Airline miles and frequent flyer credit cards can be a great way to save money on vacations and airline tickets. As with most products, knowing
the differences between the products that are available is the key to making sure you get your best deal. The first thing to know is that there are two classifications
of “Airline” credit cards. Most people are unaware of the differences between the two types of cards so I thought I would make things a little clearer.
The first
thing you need to know about airline credit cards is that they are horrible credit cards unless you intend to use them specifically for the purpose of airline travel. Most
of them have annual fees and higher interest rates than credit cards that are available. If you are the type of person that will even occasionally carry a balance on
their card this class of card is not for you. The interest rate that you pay coupled with the annual fee will probably negate your gains in airline miles. This being said,
let’s look at the first type of airline cards.
Frequent Flyer Credit Cards – These cards are sponsored by a specific airline. The credit cards
are co-branded with a major bank like American Express or Bank of America. These are the original frequent flyer cards that hit the market. These cards are perfect
for those people who are “brand loyal” or otherwise compelled to use one airline by work or airport location. These cards will allow you to establish frequent flyer
accounts that actually have cash values.
The downside is that these cards do not allow you to shop fares because the miles will not accumulate on other
airlines. These cards usually have the higher annual fee when compared to airline miles credit cards and has the higher of the interest rates between the two
classes. I presume the higher rate is because of the extra expense to the issuer for the co-branding. Of coarse I could be wrong; I am due for my first mistake this
year. The next type of airline credit card is airline miles credit cards.
Airline Miles Credit Cards – This class of card is usually sponsored by
credit card companies or banks don’t have an affiliation with a specific airline. This class of airline card has its pros and cons as well. The best feature among airline
miles credit cards is the ability to use them on multiple airlines. These cards usually reward the user with “points’ as opposed to miles like frequent flyer credit cards
do. These points can then be converted to airline miles or other travel related perks. Unlike frequent flyer cards the card holder has the choice to apply these points
to hotels, restaurants, retail stores as well as airline miles.
Savvy shoppers with good credit can also find better rates and no annual fees on some airline
miles credit cards. One of the best cards in this class is hands down the Capital One® No Hassle Miles(SM) Rewards card. It doesn’t have an annual fee and its interest rate is
tolerable should you have to carry a balance. The down-side of the airline air miles credit cards are the “gotchas.”
These are the little things in the fine print
that can zap your air miles or cost you money. Read the guidelines carefully. For instance some cards will totally erase your air miles earned in a reporting period is
you are more than 3 days late on your payment. Even though this is within the credit card issuer’s grace period there is a separate rule for the air miles benefit. So,
make sure you read the fine print to make sure the card meets your lifestyle and spending habits.
The best way to get the most of the perks on both classes
of cards these cards is to charge and pay back around $1000 each month. One example is that my wife and I just found out that our mortgage company allows
people to pay with American Express. Just using our air miles card to pay our mortgage each month we will earn one free ticket per year! Just remember what I said
at the beginning. Unless you are using air mile credit cards for the specific purpose to earn air miles they are probably not a good idea.
