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There are so many credit card choices these days. Some earn airline miles; others sweep money into an investment account. It seems to me that the second one is the best option because you can earn a return on those dollars and you can’t earn a return on m
-Ezme


Answer:


There are so many credit card choices these days. Some earn airline miles; others sweep money into an investment account. It seems to me that the second one is the best option because you can earn a return on those dollars and you can’t earn a return on miles. Would you agree?

Not necessarily. The value of an award program depends on the specifics of the program and on your ability to take advantage of it. Airline miles can be useful if you travel a lot and if a card issuer gives you a lot of miles when you use its card. I’m not sure what the offer would be with the other type of card you mentioned. Do you get a penny or two added to your brokerage account for every dollar you spend? If so, then it could be helpful if you have a margin account, one in which you borrow money so that you can own more assets than the cash value of the account. Because you’re charged interest on the amount of debt in the account – if you deposit $10,000 and buy $15,000 worth of stock, for instance, the brokerage is lending you the other $5,000 – then any money that your card issuer sweeps into the account reduces the balance that you’re paying interest on. But if you just have a cash account, then you’re earning, what, 1 percent? To be blunt, it’s not worth your time worrying about such trivial matters. You’re probably better off just getting the card that has the lowest interest rate and no annual fee.

-Conrad de Aenlle



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