Fantasizing about your next vacation can get you through a long day at the office, but when you’re choosing a miles rewards credit card, you should decide based on the facts, not dreams of waves lapping at your toes under swaying palms. But that’s what credit card companies hope you’ll do: sign up for their card impulsively based on the promise of a free flight or vacation.
To help you get past the pressure of “act now” advertising, here are some questions to help you figure out if that air miles rewards credit card is really worth it.
Do you carry a balance on your card?
This is a qualifying question to ask before signing up for any rewards credit card. If you don’t pay off your credit card balance every month, the interest on any rewards card quickly negates the rewards themselves. If you expect to earn an air miles rewards rate of 1.2 percent (a fair estimate for a good rewards card), that’s no match for an interest rate of 15 or 18 percent. Keep in mind that most rewards cards charge higher interest rates than cards without rewards, making the punishment for carrying a balance especially severe.
Can you take full advantage of the sign-up bonus?
Although there are some people who throw the consequences to the wind and sign up for every credit card possible just to take advantage of the teaser bonus miles, most of us are better suited by only applying for new credit when we really need it. That makes getting a new card a big decision, and the timing is important.
Most travel rewards cards offer generous sign up bonuses that can net you a free airline ticket if you spend a certain amount on your new card within a time limit. Obviously, you’ll want to take advantage of the teaser bonus without buying something you don’t need. So if your everyday spending won’t qualify you for the teaser bonus, wait to apply until you have a larger item to purchase.
When evaluating cards, the advertisers make apples-to-apples comparisons difficult. You’ll find cards that offer different amounts of bonus miles awarded for every $500, $1,000 or $3,000 dollars spent in the first month, three months, or six months after applying. Pay attention to the specific wording of the card for which you apply to make sure you can qualify for the maximum teaser benefit. The table below will help you compare sign-on bonuses and other terms of several of the best miles rewards credit cards.
Can you reach all your destinations with one airline?
Comparing card features isn’t helpful if the airline itself offers limited flights from your home airport. Check the available destinations ahead of time for the places you plan on traveling with your rewards before you sign up for the card. This table shows some of the different airline rewards cards available and by no means highlights every area of possible comparison.
As the following table shoes, unbranded air miles rewards card like the Capital One® Venture(SM) Rewards Card and the Chase Sapphire Preferred® card are great alternatives to single-airline cards, but branded cards offer additional perks like free checked bags and even free ticket upgrades, which we discuss after the table.
|Credit Card||Airline||Teaser Bonus||Miles Expire*||Annual Fee||Min. Redemption|
|Gold Delta SkyMiles® Credit Card from American Express||Delta||30,000 bonus miles toward Award Travel when you spend $500 on the Card within the first three months||24 mos.||$0 1st year; then $95||10,000 miles|
|AAdvantage® Visa Signature® Card||American||30,000 bonus miles (spend $1,000 in 3 mos.)||18 mos.||$0 1st year; then $95||25,000 miles|
|Southwest Airlines Rapid Rewards® Plus Credit Card||Southwest||Free flight after 1st purchase||24 mos.||$69||12,000 miles|
|Blue Sky Preferred(SM) from American Express®||Multiple||$150 cash back in Reward Dollars when you spend $1,000 in the first three months of Cardmembership||Never||$75||By airline|
|Chase Sapphire Preferred®||Multiple||40,000 bonus points (spend $3,000 in 3 mos.)||Never||$0 1st year; then $95||10,000 points|
|Capital One® Venture(SM) Rewards Card||Multiple||10,000 bonus miles (spend $1,000 in 3 mos.)||Never||$0 1st year; then $59||10,000 miles|
*Miles only expire if the frequent flier account is inactive for this period of time. Other cards’ miles may expire only upon cancellation of the account.
Do you value first class and other premium upgrades?
If you travel alone on a regular basis and have a taste for the VIP life, you might get a kick out of boarding early, or getting discounts on in-flight shopping and airline lounge access. For road warriors, these perks can add up. Some cards even offer ways to score discounted or free first class upgrades when available.
Even if first class isn’t your thing, many of these cards offer free checked bags. Even though free bags came standard a few years ago, the amount you could save on just one flight now might be the most significant reward you can get. Southwest comes standard with no baggage fees, the the Gold Delta SkyMiles® Credit Card offers one free checked bag worth $50, and the Blue Sky Preferred(SM) offers a $100 “annual airline allowance” for checked bags and other purchases.
Can you bank your miles for a mega flight?
You may try to hold onto rewards for a more expensive international flight; air miles are usually worth more when you use them for a long-haul or first-class fare than if you redeem them for domestic coach tickets. Before you hoard all those miles, however, check with your credit card and airline: you don’t want to save all those rewards only to find out you can’t redeem them in the way you had hoped.
How flexible are your award travel plans?
Although many credit cards advertise “no blackout dates”, it can still be more expensive or difficult to book award travel at peak times. (And yes, some cards still have true blackout dates.) If you’re hoping to bank all your miles for one big vacation, keep this in mind.
The selling point of the air miles credit card advertisements is almost exclusively a long-awaited vacation, yet big vacation planning is the most ill-fated way of redeeming miles. Why?
- Holidays and other frequent travel days are more likely to be blocked from air miles redemption.
- The planning and reservations a vacation takes could be strained by the red tape of miles redemption. If you have to change your vacation plans, change fees of up to $150 on some airlines can quickly eat into the value of your rewards.
- There’s a lot more to the cost of a vacation than the airfare. Hotels, attractions, food, and other costs make the real expense of a vacation extend far past the ticket price. A vacation is a huge addition to any budget compared to the tiny amount of savings that credit card air miles rewards can bring. You should already have an eligible trip for rewards miles planned in your budget before you sign up for the card.
Air miles rewards credit cards work best for people who already travel frequently and are looking to beef up their frequent flier accounts with a few more miles. If you’re savvy enough to know your cards’ rules and play along, they might be a way to earn a free vacation even if you don’t travel a lot, but weight the pros and cons carefully before choosing one of these cards over a well-rounded cash or points-based rewards system.
Have you had a good or bad experience with an airline rewards card? Let us know in a comment.
Mac Hildebrand is a writer and credit card expert for CreditCardChaser.com. Follow him on Twitter @MacHildebrand.
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