The commercials make it seem so simple. Just sign up for a credit card that gives air-travel points for your purchases, and you’ll be converting those points to miles and jetting off to your destination in no time. Airline credit cards can be great for frequent flyers if they’re used right, but they can also be expensive if the consumer isn’t savvy about how to pick (and use) one.
The good news is, companies offering airline credit cards are competing for your business.
“Signup bonuses are as big as they’ve ever been,” said Gary Leff, co-founder of the Milepoint online frequent-flyer community, and author of View from the Wing. “Ten years ago a really good bonus was 20,000 airline miles. Now it’s not uncommon to see 50,000-point and even 100,000-point bonuses for getting a new credit card.”
With the up-front rewards so sweet, other experts suggest caution and forethought before climbing aboard any one issuer’s plan.
“You should take a sheet of paper and calculate what you typically spend over a year’s time,” said Bill Hardekopf, CEO of LowCards.com. “Then look at the terms and conditions — that’s where all the details are found — of the travel cards that you are considering. From these details, you can calculate what you are projected to earn in a year with each card. That should give you a good indication of what card to apply for.”
Both Leff and Hardekopf made the following recommendations for what cards to consider applying for.
5 Airline Credit Cards: The Class Of 2013
This list that highlights five recommendations from our experts’ longer list of interesting airline credit card offers. The first selection is recommended by both experts. After that, the order alternates by expert (with the sequence following the order that they gave).
Note that CreditLoan breaks out key features of each card. However, terms and conditions frequently change, so be sure to visit the relevant websites and carefully review the complete details of each offer.
Leff called this selection “probably the best all-around consumer card these days.” Hardekopf’s site ranks it in the top-three as well. Cardholders start with 40,000 bonus points after spending their first $3,000 and get a 1:1 (points to dollars) transfer on travel programs that participate — all three major airline alliances are already on board. Leff also noted that Chase Sapphire earns double points on all travel and dining, and waives currency transaction fees. Members receive a 7% annual bonus on all points earned from spending on the card.
Tops at Hardekopf’s site, this card gives travelers an advantage with a 1.25:1 miles-to-dollars conversion. Cardholders get 10,000 bonus miles after spending their first $1,000 within the first three months of using the card. This card has no currency transaction fees.
Leff likes this card because, he said, it offers the most options when it comes to the airline partners that you can transfer points to. Cardholders score 10,000 points after their first purchase, and then 15,000 more points $5,000 or more is spent within the first six months. The miles-to-dollars ration is 1:1, but if cardholders spend with a Starwood-program business: then this ratio is at least a 2:1 conversion, with the potential to be as high as 5:1.
This cousin to the top entry on Hardekopf’s list, this card features a 2:1 points-to-dollars conversion, and cardholders nab 10,000 more points when spending $1,000 within the first three months. This card has no seat restrictions, no blackout dates and no currency transaction fees.
One of the great advantages of this card on Leff’s list are the point multipliers. Cardholders can earn up to 3:1 on qualifying airline purchases, and 2:1 on domestic gasoline and supermarket buys. 25,000 points are yours after spending $2,000 in the first three months, and 15,000 more will come your way if you tally up $30,000 of card purchases in the first year.
Is An Airline Card Right For You?
Leff said that the decision to apply for an airline credit card depends on whether you pay off your bill in full each month. If you do, the rewards add up and are quite useful. Otherwise: buyer beware. “For those that carry balances, it’s much more important to find the lowest interest rates possible,” said Leff. “And the interest rates on travel cards tend to be higher.”
Hardekopf echoed that caution and offered these further tips. The choice of card “should also depend on your travel patterns,” Hardekopf said. “You need to make sure the mileage you earn will benefit you … it doesn’t do any good to build up all sorts of miles if that airline doesn’t fly to the destinations you’d like to visit. So you need to pick a card that will be best for this consideration.”
“Sometimes a card that earns miles good on any carrier can be much more beneficial rather than a card from a specific airline due to the limited routes and destinations of certain carriers,” Hardekopf said.
Study your options carefully. Choose a card that leverages your travel habits and also rewards your wise spending practices. If you do, you’ll have an advantage the next time you take to the air.