Frequent flier credit cards can be a great way to reduce travel costs. Obviously, they are only beneficial to those who like to travel with some regularity. If one is not going to travel regularly and use the card consistently enough, a cash back credit card may be a smarter choice. There are different types of cards and many issuers, most of whom are trying to gain a profit. This means that wise and well planned use of these cards is necessary. When sorting through the options and issuers, here are the most important things to keep in mind.
The first and the most basic option is either an airline specific card or a generic card. The benefit of an airline specific card usually involves getting more rewards per card use. Airlines also include benefits and discounts via their rental car and hotel partners. The obvious benefit of a generic card is that the miles earned can be used on a greater number of airlines allowing for a more flexible application. Card holders who live near a major airport hub for a given airline that routes to a large number of destinations would benefit most from an airline sponsored card. Travelers who need a greater flexibility of application will want to go with a generic or bank sponsored card. Making a wise choice between airline specific cards and generic/bank issued cards is crucial to receiving true benefits from having this type of card.
After choosing from the basic types of frequent flier credit cards there comes a lot of choices and options that will require some research to make for a smart consumer. Bear in mind that each application for a credit card of any form has an impact on a credit rating. This means that getting occasionally rejected can have negative consequences.
What to consider when choosing a frequent flier credit card
The sheer variety of options can seem a bit overwhelming and only those with good to excellent credit ratings will be able to choose from the best options. Some of the most important and common distinctions involve the following:
The miles accrued per dollar spent is a primary distinction and typically varies between 1 and 2 miles per dollar spent. Sign up bonuses can vary by type of card (airline specific or generic) and by actual airline or bank. Promotions may also affect the amount of the bonus.
Spending threshold bonuses should also be calculated into the equation. Many cards will add on bonus miles not only for each dollar spent but also for reaching certain amounts of overall spending. These amounts range from $1,000 up to $10,000 and various points in between depending on card issuer and available promotions.
As mentioned earlier, some cards will also include discounts and benefits from specific rental car companies and hotels. Like the decision between specific and generic cards, card holders should make sure that the partnered companies are readily available and really useful to make this option beneficial. Going out of the way to use certain agencies and hotels may dampen or negate the value of a given card.
Other promotions such as double miles and limited time frames for usage can impact the overall value of a card. Make certain not to miss promotions or fine print when calculating the potential a card may have.
There are also basic strategies that savvy card holders will use. Not all of these concepts are approved by the issuers, but none violate the law and issuers will simply not allow a strategy if it is a problem for them.
Customers used to “churn” cards by getting the miles and then canceling the card and resigning up for it. The idea here is to keep accruing sign up bonus miles. Most issuers will not allow this to happen so customers have adapted the strategy to switch between cards of equal value and rewards.
Be advised that holding too many cards can be a problem if annual fees and interest start to add up. Keep only as many cards as can be easily managed. As with all things financial, keep detailed records and constantly make sure that using the cards is profitable.
Keep an eye out for the best promotions and the ones most usable for specifically desired purposes. Sometimes one card can be used to help afford one particular vacation. Promotions are also part of the card switching strategy that can be so beneficial.
Frequent flier credit cards can be very useful to those who enjoy regular travel. These cards are generally not that economical unless they are paid off regularly. Carrying a balance on any of this type of card will diminish or eliminate any potential value and mean a gain for the card issuer not the card holder. Research as many cards as possible, apply the basic strategies wisely, and this form of credit will lead to a lot of travel without a lot of expense.
Click here for a listing of some of the top frequent flier credit cards.