5 Facts About the Buffett Rule

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Warren Buffett Rule

Is the Buffett Rule fair?

Everyone’s talking about the Buffett Rule. Let’s look at a few facts surrounding the rule and the proposed legislation, the Paying a Fair Share Act of 2012.

1. The “Buffett Rule” is not a reference to anything having to do with Jimmy Buffet, although that would have made for a great rule in my opinion. It is a reference to the “most successful investor in the world”, Warren Edward Buffett, owner of Berkshire Hathaway and Nebraska Furniture Mart.

2. The bill, if made into law, would impose a mandatory 30% effective tax rate for anyone making more than $1 Million in adjusted gross income. Many prognosticators have gone on record saying the bill will die quickly in the Senate. It likely did already.

3. The rule was drawn up into this piece of legislation after President Obama made reference to the differences in tax rates paid by Warren Buffett and his secretary. Warren relies primarily on investment returns as his income, and is therefore primarily subject to the capital gains tax rate of 15%. Warren’s secretary relies primarily on her salary and is therefore primarily subject to income tax rates, which are capped at 35%.

4. Investment returns and income from employment are taxed differently for a reason. First, because the federal government wants to encourage investment, which leads to growth in the economy, jobs, etc. Secondly, and more importantly, there is a belief that earnings should not be subjected to double-taxation (e.g. taxed when earned by a salary and then again when that money is invested a company pays corporate income tax on its profits, then the stockholder pays again on the capital gain or dividend income derived from those profits).

5. Even though some are saying the rule is about equality, the bill states in the title, “to reduce the deficit by imposing a minimum effective tax rate for high income tax payers.” If made into law, the Buffett Rule would bring in an estimated $4.7 Billion a year. The 2011 federal deficit was $1.56 Trillion. In case you don’t want to do the math, the proposed law would reduce the deficit (not the debt, the deficit) by roughly 0.3%.

My take: I think capital gains taxes are already double-taxed, if not triple taxed. Think about it. A company produces a profit by providing a service or product of value. That profit is then taxed at corporate tax rates.

The remaining “after-tax” profit is what’s reflected in the company’s stock valuation. When that profit is distributed to shareholders it is taxed as a capital gain tax rate of 15%.

Additionally, the money that the shareholder used to invest in the shares was not taken out of thin air. It was earned at a job or through another business by someone and already taxed at income tax rates, which are as high as 35%.

Because of this double and triple taxation, I think capital gains, and certainly what amounts to a mandatory 30% capital gains tax rate is unfair and bad for investment. Additionally, I think the rule itself only serves to pit the classes against each other.

It should be no surprise then, that I actually think progressive income tax rates are unfair. There is absolutely no basis for requiring someone to pay more than an equal share and calling that “fair”. You can call it necessary, or according to the law, but you can’t abuse the word fair (in the “just” sense) like that, in my opinion.

Further, the only reason we have progressive tax rates in this country to begin with is because we can get away with it. There aren’t enough progressively wealthy people to protest the incremental increases.

Of course, what’s fair to me may not be considered fair to everyone else. For instance, a recent poll showed that 60% think the Buffett Rule is a good idea. Personally, I doubt most of those 60% could spout the five facts above though.

Am I wrong? Is the Buffett Rule fair?

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British Airways Signature Visa and Their 100,000 Avios Bonus

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Since the turn of the year, credit card bonuses have been dwindling.  That’s a fairly common thing to happen in the first two quarters of a year as issuers pump up offers around the holiday shopping season, then pull back.  That being said, Chase has just launched the first new big bonus of 2012 with the 100,000 Avios promo the British Airways Visa Card is offering.

British Airways 100,000 Avios Bonus

To be clear, the British Airways Signature Visa also had an offer launched last year which gave 100,000 bonus miles to new cardholders, so this is a refresh with a slightly different twist on how to earn the Avios (new slang for miles).

  • 50,000 Avios are earned after making your first purchase
  • 25,000 Avios are earned after spending $10,000 in the first year
  • 25,000 Avios are earned after spending an additional $10,000 in the first year

So what is 100,000 Avios worth these days?  We’ll that depends on what you redeem your miles for and where you live.  First class flights to Europe can run more than $5,500 but 100,000 Avios will cover the entire flight.  Taxes will still need to be paid (which can run around $1,000 for very long distance flights) but for a credit card to save you more than five grand, it’s one of a kind.

British Airways Rewards Program

Sadly, in order to receive the 100,000 Avios, you have have to spend $20,000 in the first year.  That’s a lot of coin for the average American but when you add up your gas, utilities, groceries, vacation spending and other purchases, you might be able to make it.  And don’t forget, you’ll be earning rewards for every purchases as well.  Added perks on the British Airways Visa Signature break down as follows:

  • 2.5 Avios for every dollar spent on British Airways flights
  • 1.25 Avios for every dollar spent everywhere else
  • No foreign transaction fees (a real nice perk for the international traveler)
  • Annual travel together ticket each year you spend $30,000 or more

Some of the more standard features of the British Airways Visa Signature are it’s 15.24% variable purchase and balance transfer APR and $95 annual fee.  Seems as if every travel card has a $95 annual fee these days but for the big up front bonus this card provides, it’s workable (but make sure to use this card and use it often year one)

Chase is the credit card issuer behind this bonus and cards like this usually last a few months before being pulled off the market.  This has the feeling of being a very popular summer and travel type card, so if you and your family or friends have a long distance trip in the works, the British Airways Visa Signature is a great money saver.   You won’t find a bigger bonus anywhere.

Chase Freedom Visa $200 Bonus Cash Back – Last Chance

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UPDATE – The Chase Freedom Visa $200 Bonus Cash Back is now expired.  Visit our page with the best cash back credit cards to find another cash card that fits your needs.

Competition between business can be an amazing thing for consumers, and what is happening in the credit card industry is a perfect example.  Every day it seems, a credit card issuer is launching a bonus offer, only to be topped a few days later.  Today, consider everyone other than Chase officially beaten as the Chase Freedom® Visa – $200 Bonus Cash Back is now available for just a few days longer.

Chase Freedom Visa - $200 Cash Back BigThe $200 cash back is awarded after spending $500 in the first three months. The Chase Freedom Visa – $200 Bonus Cash Back also includes a 5% cash back rewards program on specific categories month.  From April 1st – June 30th, the 5% categories are:

  • Grocery stores
  • Movie theaters

There is a quarterly maximum to the amount of cashback that can be earned from the 5% categories but no maximum to cash back earned from the standard 1% rate.  Cash back earned never expires so long as your account with Chase is always open, and in good standing.

The purchase APR on the Chase Freedom® Visa – $200 Bonus Cash Back is 15.99% – 22.99% variable depending on your credit history.  The cash advance APR is 19.24% variable or, if your purchase APR is 22.99% variable, then 23.24%, based on your creditworthiness.  The default APR is 29.99% variable, so avoid paying that ridiculously high interest rate at all costs. There is no annual fee to own the Chase Freedom Visa – $200 Bonus Cash Back, so none of the initial bonus is given back in a yearly fee.

This $200 promotion is available for a limited time only and you won’t find it everywhere.  Chase requires above average to excellent credit in order to be approved for the Chase Freedom Visa – $200 Bonus Cash Back and with no annual fee and a great rewards program, this card is one of the best.  To complete an application or find more info, visit the secure application page for the Chase Freedom® Visa – $200 Bonus Cash Back.

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Some Advice for Stay at Home Moms

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Stay at Home Mom Working

"That ain't workin'..."

Do stay at home moms really “work”?

Of course they do. That’s a ridiculous question.

Anyone with kids, who doesn’t hire a nanny/maid/chef to do literally everything, works.

I know. I have kids.

It’s work that I help perform at night and on weekends.

It’s work I love most of the time, but it does require real effort and selflessness. These little ones don’t take care of themselves.

Therefore, if a parent chooses to perform a different type of work (say, advisor to the President), that person would then have to hire someone else to take care of the kids. You couldn’t get away with just leaving your one year old in the house by themselves all day (believe me, I’ve tried). That alone is evidence that it is work to raise kids, and equivalent to a job (even though it doesn’t come with a wage).

Additionally, it’s important to note that the person who leaves to go to a job outside the home each day still has to come home and work nights and weekends with the kids.

So, now that we’ve established that we all work, let’s move on to a few related points that I think are important for stay at home parents to understand regarding their finances.

1. Understand and Participate in the Family Finances

This advice is really aimed at both parents, whether you are working at home or working in a job outside of the home. Both parents should be active participants in the financial decisions (and actions) that affect the family: debt reduction, spending decisions, savings efforts, etc. Don’t let your job choice be an excuse for ignorance. If one member is clueless to certain aspects of the household finances, it creates a weakness that could lead to trouble down the line. Stay at home parents should be listed on the banking accounts and credit accounts (including the mortgage) to maintain an active financial history, and should also consider getting life insurance.

2. You Don’t Need Two Incomes

Note: My point below obviously isn’t directed at the more than 13.7 million single parents in the United States today, who have difficult choices to make when it comes to getting support, earning a living, and caring for their kids.

In my opinion it’s an outright lie that you need two incomes to get by today. People change jobs and lower their standard of living all the time so that one parent can be at home with the kids. If this is your desire, do it. Don’t let anything stop you.

Some families choose to maintain a high standard of living and also choose to maintain two jobs outside the home. Cool. I accept that families can choose to make this move, but please avoid thinking that you *have* to. You don’t.

3. Contribute to a Separate Retirement Account

Just because you work and don’t receive an income, it doesn’t mean that you shouldn’t be contributing to a separate retirement account. You can contribute to an IRA (sometimes referred to as a Spousal IRA) each year just like your spouse who works outside the home, as long as you meet the income limits and file a joint return. If you’re a stay at home mom or dad, go open up an IRA today and get started with your retirement savings.

4. Look for Ways to Bring in Extra Income

Make use of the free time you do have at home to generate some extra income for your family. Emily, freelance contributor to this site, is a stay at home mom, who I know makes a solid income through her efforts. There are lots of good jobs for stay at home moms and dads that you could explore. Talk with your spouse that work outside the home about trading some of the cleaning and cooking duties so that you can pursue an extra income while at home with the kids.

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5 Tips for Optimizing Credit Card Rewards

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Credit Card RewardsLooking for a great way to bring in some extra money every year? Look no further than credit card rewards.

If you pick the right credit card rewards programs and use the card for the majority of your spending, you could bring in an extra few hundred each year.

Before you head down this road, there are some things you should know to make the most of your efforts.

Check out these five tips for optimizing credit card rewards.

1. Understand How and Where You Spend Your Money

It’s a smart move to think about what type of spender you are, before you run out and get the first cash back rewards card offered to you. Do you travel a lot for work or leisure? Do you spend a lot of money on hotels and flights? What about fuel? Do you spend a lot of time on the roads burning gas?

You get the concept here. Determine what type of spending you do and pick the cards that make the most sense for someone like you. (e.g. if you take the bus to work each day, then a card that rewards you for fuel expenses isn’t going to work for you).

2. Skip the Cards with Annual Fees (In Most Cases)

Standard advice when it comes to credit card rewards is to avoid cards that have annual fees. This sound reasonable as an annual fee would tend to cancel out some of the rewards you are earning.

Personally, I do try to make it a point to not have a card with an annual fee. If you find yourself with one of these cards then be sure to do an analysis to see if the difference in rewards/cash earned makes it worth keeping.

3. Don’t Spend Money Just So You Can Earn Rewards

Don’t let the tail wag the dog here. Your goal is not the most credit card rewards regardless of the means to get there. Your goal is the most credit card rewards given the amount of spending you normally do.

I turn off all the emails that credit card companies send me that might try to influence me to spend when I otherwise would not. I also stopped all the junk mail. I suggest you do the same. You decide when to spend your money.

4. Absolutely No Balances…Ever!

I hoping this goes without saying for all of my money savvy readers, but please pay off all of your credit cards in full each month. Just like with those tricky annual fees, the interest charges you pay on your balances cuts into your rewards earned. Plus, it’s a sign that you are spending money you don’t have. Don’t spend money you don’t have.

5. Be Smart About Redeeming Rewards

Be sure you understand how the card company is going to payout their rewards before you just start redeeming points. Many reward programs are going to have specific teirs that you need to achieve before you can redeem the ideal/optimal number of rewards.

I primarily roll with the cash back cards (highly recommended unless you are a travel junkie) and here is an example of how I redeem rewards.

This particular card will allow me to redeem points for cash at these tiers:

Cash Back Points

5000 $25 Check
7500 $37.50 Check
10,000 $80 Check
15,000 $120 Check
20,000 $160 Check
25,000 $220 Check
30,000 $300 Check
35,000 $350 Check
50,000 $500 Check

It’s plain to see, the most advantageous time to redeem the points would be when I’ve accumulated 30,000 points. If I were to redeem points at any earlier time, I wouldn’t be taking full advantage of the program. Be sure you attain your ideal tier prior to pulling out points for cash.

It’s wise to also be aware of the date that your points will expire. Personally, I use a lot of my points for spending at Christmas time, so I’m prone to always check them annually. You should implement a similar rule or place a note on your calendar to remind you. Good luck.

I know I have some very skilled readers who optimize their credit card rewards far better than I could imagine. Please share your tips below.

Do You Need LT Disability Insurance?

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Disability Insurance

Do you need disability insurance?

Do you have enough insurance?

In the past, I’ve stated that there are 5 types of insurance that you need.

I have four of the five.

I don’t have long-term disability insurance.

This fact has bothered me for some time. I’m finally beginning the process of determining if I really need long-term disability insurance, as well as, how much and what type to get.

Long-term disability insurance or LTD insurance is insurance that is meant to replace part of your income in the event that you become disabled for an extended period.

Do I need this? Do you need this?

One of my favorite things to do when I have a complex personal finance issue come up in my life is to poll my peers and share their responses.

I asked a few other friends/bloggers these questions (I welcome your answers to these questions as well) and I follow with their answers:

Do You Have Long-Term Disability Insurance?

If so, why do you have it and what type/amount do you have? If not, why and do you plan to get any?

Kyle from Amateur Asset Allocator – No. I don’t have any dependents and as it currently stands, the standard Social Security disability payout would be sufficient to sustain my current lifestyle. If I had any children I would definitely consider purchasing LTD insurance.

Ryan from Cash Money Life – I don’t have LTDI, but my parents do (they are in their mid to late 50s). My wife still has the ability to work and earn enough to cover most of our needs, but depending on how bad the disability would be, who knows if it would be enough?

Jeremy from Gen X Finance – I personally do not have any disability insurance because of the nature of my work, but since we do have children and my wife has a job that could be lost due to a disability, she has both short and long-term disability insurance that is provided through the group plans offered by her employer. If I ever stopped being a writer and had to go back into the regular workforce to provide for my family, then I would almost certainly pick up disability insurance on myself as well.

Jeremy shares his thoughts in more detail at “Is it Smart to Buy Disability Insurance?”

Pinyo from Moolanomy – I don’t have LTD. That said, I did buy optional LTD when I was previously employed with Xerox. At that time, I didn’t even think about my ability to qualify with the side income I was generating.

Mike at Money Smarts Blog – I have LTD & STD from work and I’m in the process of getting an additional LTD plan outside of work because my group (work) plan is insufficient in my opinion. The policy I’m getting does allow you to earn income and will pay the difference. My payout is set at $5000 per month (tax free) so if I earn $2000 from a job or a business, they will still pay $3000. Not all policies are like that. One of the reasons my work insurance is insufficient is: The payment is not indexed to inflation. So for example if I became disabled tomorrow, I would get 85% of my net income tax free, which is fine. But over time inflation will reduce the purchasing power of that money so that by the time I’m in my 60s, the amount could be less than half of what it is now. My new plan does index the payment. If you are permanently disabled, there is a chance the money you get from LTD will likely be your only income, so you have to be able to live and save for retirement as well since LTD payments stop at age 65. Obviously, if you are single/married/dependents etc makes a difference in your planning. You also have to ask yourself will your spouse stick around for the next several decades if you are a basket case? In my case, I’m the only breadwinner, so getting proper LTD is more important to me than someone who has two incomes. It would be bad enough if I couldn’t earn any money, but I would still be eating etc and might need extra care and could end up being a huge burden on my family.

Robb from Boomer and Echo – I have long term disability coverage through my employer (Public Sector – University). The policy states that it will provide 65% of the first $4,500, and 45% of the balance of your pre-disability monthly earnings up to a maximum of $6,000 per month for the length of time that you are totally disabled, or until your 65th birthday. Like Mike’s policy, it’s not indexed to inflation, so I might look for an additional policy to top-up the plan.

Robb also wrote, “Understanding Disability Insurance.”

Rob at Dough Roller – I have LTDI through my employer as part of my compensation (one of the many reasons I don’t blog full-time). It’s very expensive to buy on your own, so I’d probably do without if I were self-employed.

Mike Piper at Oblivious Investor – I have long-term disability through the AICPA’s group plan. The coverage is cheap, but that’s for a reason. (That is, it’s lacking in several desirable provisions.) I shopped around last year and was almost entirely unable to obtain an individual policy due to 1) the incentive a writer has to become “disabled” and 2) not very many years of the level of income I have now. I intend to shop around again every year or so in the hope that #2 having changed will make it possible to get better coverage.

Mike also suggested the Bogleheads Wiki on Disability Insurance.

Jeff from Good Financial Cents – I do have it. I got a really sweet deal offered by my previous broker/dealer that would pay me $4000/mo in the event I was unable to run my practice and would continue to do so from day 91 to [age] 65. Right now it only costs me $1022 per year. Very similar to an online business, there is a lot of gray area on me to continue to receive revenue since I wouldn’t be servicing my clients. Definitely shop around. I did a quote with another carrier and they offered a $3k maximum benefit and was only good for a certain number of years – maybe 5 or so? And the premium was almost 2 1/2 times what I’m paying.

Bonus Question: Disability Insurance for the Self-Employed

I’m a self-employed blogger in a single income household. Since my blog income is somewhat passive and will continue even if I stop writing, do I even need long-term disability insurance?

Would LTDI even cover you in that case? I was under the impression that the inability to earn an income would be required to cash in. But if the income keeps coming anyway, would that really qualify? I have no idea, but I can see an insurance company making that claim. – Kyle

I’m not sure you would even be able to receive a disability claim if you own an online business and receive income from it, even if you aren’t actively participating. I would be interested in seeing the legal opinion on this type of situation, and if it’s true that most insurers wouldn’t pay on this type of claim, it would make perfect sense to stay away from disability insurance in cases like that. – Jeremy

Regarding your bonus question – in my case, I pay most of the blog earnings to my wife so hopefully that wouldn’t count against my LTD payment. Of course, there are no guarantees. I’m not sure if you can say you don’t need LTD because a blog is ‘passive’. Think about what kind of disabilities you could have – you could have severe mental and/or physical problems – you might be in a coma for the next 30 years. Worst case scenario you won’t be able to run the blog and the best course of action would be for your spouse/caretakers to sell it and then you will live off the LTD assuming you have it and still need it. – Mike

Summary of Information

Okay, I know I just threw a lot of information at you there. I’ll try to sum it all up in a few bullets below:

  • A good place to start your search for LTD insurance is through your employer or trade association, as it’s considerably more difficult and expensive to get coverage elsewhere. Additionally, if your spouse works and has access to a decent LTD insurance plan, see if you can simply rely on that.
  • The devil is in the details. It seems coverage can vary greatly from plan to plan, so make sure you understand what’s in your policy and work with an agent who will explain things to you.
  • Some factors that affect your policy: when coverage begins once you’re disabled, how long the benefits last, what percentage of your current income the insurance will replace, whether it contains an “own occupation” rider (meaning, you will get benefits if you can’t perform your current occupation, not “any” occupation).

This gives me some good information to start my search for a good policy. I’m going to speak with an insurance agent today about my bonus question (regarding my business’ continual income) and provide him with some information to gather some quotes. Stay tuned for a part two.

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10 Quick Questions About the Roth IRA

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This post is my contribution to the Financial Literacy Month blogger video project. See more videos shared by Steve at MoneyPlanSOS.

Everyone should know about the Roth IRA. I decided to sit down (in front of a camera…yikes) and answer 10 common questions about them.

Here’s my video, followed by the rough transcript.

1. What is a Roth IRA?

A Roth IRA is an “individual retirement account” or “arrangement” created by the U.S. Government with certain tax-saving features aimed at encouraging you to save more money on your own for your retirement.

2. Is a Roth IRA an investment?

No. A Roth IRA is an account. Not a specific investment. A Roth IRA is simply an account to put your investments, things like stocks, bonds, and cash.

3. How does a Roth IRA work?

A Roth IRA works in the opposit manner as a 401k. After you open a Roth IRA you are allowed to make after-tax contributions into the account and then choose investments. You can withdraw those contributions at any time.

However, since that money is typically invested and those earning are growing tax-free, the money you earn on your contributions generally cannot be withdrawn until you reach 59 and a half. The Roth IRA withdrawal rules can be complicated so be sure you understand them before getting started.

4. Who should open a Roth IRA?

A roth ira is a perfect for anyone just getting started with retirement investing who wants to pay fewer taxes on the money they use in retirement. They are also good for those who have a retirement plan through work (like a 401K) but want to make additional retirement contributions.

The Roth IRA is also good for anyone wanting more control over their retirement investing options.

5. Can you contribute to both a 401k and a Roth IRA?

Yes, in most cases this can be done. In fact, I would encourage you to do both if you have the choice. When I met the eligibility rules I was contributing the max to my 401k and then started contributing to the Roth IRA with my remaining dollars.

6. How do you open a Roth IRA?

There are lots of places to open a Roth IRA. I recommend you check out one of the discount online brokers or mutual fund companies (like Vanguard). The process is very similar to opening a savings account. Provide some basic personal information and fund the account with an initial deposit.

There is typically a “cash” type fund where you can hold your initial deposit while you decide on particular investments.

7. How much can you contribute to a Roth IRA?

The annual contribution limit changes each year, but in 2012 the contribution limit is $5000 per individual, with those 50 or older getting an extra $1000 added to their limit. There are also income limitations that you should review prior to opening an account.

8. What investments do you choose for your Roth IRA?

This is a very personal decision that should be based on your own tolerance for risk and understanding of basic investing concepts like asset allocation and diversification. I typically invest in low-cost target date mutual funds or some type of index mutual fund.

If you choose to open a “self-directed” roth ira you can invest in a number of different things, like real estate, peer lending notes, and even precious metals.

9. Can I rollover an old 401k into a Roth IRA?

Yes. As long as you’ve left the job, you can transfer funds directly from your 401k into a roth ira. Note that you will need to ensure that “direct” transfer takes place.

Also, note that you will need to pay the income taxes on the money you are transferring since the tax treatment of the money in changing.

10. Do you use a Roth IRA?

Yes. Both my wife and I have been using a Roth IRA for our retirement savings since about 2008. We’ve attempted to max out our accounts each year and we’ve kept the investments very simple by mainly investing in low cost target date retirement funds.

I love the security that comes with knowing we’re planning ahead and will be more prepared when we have to retire.

New and Improved Citi AAdvantage 30,000 Bonus Mile Offer

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It’s been some time since a bank has improved the offer on one of it’s frequent flyer credit cards but Citi recently launched an update to their American Airlines frequent flyer credit card.  The Citi Platinum Select/AAdvantage Visa Signature Card has increased a few important perks while keeping a low annual fee for all American Airline travelers.  Let’s take a deeper look into the pros and cons of card ownership.

Following $1,000 in purchases during the first three months, Citi Platinum Select/AAdvantage Visa Signature Card holders will receive 30,000 bonus miles.  Although the application page makes no mention, 30,000 bonus miles is enough for a round-trip flight in the continental United States with a few points left over.  Not to mention …

  • A $100 American Airlines discount every year you spend $30,000.  That’s a lot of money to spend on a credit card in one year so while this is a nice perk, don’t count on it year in and year out.
  • First checked bag on all American Airlines flights is free for you and up to four other members of your party.
  • 10% of your redeemed American Airline miles are returned every year.  For example if you turned in 50,000, you’d receive a 5,000 mile bonus.
  • Double miles on all American Airlines purchases
  • 25% discount on in-flight food and beverages (which is a very nice perk for the frequent flyer)
  • No mileage cap and priority boarding on every flight

AAdvantage Pricing Details

Even though this credit card should be used for travel only (and paid in full every month), sometimes an emergency comes up where you have to roll over a balance month to month.  The Citi Platinum Select/AAdvantage Visa Signature Card has a variable APR of 15.24%, which is pretty average for a credit card these days.  The cash advance APR is 25.24% and the default APR is 29.99%.

Unfortunately, you won’t find an introductory offer on the Citi Platinum Select/AAdvantage Visa Signature Card and the annual fee is somewhat steep at $95.  But that fee is waived for all first year cardholders and just about matches the annual fee on all other airline miles credit cards.

For those that fly American Airlines often, the Citi Platinum Select/AAdvantage Visa Signature Card is a card you need to own.  The miles you’ll rack up on flights in addition to the discounts you’ll receive during flights makes this a pretty solid offer from Citi.  The $95 annual fee is a detraction to the overall value, but trying it for 12 months won’t hurt your wallet.

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