed ­Mierzwinski at advocacy organization U.S. PIRG. And sign up for any no-cost service your bank or credit card issuer has for notifying you of activity in your account.

2. Warn All Lenders

Afraid your data has already slipped out? Put a free 90-day fraud alert on all your credit reports by contacting Experian, Trans­Union, or Equifax, says Paul Stephens of the nonprofit Privacy Rights Clearinghouse. That tells companies to use extra caution before issuing credit in your name. For confirmed identity-theft victims, alerts last seven years.

3. Lock Down Your Credit

For top security, freeze your ­credit, advises ID-theft consultant Robert Siciliano. Opening new lines of credit will require your password. Visit each of the big three bureaus online to launch it. Costs—up to $30 to place a freeze and $12 to lift it—vary by state.

MONEY Savings

Millennials Are Saving, But Men Are Saving More. Here’s Why.

Among young adults, a savings gender gap is starting early. Are you ahead or behind?

You’ve probably heard that Millennials are doing better than previous generations in saving for retirement—those who landed jobs, anyway. But here’s something you may not have heard so much about: young men are saving significantly more than young women.

That’s the finding from a new Wells Fargo survey on Millennial savings habits, which found that overall 55% of young adults are saving for retirement. But that number disguises a wide gender gap. More than 60% of men are stashing money away, compared with just 50% of women.

“We were surprised to see the gap in this generation, when they have such similar profiles,” said Karen Wimbish, director of retail retirement at Wells Fargo. She points to the relatively few number of women in high-paying positions as a key reason for the disparity. For college-educated Millennial men, the median household income is $77,000, according to the survey; for women, it’s $63,000. (Those figures are similar to 2012 data from the Bureau of Labor Statistics, which found that women ages 20 to 24 earn just 89% the median earnings of their male counterparts.)

Given that difference in pay, it’s not that surprising that 26% of young men manage to save more than 10% of their incomes, compared with just 9% of women. The majority of women surveyed (53%) put away only 1% to 5% of their pay.

For both men and women, debt loads are making it more difficult to save. Some 40% of Millennials say they feel overwhelmed by debt. Nearly half say more than 50% of their pay is going toward debt repayment, and 56% “live from paycheck to paycheck,” the survey reported. The largest payments were owed to credit cards (16% of debt), followed by mortgages (15%), student loans (12%), auto loans (9%), and medical bills (5%).

Still, paying off debt, especially high-interest credit-card balances, can be a smart move, even if it delays saving, says Dan Weeks, a financial planner at Sound Stewardship in Overland Park, Kansas. But for many Millennials, those payments are likely to slow their ability to buy a house and start a family.

One bright spot: Millennials are becoming less risk averse—nearly one-third are invested in the stock market. Among college-educated young men, median financial assets, including stocks and bonds, were $58,500; for women, $31,400. And more than two-thirds of Millennial expect their life after retirement to be better than that of their parents. They could be right about that.

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