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Spend more, fly more. But is your airline rewards credit card costing you more than the miles it's giving you?
Credit Card Miles - Are You Getting a Good Deal?
Getting a credit card with airline mileage rewards is a good idea. Generally, the more purchases you make on the card, the more credit card miles, or frequent flyer miles, you add up. When your credit card miles match or exceed the actual air miles you want to travel, you can redeem them for an airline ticket. Sounds simple and worth the effort, but there some important details to consider before you sign up for a mileage card.
Reasons Not to Get an Airline Rewards Mileage Card
The reason to get a mileage card and save up credit card miles is pretty clear: Save money on airfare. But what if your shiny new mileage card does not save you money? What if it costs you more than what you will save on an airline ticket?
- How fast can you earn mileage points? If it's going to take you years to reach thousands of credit card mileage points, you might benefit from a different kind of card with rewards you can redeem at lower levels. Or better yet, use a credit card with a lower interest rate.
- Do you pay your entire credit card balance each month? If you do not, then the interest rate on your credit card is your most import consideration. The value of credit card miles and airline rewards will almost certainly amount to less than what you are spending on interest. Instead of a mileage card, which may have a higher interest rate, use a credit card with a lower interest rate and strive to pay the entire balance each month.
- How much are the credit card's annual fees? Saving money on airfare is great. But if the annual fee you are paying on a mileage card eats up all those frequent flyer points, then your savings may be very little or disappear all together.
- Are you good at tracking credit card terms? All of the terms regarding accumulating credit card mileage and redeeming credit card miles can change frequently and without warning. The terms that come with the airline rewards card may change before redeem your mileage points.
Comparing Airline Rewards Credit Cards
Every mileage card has its own interest rates, fees, terms for acquiring and redeeming mileage points, and other rules. And all of these credit card details tend to change with some frequency, making it impossible to do side-by-side comparisons of credit cards that offer airline rewards. Nonetheless, you can compare basic qualities of credit cards to determine which suits your budget, spending habits, and travel plans.
- Mileage Expiration - What are your travel plans and how well do they match the terms of mileage expiration on a mileage card? Some credit cards have mileage with no expiration. That's perfect if you are saving for a trip overseas with your family. The mileage on other cards can expire after a few years. Expired miles cost you money. Carefully match your travel plans with the terms of mileage expiration.
- Interest Rates - Pay the balance on your credit card each month? If you tend to carry a balance on your credit card, then the interest rate on the card is your primary concern, not frequent flyer points. Air miles cards tend to have higher interest rates, and generally only provide a savings to you if you pay off the balance on your credit card bill completely each month. If you carry a balance, use a low interest credit card and try your best to reduce the balance to zero.
- Annual Fees - How high of an annual fee is worth the rewards? Many credit cards have some kind of annual fee, or membership fee. Some air mileage cards offer no annual fees, but most of these are only waiving the fee for the first year. Various credit cards have different premium levels, such as standard, gold, and platinum. The price, rewards, and credit limits rise with each level. And your credit rating generally determines for which credit card level you qualify. Compare the reward levels you get on different cards, and their annual costs.
- Travel Miles - You won't necessarily have to spend thousands of dollars on a mileage card to get travel rewards. Even though minimum travel miles are lower than they have been, compare airline rewards credit cards to see which one gives you the most miles for your money.
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