Does the idea of traveling for “free” sound good to you? With airline credit cards, this idea can become a reality, as this type of rewards card is designed specifically to help people reach their destinations - for “free.” Or at least, at a discount. All by simple use of their credit card.
Airline credit cards can be just the thing for families, businesses, and even students. However, before you can begin racking up those vacation miles, you’ll need to decide which card works best for you. The very first question to ask is: airline-specific or broad air miles?
The main difference between the two is that with an airline-specific card, you earn miles for use on one airline only. Because of this, miles can be combined with a frequent-flier program. By contrast, with a broad or generic air-miles card, earned miles can be used on any airline; but all miles must be earned on the card and points cannot be added to a frequent-flier account.
For those who are frequent fliers, chances are likely that most of their travel is done via one airline anyway so an airline card should work well. (Yet beware of expiration dates.) For the rest of us who take a vacation maybe once a year, a bank-issued air-miles card might be a better fit.
Other differences distinguishing airline credit cards include interest rates, APR, and grace period. It all really depends on how you use your air miles, as well as how you traditionally use a credit card. If you can keep the balance paid off every month, then interest rates shouldn’t be a problem. However, if you’re one to carry a balance, then the higher rates on airline cards can become problematic. The whole idea is to be “saving” without realizing it, but a few months of paying interest and any positive gain could be erased.
Keep in mind that with airline-specific cards, you’re looking at one mile earned per every dollar spent, plus bonus miles for purchases made at airline partners. Usually, this partner list will include hotels, rental cars, and other services typically needed for a trip anyway. The cons for such a card however are 1) there’s usually an annual fee (or “membership” fee) of $50-$125 and 2) these cards tend to have a higher finance charge than generic airline credit cards.
As for such broad cards, the main advantage to them is their flexibility. Because the air miles can be used on any airline, the number of possible destinations increases as well. What’s more, these cards also tend to have lower interest rates and fees. In many cases, there’s a reasonably low APR and no charge to sign up.
On the flip-side however, generic cards often come with restrictions and complex terms. When comparing cards, look at the black-out dates, international flights, and minimum points needed. All of these factors could impact how your card is used and when you can take that vacation.
With dozens of offers to choose from, airline credit cards should certainly be considered when shopping for rewards cards. By simply using your credit card as you normally would, you can begin building miles towards a vacation in the future. Just keep in mind the pros and cons when weighing your options.
Miles are not transferable, so once you begin a rewards program, you’ll need to stick to it. However, in some cases, they are donatable. There are a few programs that allow or encourage donating frequent flyer miles to charities or organizations. This is especially beneficial to the receiving organization who accrues the “spare change” of other’s rewards programs.
A final word of caution: never take on unnecessary purchases just to gain points. In order to enjoy the benefits of airline credit cards, the best thing you can do is to spend as you would and pay your statement(s) on time.
