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Getting to the Point(s)

Getting to the Point(s)

When Randy Dickey, owner of South Carolina-based ACX Cheer and head of the All- Star Gym Association, unexpectedly had to fly a photographer to an event, the exorbitant price of the airline ticket stunned him. But when he pulled out his credit card, he solved the problem—without spending a dime.

Ever since Dickey first signed up for the American Express Platinum Business Card in 1999, he has been covering gym expenses and reaping significant benefits. “We run everything in the business through the credit card,” says Dickey. “Every month, we rack up several hundred thousand points and use them to pay for everything from flights to hotels, as well as to offset the cost of coaches’ and team rooms.”

For those gyms looking to follow in his cost-saving footsteps, expert Eric Rosen advises evaluating your spending habits before applying for a points-based credit card. “Look at what your typical expenses are,” says Rosen, managing editor of ThePointsGuy.com. Some cards focus rewards on category spending (awarding cash back or merchandise for specific purchases); other cards provide airline miles and cover hotel costs.

For gyms that travel to competitions mostly by car or bus, a card that offers cash back on gas purchases makes good sense, according to Matt Schulz, senior industry analyst for CreditCards.com. On the other hand, frequent flyers might want to consider a card that offers airline miles and/or hotel perks. A co-branded card, one that has a relationship with both airlines and hotels, can also offer some incredible benefits. “If you do a lot of traveling by air, over the course of time, you’ll get some great rewards,” he says.

The same idea applies to hotels. For instance, if you always book rooms at a Marriott, having their card may mean some extra nights for free. “You have to have a feel for what you are hoping to get out of a card. Knowing how you are going to use the card should determine which one you select,” Schulz notes, adding that having separate cards for airfare and hotel can help to maximize the rewards. Also, using a card with transferable points means you’ll have more options when it comes to redeeming those points.

Although charging all your gym-related purchases with the goal of getting something free in return is a great idea, Schulz emphasizes the importance of paying off the entire balance every month. “If you don’t, interest charges will make any rewards less of a bargain,” he warns. Also, keep in mind the difference between a charge card and a credit card: a charge card gives the user bigger spending power, but requires full payment every month or a hefty fee and penalties will be assessed. A credit card has pre-set spending limits—carrying a balance will incur interest, but the amount will not be as taxing as the charge card fee/penalties.

The Fine Print: Fees, Bonuses and Penalties

Most credit cards carry an annual membership fee, and those that don’t typically offer fewer and smaller rewards. Fees often range from $50 to $450+ and usually determine the value of the benefits. “If there is a $100 fee and you get a free bag check every time you travel, this could be worth it for [gym owners] that fly a lot,” Schulz notes. “But if the fee is $500 and you travel sporadically, it’s not a good deal. You need to look at terms and conditions and do a little math.” It can certainly be beneficial to have more than one card, but if you are paying a fee on several and only using one, you should reevaluate your strategy.

In addition to reaping travel and accommodation perks, some cards offer rental car insurance and lost luggage coverage, access to airline lounges and other amenities. In many cases, extra rewards like these can offset the cost of fees. Also, almost all cards have bonus signups, so you could earn as many as 50,000 free airline miles from the start. “You should wait until a good offer comes along,” Rosen says, cautioning that most of these cards come with minimum purchase requirements.

Also, gyms that compete overseas (including Mexico and Canada) may incur foreign transaction fees if they use their credit cards for purchases. “What many people don’t realize is that, even if you are in the United States and you purchase something from another country, you may be charged a foreign transaction fee,” warns Rosen.

When it comes to signing any financial document, experts emphasize the importance of reading the fine print. Dickey learned this lesson the hard way: “When I rent a vehicle with my American Express Platinum, I can [take advantage of] car insurance,” he explained. “But at one point I realized that they don’t cover 15- passenger vans and large SUVs.”

Using a credit card wisely can be a cost-effective way to run your gym. “You’re spending the money anyway,” says Rosen. “Why not look for ways to get a return on it?” Just ask Dickey. Based on personal experience, he asserts that every gym owner should be using reward points: “If you’re not, you are just giving money away.”

-Phyllis Hanlon

Visit our blog this Thursday for a list of credit card recommendations from The Points Guy’s Eric Rosen!

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