8 Questions to Ask About Airline Reward Credit Cards

Flight rewards are one of the most popular incentives for opening a new credit card account. But not all of them stack up equally. Before you open a new line of credit, you need to know what sort of account is right for you by asking a few qualifying questions of your own:

Will I spend enough to make the redemption ratio work in my favor?
No card offers a one-to-one ratio on redeeming miles, which is why almost all of them call them "points" now. Note: The third-party cards have a ratio that's slightly less in your favor than the cards issued directly by the airlines.

Take the Capital One™ VentureOne(SM) Rewards Credit Card, for example. It's popular because it allows redemption on a wide variety of carriers, but it actually has a ratio that requires tens of thousands of dollars in purchases before you begin to approach the value of that air ticket you covet. That means, for a $260 ticket on that card, you'd need to amass 26,000 points, which would cost you $20,800 in purchases to accrue.

Compare that with the deals offered by the airlines with their own cards, which have tighter control over the value of a point. In one of our price checks, we found that owners of a JetBlue Business Card from American Express OPEN® could get a flight valued at $154 in cash by redeeming 11,500 points, which would cost them $11,500 in purchases. Calculated against dollar value of the ticket you get, that's about 4,000 fewer points than the Capital One rate.

British Airways Visa Signature® Card from Chase grants a free companion ticket (only for British Airways, not alliance or codeshare partners) to anyone who charges $30,000 a year, which sounds nice, but think about it: Would your salary support spending at such a high rate, and is a companion ticket enough of a reward for you? This open question might make an offer like this a loser unless you're a big spender.

So if you travel often with a single airline or with an airline alliance, it may be more economical to focus your spending on its card rather than using third-parties who grant points that can be redeemed on any airline.

Winner: Airline-issued cards have the better redemption rates

What routes will I use my points for?
The more critical question to ask isn't how many miles you get for your purchases, but how much the ticket you want costs on the open market. Only then can you figure out if you're saving any money by using your miles. Regardless of what gas prices are doing, air travel is still relatively inexpensive most times of year. You could rack up $10,000 in purchases to get a flight with miles to Orlando, or you could pay $99 each way in cash without miles.

The value of airline points skyrockets where airfares are high, so to maximize value, the tactical miles redeemer doesn't randomly turn in points for flights. Instead, he works to redeem them 1) in advance for periods of high traffic and airfares, such as holidays 2) on routes where sales are less likely, such as to second-tier cities with fewer flights. For flights that are cheaper anyway or on sale often, cash purchases may yield smarter results.

The bottom line is that if you don't pay off your balance each month, you'll be racking up finance fees and you won't actually be saving anything off airfare costs.

Winner: Cards from airlines that specialize in harder-to-book routes such as the British Airways Signature® Visa Card from Chase.

Once the initial enticements are over, is it worth it?
Many cards sweeten the temptation by offering signing bonuses. Most often, that comes as a chunk of miles once you spend your first few thousand bucks with them.

For example, the Chase Sapphire Preferred Card (a product that curtails flexibility by pushing customers to make airline bookings through its own portal, Ultimate Rewards) doles out 25,000 points if you spend $3,000 in the first three months. Compare that to the Continental Airlines OnePass® Plus Card from Chase, which grants its 25,000 bonus miles with your first purchase, no matter how small.

That first 25,000 or 30,000 in bonus points can be enough for a round-trip flight valued at around $250 or $300, but weigh carefully if it's worth it to you to ding your credit by opening a new account — and racking up thousands in purchases right off the bat — just to land a round-trip flight that might have been even cheaper if you'd purchased it on sale with cash.

The enticements that can cloud your perspective, so when you're analyzing cards, try to ignore the initial come-ons and appraise the cards by their core benefits. After all, it's bad for your credit to cancel cards when you tire of them, so make sure their basic amenities will be enough to keep you happy once the initial burst of enticements is exhausted.

Winner: Continental Airlines OnePass® Plus Card from Chase

Can I get free checked baggage?
If the value of the air tickets is questionable or takes forever to attain, that leaves the extra perks to help you make your decision. Some airline cards grant a few extra benefits to members, which, if you fly more than a few times a year, could pay for the fees and finance charges you accrue.

For example, the Continental card grants one free checked bag, which is a value of $25 for each flight. Take four flights a year, and you'll have paid off its $85 annual fee in baggage savings alone. The Delta cards from American Express (Gold, Platinum and Reserve) cards offer the same perks.

The cards from JetBlue and Southwest can't offer that perk because the first checked bag is already free on those airlines. United's doesn't offer free checked baggage to credit card holders (instead, it wants you to pay $349 for a separate membership to access that).

Winners: Continental Airlines OnePass® Plus from Chase and Delta SkyMiles® Credit Cards from American Express.

Can I get free lounge access?
Insisting upon this perk will cost you hundreds in fees, because all cards that offer lounge access charge hefty annual fees to offset the added expense of the perk. Delta's Reserve Credit Card with American Express, for example, costs $450 a year for that privilege. Considering the membership to the lounge itself costs $500 when purchased independently, you'd only save about $50 to get it as a credit card perk.

Continental's card comes with two annual day passes to its departure lounge, the Presidents Club, which would normally cost $700 for a couple.

Winner: Since its annual fee is only $85, Continental's OnePass® Plus Card from Chase dominates for lounge access.

Will the annual fee cost more than I get back in rewards each year?
Some cards waive the annual fee for the first year (not if you're upgrading cards), but once that's done, is the annual price going to pay for itself through the perks you use?

If your chosen card offers, for example, free baggage on its associated airline and you fly that airline often, the annual fee will usually pay for itself after four or five flights.

But if you only charge modest amounts on your card and you're unlikely to withdraw points for flights every year, paying an $80 fee each year isn't likely to work in your favor.

For many cards, you'd have to spend more than $20,000 to get a ticket valued at a mere $200 ticket, and many of us don't rack up bills anywhere near that amount. Will your spending habits come to the annual fee paying for itself? Again, subtract any signing bonus from your thinking, because you'll be living with this card long after you've burned that off.

Winner: Continental OnePass Plus® Card from Chase and Gold Delta SkyMiles® with American Express both offset annual fees with free checked baggage provisions you'll probably use.

Can I save on foreign transaction fees?
You'd think that credit cards designed for travelers would provide this perk more regularly, but in fact, only a few waive foreign transaction fees, which come to about 3% for overseas purchases.

Credit cards from Chase, American Express and Citi have started eliminating foreign transaction fees, but only for customers at the top levels who already pay hundreds of dollars in annual fees. For them, the break-even point won't come until well after $10,000 in annual spending.

The new British Airways card intelligently provides this benefit. (It doesn't however, let you use your accumulated miles towards elite status, which on that airline is notoriously difficult to attain, and it does charge fuel surcharges for reward flghts.)

Discover cards aren't often accepted abroad, so the fact that its fee is only 2% (versus 2.7% to 3% for most other issuers) only looks good on paper. For that reason, seasoned travelers can scratch Discover off their shopping lists.

Capital One's cards, though, eliminate the fees for even average users, making them famous among travelers.

Winner: Capital One™ Venture(SM) Rewards Credit Card or Capital One™ VentureOne(SM) Rewards Credit Card

Do I have to pay off my bill monthly? 
If you're wise, you will. But do you have to? Visa and MasterCard allow flexible pay-back, while traditional American Express cards require monthly payoff.

But both Delta and JetBlue partner with American Express cards, and both offer Optima-style versions that function more like traditional credit cards and do not require full account payoffs each month. It should go without saying, though, that paying off your balance in full each month will result in a minimum of finance charges.

Winner: Delta and JetBlue American Express


Here's a run-down of the perks on a few of the leading contenders among airline rewards credit cards, and if you're looking for the latest deals, just check our credit card category:

Continental Airlines OnePass® Plus Card from Chase:

  • 25,000 bonus miles after first purchase
  • First checked bag free ($25 value per flight)
  • Presidents Club passes ($700 value)
  • Miles also redeemable for hotels and cars
  • First year free, $85 a year afterward
  • 14.24% APR for purchases, 29.99% penalty APR

*For rate and disclosure information, click here.

Southwest Airlines Rapid Rewards® Plus Credit Card from Chase:

  • 2 points for every dollar on Southwest Airlines, partners
  • 1 point for all other purchases
  • 20,000 bonus points after first purchase
  • 3,000 bonus points on your membership anniversary
  • Points also redeemable for cars, hotels, gift cards
  • $69 annual fee
  • 14.24% APR, 29.99% penalty APR

*For rate and disclosure information, click here.

Capital One™ Venture(SM) Rewards Credit Card:

  • 2 miles for every dollar purchased, no expiration
  • 10,000 bonus miles if you spend $1,000 in first three months
  • Miles also redeemable for hotels, cars, gift cards
  • Foreign transaction fees waived
  • $59 annual fee (waived first year for new customers)
  • 19.9% APR, 29.4% penalty APR

*For rate and disclosure information, click here.

Capital One™ VentureOne(SM) Rewards Credit Card:

  • 1.25 miles for every $, unlimted
  • up to 15 miles per $1 at partner retailers
  • $250 flight = 25,000 miles
  • Foreign transaction fees waived
  • Miles also redeemable for hotels, cars, gift cards
  • 0% introductory APR, then 19.9% APR, 29.4% penalty APR
  • No annual fee

*For rate and disclosure information, click here.

British Airways Visa Signature® Card from Chase:

  • 2.5 miles for $1 of British Airways purchases, 1.25 per $1 for other purchases
  • 50,000 bonus miles after first $2,500 of purchases
  • Spend $30,000 each year, get a companion ticket
  • No foreign transaction fees
  • Miles not good for elite status
  • $95 annual fee
  • 14.24% APR, 29.99% penalty APR

*For rate and disclosure information, click here.

United Mileage Plus® Club Visa® Card:

  • 30,000 bonus miles after $250 in purchases
  • 2 miles for $1 on United, 1 mile for other purchases
  • 10,000 miles toward Elite status after $35,000 in purchases
  • Foreign transaction fees waived
  • Membership to its lounge, Red Carpet Club ($525 value)
  • $375 annual fee
  • 13.24% APR, 29.99% penalty APR

*For rate and disclosure information, click here.

United Mileage Plus® Visa Signature® Card:

  • 25,000 miles after you spend $250
  • 1 mile per $1
  • $60 annual fee
  • 14.24% APR, 29.99% penalty APR

*For rate and disclosure information, click here.

Gold Delta SkyMiles® Card with American Express:

  • 2x miles for Delta purchases, 1x for other purchases
  • First checked bag free ($25 value per flight)
  • Redeemable for standard award tickets or "Pay with Miles" seats anytime
  • $95 annual fee
  • 14.50% APR, 27.24% penalty APR

*For rate and disclosure information, click here.

JetBlue Business Card from American Express OPEN®:

  • 8 points for $1 spent on JetBlue.com, 1 point for $1 elsewhere
  • No blackout dates for flight redemption
  • $40 annual fee
  • 15.24% APR, 27.24% penalty APR

*For rate and disclosure information, click here.

Citi® Gold / AAdvantage® World MasterCard®:

  • 30,000 bonus miles after $750 in purchases in first four months
  • 1 mile for every $1
  • No blackout dates on award travel on American Airlines
  • $50 annual fee (waived first year)
  • 15.24% APR, 29.99% penalty APR

*For rate and disclosure information, click here.


 

Jason Cochran is an award-winning writer. He's on Twitter as @bastable and his website is JasonCochran.com. 


Photo credit: Kossy@FINEDAYS

 

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