People in Wrangell, just like the rest of Alaska and the country, love earning airline miles by using their credit cards. It’s not paying bills that they love so much, it’s the benefit of adding miles to their accounts for free travel. It’s understandable, considering the cost of flying in and out of Alaska and the fun of seeing friends and family outside the state.
Another incentive is the fact that Alaska Airlines offers one of the more generous mileage plans among U.S. air carriers.
In 2023, Alaska Airlines Mileage Plan members redeemed miles and companion certificates for seven million award tickets on the air carrier and its partner airlines, according to the company’s 2023 annual report. As of Dec. 31, 2023, plan members held 341 billion miles in their accounts. Those numbers show just how popular mileage is to travelers.
Putting everything possible on their credit cards is an easy way to add mileage.
There is a cost, however, to businesses that accept credit cards. They pay a fee to the banks that issue the cards, and the banks pay a fee to the airlines that issue the miles. The system works well: Businesses attract more customers and more spending by accepting credit cards, the banks make money and the airlines make money.
In the case of the Wrangell borough, however, the fees to the banks are substantial, and it’s not like residents will spend more on electricity, water, sewer or trash services just because they can earn miles. It’s convenient for residents to pay with a card, no question about that, but it costs the borough about $100,000 a year in bank fees on utility payments.
The assembly last week voted to expand the borough’s acceptance of credit cards to payment of property taxes and sales taxes. But rather than continue the no-fee practice of paying utility bills, the borough adopted a 2.75% fee if people pay their taxes by credit card. The money will cover the charges of the card processor that will handle the transactions.
No doubt some people may grumble at paying a fee to put their taxes on a credit card. But it’s optional: Want the miles, pay the fee. The borough expects to collect about $5.7 million this year in sales and property taxes. If even half of that comes in by credit card, the borough could lose $80,000 a year in revenues if it didn’t charge a fee.
Airline mileage is a great thing, and an enjoyable bonus for paying the bills of life. But it’s more than the borough can afford to give away for free in its tax collections.
- Wrangell Sentinel
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