For people who travel frequently, it might make sense to find an airline credit card with a rewards program to help you earn discounted or free flights. The trouble is how much money you need to spend with your credit card in order to earn the rewards. Generally, airline credit cards reward you with one mile for each dollar you spend. Thus, if you want a $250 airline ticket, you’ll need 25,000 miles. This could require spending of up to $25,000 with some cards as one mile is often worth one cent.
Here are three reasons not to get airline credit cards:
1. Many come with high annual fees
A major drawback of most airline credit cards is their high annual fees. Before you can count the airline miles you earn as a “reward”, you need to factor in the cost of the annual fees you pay. As you look at airline credit cards, you’ll notice annual fees that range from about $59 a year to $200 a year. To make up for a $59 annual fee, you might need to spend $5,900 just to break even, though with cards that offer double miles, like the Capital One Venture Card, you’ll only need to spend $2950. Still, this can be a lot if you only spend a few hundred dollars a month on your card.
2. Redeeming miles can be difficult
It can be extremely difficult and expenses to redeem your earned miles for airline seats or upgrades. Airlines are focused on reducing their own costs, which in turn makes it difficult to find the “free seats”. Many airlines start booking their frequent-flier seats a year in advance and it can be especially hard to find available seats using your earned miles to popular destinations like the Caribbean, Hawaii or Europe-particularly at the last minute.
There are a few airline credit cards which have made an attempt to relieve the difficulty experienced when redeeming miles. Some cards will offer airline-miles redemption on any flight, at any time – if you are going to get an airline card, this is probably the best type to have. Also, some cards offer free checked bags. This perk is available on Delta and Continental credit cards and is in many ways a better reward than miles.
3. Airline cards typically charge higher interest rates and don’t offer 0% APR deals
Some people transfer other credit card balances to newly opened airline credit cards in an effort to increase the miles they earn. Unfortunately, most airline credit cards charge higher interest rates than non-reward cards which means you’ll pay more interest while paying off the balance in exchange for those miles. It is generally difficult, if not impossible, to find an airline specific credit card offering 0% APR deals on either new purchases or balance transfers. Thus, for anyone carrying an existing balance on a credit card, you can likely save more money by finding a 0% APR balance transfer than you could earn back in the form of airline miles with a rewards card.
Note: This post was featured in the Carnival of Personal Finance at Mighty Bargain Hunter.
December 10th, 2010 at 11:54 am
I hate my airline credit card for all of these reasons and then some. I have tried to book trips with my miles and only once was able to get the flight I want. I end up using them on magazines. Total waste.
December 10th, 2010 at 5:49 pm
I have the JetBlue card and I love it. The annual fee is only $40 and you get a free cocktail on flights:)
December 15th, 2010 at 2:19 am
Good points. I used to have a US Airways cards and I never used my rewards despite paying hundreds in fees over the years. I stick to cashback cards now, but the Venture Card you mention seems like the lessor of two evils when it comes to airline cards.
March 31st, 2011 at 8:08 pm
i have a visa americanairlines card and they have been very honest with their travel miles on credit.
April 13th, 2011 at 2:02 pm
Jet blue points are worth 1percent of money spent. I have taken about six round trips east and west coasts and spent over $4000. $40 is not enough for a 20 mile cab ride. Not a good deal.
April 14th, 2011 at 9:41 am
Agreed. The same is true for most other cards, which is why the only airline card I really like is the Capital One Venture Card. With Venture rewards, you get two miles for every dollar spent and you can use them like cash on any airline.
April 14th, 2011 at 6:19 pm
Bad attitude buddy, sorry for your poor experiences.
The only card worth having is the Barclays Bank / Airtran Airways . The absolute best program, simple, spend $16k and book a round trip, only need one way? easy just half as much, as it should be. Great Airline, great card. I just hope the merger with Southwest won’t change things, I love the extra room up frontwith Airtran.
April 15th, 2011 at 10:28 am
Airtran is a great airline, though I was harassed in Atlanta by over zealous employees trying to push the card. But the thing is, if you spend $16,000 on the Capital One Venture Rewards Card, you get $320 you can use towards any flight you want – and since you can often get Airtran flights below this level, you’d likely be better off with Venture. Plus, you have much more flexibility.