Airline credit cards offer some of the most lucrative rewards available and perks for frequent flyers. Though annual fees can make airline credit cards some of the most expensive rewards cards to carry, cardholders who take advantage of their airline benefits can more than recoup that fee. The payoff can be worth it for cardholders who travel frequently and pay their credit card balance each month.
There are two types of credit cards for earning airline miles:
- Airline cobranded cards that let you earn and redeem rewards for a specific airline
- Travel rewards cards that can be used for a wider selection of airfare
U.S. News Survey: 20 percent of Airline Rewards Card Holders Lose More Than They Earn
U.S. News surveyed 1,255 airline credit card holders to learn about how they use their cards and rewards program. The majority of cardholders use their earned rewards to take free flights, and many use perks such as free checked bags and priority boarding. More than half of users surveyed earned more than $200 in rewards in the last 12 months. However, 20 percent of airline credit card holders carry a balance month to month and earn less in rewards than they pay in annual fees.
Most people sign up for airline rewards cards to earn free flights.
At 43 percent, free flights are the leading reason respondents signed up for an airline credit card. Others are drawn to loyalty perks or benefits with the airline (17 percent), which often include free checked bags and priority boarding.
Most respondents are using their earned rewards as intended, with 51 percent of respondents having redeemed at least one free domestic flight using their airline credit card within the last year. Fewer respondents (24 percent) redeemed free international flights in the last 12 months.
Bill Hardekopf, CEO of LowCards.com, points out that miles can be very difficult to use today compared to in past years. More miles are usually required to book a flight, while the number of flights and rewards seats available has decreased. For that reason, he suggests many people will be better off with an airline rewards card that can be used on any airline.
Most respondents are earning hundreds of dollars in rewards value from their airline credit cards.
The majority of respondents (60 percent) have earned an estimated equivalent of more than $100 in airline rewards within the past 12 months. In fact, 33 percent of respondents estimated that they’ve earned more than $500. Only 18 percent said they earned $100 or less.
Free checked bags are the most popular airline credit card benefit.
More than a third of respondents (35 percent) said they’ve used their card to check bags for free when flying. Other popular airline credit card benefits are priority boarding (23 percent), upgraded seating (17 percent) and airport lounge access (11 percent).
Airline credit cards can cost consumers more than the rewards they earn.
For some respondents, their airline credit card does not earn as much as it costs. Seven percent of respondents said they don’t earn enough rewards to offset their card’s annual fee. Thirteen percent of respondents often carry a balance month to month, which means they are paying more in interest than they are earning in rewards.
“Mathematically, it’s a horrible idea to have a rewards credit card and carry a balance just to try and get rewards,” Hardekopf advises. With rewards, you get 1 to 2 percent return on your spending, but if you carry a balance, you are paying 15 to 20 percent or more in interest. “If you are going to carry a balance, don’t go out and get a rewards card. Get the lowest interest rate card you can get.”
- U.S. News ran a nationwide survey through Google Surveys in May 2017.
- The sample size was the general American population and the survey was configured to be representative of this sample.
- The survey polled 1,3 people who have airline rewards credit cards.
- The survey asked nine questions relating to their credit card and rewards usage.
- All winning answers were statistically significant at the 95 percent confidence level.
- See the full survey data, questions and results.
How Airline Credit Cards Work
As you spend on your credit card, you earn points or miles that can be redeemed for free flights. Often, travel spending on airlines, rental cars and hotels earn bonus points. Some airline credit cards allow for higher point valuations when redeemed for airline rewards as well.
In addition to earning free flights, many airline credit cards come with travel perks such as free checked baggage, priority boarding, seat upgrades, concierge services or even access to members-only airport lounges.
Using points for travel: Rewards are a compelling benefit for frequent travelers. Airline credit cards may offer bonus points for purchases made with that airline, for other travel-related purchases, or on dining, entertainment and groceries. Airline credit cards typically have a sign-up bonus that offers extra points, miles, cash back or even free flights.
Airfare discounts: Even when you’re not redeeming rewards points/miles, you can use your airline card to save. Some airline credit cards offer discounts on airfare just for using the card. For example, British Airways Visa Signature cardholders can save 10 percent on British Airways-operated round-trip flights. Other airline cards, including the Platinum Delta SkyMiles Credit Card from American Express, offer a companion fare discount.
Airline privileges: Many airlines reserve privileges for airline credit card holders, including free checked bags, dedicated check-in lines, early boarding, discounts on inflight purchases and seat upgrades. Your card may also get you access to private airport lounges with complimentary beverages, snacks, internet access and workspaces. For example, United MileagePlus Explorer cardholders get a free first checked bag, when your card is used to purchase your ticket, priority boarding and two United Club passes each year.
Travel perks and protections: Airline credit cards often waive foreign transaction fees. They may also offer insurance and protection for travelers, including trip cancellation insurance, car rental insurance, lost baggage protection and emergency assistance. Concierge services may be offered to help book restaurants, select gifts and plan travel.
Complicated rewards structure: With airline cobranded cards, point valuations are fluid, and it can be difficult to determine just how much a point or mile earned is worth. Each airline has different earning and redemption structures, as well as cardholder tiers, so one mile earned is almost never equal to a mile you could fly.
Fewer promotional offers: Some rewards credit cards can offer introductory zero percent APRs and balance transfer offers, but these are significantly less common among travel-related rewards cards, particularly cobranded airline cards.
Annual fees: Many airline credit cards have annual fees that require you to earn significant rewards to offset.
Higher purchase and balance transfer APRs: Purchase and balance transfer APRs for airline credit cards may be higher than other types of rewards cards.
Credit score requirements: Because airline cards often provide more benefits than nonrewards cards, they tend to have stricter credit score requirements.
Restrictions on earnings: Some airline credit cards only earn bonus points/miles on purchases with the airline. Some cards will limit the amount of points/miles you can earn in a month, quarter or year, especially in bonus spending categories.
Restrictions on redemptions: Points or miles earned with a branded airline credit card may only be usable with that particular airline, although some will allow you to use your points/miles with partner airlines and hotels. There may be blackout dates, which limit the flights you have access to and when you can travel. Some rewards programs may limit which online services you can use to book your flights. Points or miles can expire after a specific period of time or if your card remains inactive for too long, and your airline may not offer flights to your desired destination.
Is an Airline Rewards Credit Card Right for You?
Be sure you meet these requirements before you sign up for an airline rewards credit card.
- You spend a significant amount of money on air travel. If you don’t travel frequently or visit destinations served by a particular airline, another type of rewards card may be more beneficial.
- You have good or excellent credit. Airline credit cards usually require good to excellent credit. You should have a FICO credit score of at least 670 before you apply for an airline rewards credit card.
- You can pay off your balance each month. You should be debt-free and avoid carrying a balance on your airline rewards credit card, as interest charges can quickly overshadow reward benefits.
Choosing the Best Airline Credit Card
When you’re choosing the best airline credit card for you, you should take these steps to evaluate each card:
- Pick the right rewards program for you.
- Calculate earning potential.
- Factor in sign-up bonuses.
- Calculate redemption value.
- Subtract annual fees.
- Understand travel benefits.
1. Pick the right rewards program for you.
Cobranded airline cards offer the biggest benefits toward airfare and related purchases. Travel rewards cards offer broader rewards categories but do not offer the same level of rewards for airline-based earnings. If you fly frequently with a particular brand, you should consider a cobranded card; otherwise, a travel rewards card offers the most value.
Cobranded cards are best for people who tend to use the same airline most of the time, as they typically offer the highest level of rewards earning and redemption on airline purchases. However, cobranded cards often only offer rewards tied to that specific brand and their affiliate partners, which can limit your travel options.
Popular airline cobranded cards include:
- AeroMexico Visa Signature Card
- Allegiant World MasterCard
- Citi / AAdvantage Platinum Select World Elite MasterCard
- Avianca Vuela Visa Card
- Asiana Visa Signature
- British Airways Visa Signature Card
- Gold Delta SkyMiles Credit Card
- Frontier Airlines World MasterCard
- Hawaiian Airlines World Elite MasterCard
- LANPASS Visa Signature Card
- SKYPASS Visa Signature Card
- Chase Southwest Rapid Rewards Premier Card
- Spirit Airlines World MasterCard
- Sun Country Airlines Visa Signature Card
- United MileagePlus Explorer
- Virgin America Visa Signature Card
If you’re signing up for a cobranded airline card, consider airlines with hubs at your local airport, says Joe Cortez, senior writer for frugaltravelguy.com. For example, flyers out of Chicago’s O’Hare airport may get more value when flying with United Airlines or American Airlines, as both airlines have hubs at O’Hare.
In addition, some travel booking websites offer their own cobranded cards to provide bonuses and rewards for airfare and travel bookings through their websites. For example, the Expedia+ Voyager Card from Citi lets you earn four Expedia+ bonus points per dollar spent on eligible Expedia purchases, two Expedia+ points per dollar spent on purchases for dining out and entertainment and one Expedia+ point per dollar spent on all other purchases. Points are redeemable on Expedia.com for flights, Expedia Rate Hotels, vacation packages and activities.
Travel rewards cards
With travel rewards cards, points or miles can be used for flights, hotels and rental cars without being restricted to a particular airline or an airline’s partners. They can also be redeemed for merchandise or cash back. Travel rewards cards are more versatile than airline cobranded cards but potential rewards earnings may not be as large as those with a cobranded airline card, and they offer fewer perks.
Popular travel rewards cards include:
- Barclaycard Arrival Plus World Elite MasterCard
- Venture from Capital One
- Chase Sapphire Preferred Credit Card
- Discover it® Miles
- FlexPerks Travel Rewards Visa Signature Card
Decide which type of rewards will benefit you the most when selecting an airline credit card. If you’re flying frequently with one particular airline, cobranded airline cards offer a lot of benefits, but Cortez advises that they may not be the best option for casual travelers who aren’t going to reach elite status with an airline. He encourages casual travelers to consider travel rewards cards with flexible travel points.
2. Calculate earning potential.
With the best rewards on airfare and related purchases made directly with the airline, airline cobranded cards promote brand loyalty. For example, the Gold Delta SkyMiles Credit Card earns two miles per dollar spent on purchases made directly with Delta and one mile per dollar spent on all other purchases.
Some cards also offer bonus spending categories. For example, the JetBlue Card earns triple points on JetBlue purchases, double points at restaurants and grocery stores, and one point per dollar on all other purchases.
Airline rewards cards for businesses offer bonuses in categories related to business spending, such as utilities, office supplies and travel-related expenses like gas and car rentals.
For example, the United MileagePlus Explorer Business earns double miles on purchases through United, as well as double miles on restaurants, gas stations and office supply stores, then one mile for every dollar spent on all other purchases.
Travel cards that aren’t cobranded with an airline but provide access to airline rewards often have more flexible opportunities for earning a higher rate of rewards. They may offer broader bonus spending categories or simply earn a higher rate on all purchases, like the Discover it Miles that earns 1.5 miles on every dollar spent.
Knowing your spending habits will help you determine which card offers the best earning potential based on where you spend the most money.
3. Calculate sign-up bonuses.
Sign-up bonuses offer a large amount of points or miles, but only after you meet certain spending requirements.
For example, sign-up bonus offers from cobranded airline credit cards include:
- Chase United MileagePlus Explorer Card offers 40,000 bonus miles after spending $2,000 in the first three months.
- Gold Delta SkyMiles Credit Card from American Express offers 30,000 bonus miles after you spend $1,000 in purchases within the first 3 months and a $50 statement credit after making a Delta purchase within the first 3 months.
- Bank of America Spirit Airlines World MasterCard offers 15,000 bonus miles after your first purchase.
Sign-up bonus offers from travel rewards credit cards include:
- The Platinum Card from American Express offers 60,000 bonus points after spending $5,000 in the first three months.
- Bank of America Travel Rewards Credit Card offers 20,000 bonus points after spending $1,000 in the first three months.
- Discover it Miles doubles the miles you’ve earned at the end of your first year if you’re a new cardholder. The card earns 1.5 miles for every dollar spent.
However, you should be careful not to let sign-up bonuses cloud your judgement. Cortez warns that it’s easy to get lost in card marketing when you see you can get 50,000 or 100,000 points or miles for signing up. Cortez encourages consumers to consider the card’s annual fee and benefits as well as the sign-up bonus.
4. Calculate redemption value.
For most travel rewards cards, one point is equal to 1 cent. Airline cobranded cards may offer anywhere from 1 to 5 cents per point depending on the flight, but it’s very difficult to put a consistent value on what you earn in rewards because it’s always changing based on flight prices, route, availability and more.
The redemption value of miles varies wildly between different programs, says Cortez. Some airlines, such as Delta and Southwest, do not have a published award chart, he says. This can make it difficult to determine how many miles you need to earn for a free flight. However, other airlines, including American and United, have published award charts that make it easier to understand the value of your miles.
Understanding how an airline card’s point system works is an important part of selecting a credit card. To illustrate how to value points, U.S. News compared domestic flights booked through JetBlue and Delta using cash and points/miles for a round trip over a weekend.
U.S. News compared prices in dollars and points for three domestic flights, crisscrossing the country, using the airports that are among the highest trafficked according to the most recent FAA data and are serviced by both airlines. Tickets purchased were the lowest tier, earliest and shortest flights available for the dates selected.
|JFK to LAX (roundtrip)||JFK to PHX (roundtrip)||LAX to CLT (roundtrip)||Average|
|JetBlue||$471.40 or 31,100 points = 1.52 cents per point||$456.60 or 31,800 points = 1.44 cents per point||$848.34 or 59,800 points = 1.42 cents per point||1.46 cents per point|
|Delta||$507.40 or 37,500 miles = 1.35 cents per mile||$429.40 or 30,000 miles = 1.43 cents per mile||$583.25 or 57,500 miles = 1.01 cents per mile||1.26 cents per mile|
Based on the three test flight routes above, JetBlue points are worth an average of 1.46 cents per point, and Delta miles are worth 1.26 cents per mile.
5. Subtract annual fees.
Subtract annual fees from your potential earnings to estimate the true earning potential of a card. Though a card may have expensive annual fees, it may provide benefits that offset that cost, such as a high-earning rewards program or travel perks including priority boarding, free luggage and trip insurance.
6. Understand travel benefits.
Airline rewards cards come with benefits that can be helpful for traveling and making purchases. Many travel cards offer perks for frequent travelers including:
- No foreign transaction fees
- Trip cancellation insurance
- Auto rental insurance
- Lost baggage protection
- Roadside assistance
- Extended warranties
- Extended return periods
- Concierge services
- Late checkout privileges at participating hotels and resorts
Airline cobranded cards typically offer more valuable cardholder benefits. They offer benefits directly with the airline, often including:
- Waived baggage fees
- Priority check-in
- Priority boarding
- Discounts on inflight purchases
- Companion tickets
- Access to airport lounges with free snacks, drinks and Wi-Fi
Gary Leff, author of travel blog View From the Wing, encourages travelers who fly frequently with a particular airline to hold the airline’s cobranded credit card for the benefits. The benefits offered by the airline card are nice to have regardless of mile earnings or elite status. Leff advises that you don’t necessarily have to put purchases on a cobranded airline card to get value from it.
Many airline rewards programs offer membership tiers to reward those who are loyal to the airline. These tiers are typically based on the amount of points/miles earned and/or the number of flights taken in a particular time period. They are usually tied into airline cobranded rewards card membership and earnings and offer additional perks to high-volume cardholders. Perks offered to elite status cardholders often include:
- Additional free checked bags
- Priority boarding
- Seat upgrades
- Complimentary food and beverages
- Access to restricted dates and flight times
- Bonus points/miles for eligible purchases made with the program
Comparing Airline Rewards Credit Cards
U.S. News compared a cobranded airline card, the JetBlue Card, with a general travel rewards card, the Barclaycard Arrival Plus World Elite MasterCard, to help consumers understand the benefits and drawbacks of each type of card and understand how to pick the best card based on your habits and priorities.
1. Pick the right rewards program for you: The JetBlue Card is an airline cobranded card, while the Barclaycard Arrival Plus World Elite MasterCard is a travel rewards card. If you frequently fly JetBlue, you may want to earn TrueBlue loyalty points and perks with that brand; otherwise, the Barclaycard Arrival Plus World Elite MasterCard will provide a much broader array of earning and redemption options.
2. Calculate earning potential: Find out what you can expect to earn with an airline credit card by considering what you plan to spend. The JetBlue Card earns three points for JetBlue purchases, two points at restaurants and grocery stores and one point for everything else. The Barclaycard Arrival Plus World Elite MasterCard earns a flat two miles for every purchase.
Use your monthly budget to determine how much you can expect to earn from your regular spending with an airline credit card. The sample budget below assumes the cardholder flies four times per year at $346.72, or the average cost of a roundtrip domestic flight.
$1,500/month budget with four flights/year
|General: $303||Groceries: $334|
|Dining: $250||Utilities: $323|
|Gas: $174||Airfare: $116|
If you spend $1,500 per month on your credit card and take four flights each year on JetBlue, you’ll earn 27,792 points with the JetBlue Card and 36,000 miles with the Barclaycard Arrival Plus World Elite MasterCard from this breakdown:
JetBlue Card first-year points
|Airline||$116 * 3x earning rate * 12 months = 4,176 points|
|Dining and groceries||$584 * 2x earning rate * 12 months = 14,016 points|
|Everything else||$800 * 1x earning rate * 12 months = 9,600 points|
|Total||4,176 + 14,016 + 9,600 =
Barclaycard Arrival Plus World Elite MasterCard first-year miles
|Everything||$1,500 * 2x earning rate * 12 months = 36,000 miles|
3. Factor in sign-up bonuses: Both cards offer a sign-up bonus. The JetBlue Card offers 5,000 bonus points if you spend $1,000 in the first 90 days. The Barclaycard Arrival Plus World Elite MasterCard earns 50,000 bonus miles after you spend $3,000 in the first three months. The sample budget of $1,500/month is enough to meet both sign-up bonus requirements.
With sign-up bonuses included, you can expect to earn 32,792 points with the JetBlue Card and 86,000 miles with the Barclaycard Arrival Plus World Elite MasterCard.
4. Calculate redemption value: JetBlue’s redemption values vary depending on the flight, but average 1.46 cents per mile in our test flights. The point valuation for the Barclaycard Arrival Plus World Elite MasterCard is 1 mile to 1 cent with a 5 percent bonus when miles are redeemed.
Given that, cash equivalents from rewards equal $478.76 with the JetBlue Card and $903 with the Barclaycard Arrival Plus World Elite MasterCard after the first year of spending.
5. Subtract annual fees: The JetBlue Card has no annual fee. The Barclaycard Arrival Plus World Elite MasterCard has an $89 annual fee that is waived for the first year. After the fifth year, due to the difference in annual fee amounts and the lack of any further sign-up bonuses, the JetBlue Card’s rewards earnings actually surpass the earnings of the Barclaycard Arrival Plus World Elite MasterCard at the same monthly spend.
Five-year rewards value with sign-up bonus and annual fees
|1st year||1st-2nd year total||1st-3rd year total||1st-4th year total||1st-5th year total|
|Barclaycard Arrival Plus World Elite MasterCard||$903||$1,192||$1,481||$1,770||$2,059|
6. Understand travel benefits: The JetBlue Card offers a 50 percent inflight savings on all cocktails and food purchases for all cardholders. If you reach TrueBlue Mosaic status, you’ll get your first and second checked bag free, waived cancellation fees, expedited security, early boarding, complimentary alcoholic beverages and an additional three points per dollar spent on JetBlue flights.
The Barclaycard Arrival Plus World Elite MasterCard offers MasterCard World Elite travel benefits. These benefits include travel discounts on hotels, car rentals and cruises, airline upgrades, a 24/7 concierge, trip cancellation or interruption insurance, travel accident insurance, emergency assistance services and more.
Neither card charges foreign transaction fees.
The bottom line: If you spend $1,500 on your credit card each month and take four flights per year, you will earn the most ($903) with the Barclaycard Arrival Plus World Elite MasterCard in the first year. After five years, the JetBlue Card earns $2,101.80, edging out the Barclaycard’s $2,059 just slightly.
If you travel JetBlue at least four times a year, the JetBlue Card offers the most in rewards earnings and travel benefits after five years. But the Barclaycard Arrival Plus World Elite MasterCard has a greater value for the first four years. If you need flexibility in your airline choice, or want to get faster access to your rewards, the Barclaycard Arrival Plus World Elite MasterCard may be a better choice.
Best Airline Credit Cards of 2018
U.S. News researched 43 cobranded airline credit cards and 69 general travel cards with airline spending bonuses to identify the best cards available using the steps outlined above. We examined cards that fit common categories for frequent flyers, including business flyers, small to medium airline spending with no annual fee and airline cobranded cards. We’ve selected the top eight cards that specialize in these categories.
- Chase Sapphire Preferred Credit Card
- Barclaycard Arrival Plus World Elite MasterCard
- Chase United MileagePlus Explorer Card
- Citi / AAdvantage Platinum Select World Elite MasterCard
- Gold Delta SkyMiles Credit Card from American Express
- Chase Southwest Rapid Rewards Premier Card
- Alaska Airlines Visa Signature Card
- British Airways Visa Signature Card
Source by:- usnews