Asian young woman passenger after discovering are airline credit cards worth it checking departure boarding pass in airport.
16 May 2024

Are Airline Credit Cards Worth It?

Airline credit cards are the stars of the credit industry, beckoning with the allure of free flights, priority boarding, and a host of travel perks that seem almost too good to be true. For both the avid jetsetter and the occasional holiday-goer, the allure of airline miles and their accompanying luxuries can be irresistibly tempting. In this in-depth analysis, we face the vital question: Are airline credit cards worth it?

Understanding Airline Credit Cards

Airline credit cards, a type of travel credit card, have become a staple for frequent travelers seeking to maximize the benefits of their spending habits. These cards are co-branded partnerships between credit card issuers and specific airlines, designed to reward cardholders with points or miles that can be redeemed for air travel and other related benefits.

The primary feature of an airline credit card is its ability to earn miles for every dollar spent using the card. These miles are typically accrued within the airline’s loyalty program and can be redeemed for free or discounted flights, seat upgrades, and more with the airline and its partners. Unlike general travel credit cards, airline credit cards often offer additional airline-specific perks that enhance the travel experience.

Are Airline Credit Cards Worth It?

The Pros of Airline Credit Cards

Miles and Rewards Programs

One of the primary attractions of airline credit cards is their miles and rewards programs. For frequent flyers, the earning potential through these programs can be substantial. Every purchase made with an airline credit card earns miles that can be redeemed for future flights, seat upgrades, or shopping and dining options.

Some cards offer accelerated miles on purchases made directly with the airline, further multiplying the earning potential. The real-world value of these miles can be considerable, with case studies showcasing how strategic card use has led to significant savings on airfare and even complimentary flights.

Travel Benefits and Perks

Beyond the allure of earning miles, airline credit cards come packed with various travel benefits and perks designed to make the journey smoother and more enjoyable. These include priority boarding, which allows cardholders to board the plane ahead of general boarding, ensuring access to overhead bin space and a more relaxed boarding process.

Complimentary checked baggage is another common perk, potentially saving travelers hundreds of dollars per year in fees. Lounge access stands out as a premium benefit, offering a tranquil space to relax before a flight, complete with complimentary food, drinks, and Wi-Fi. The value of these perks can vary across airline credit cards, making it essential for potential cardholders to compare offers to find the best fit for their travel habits.

Building Credit and Additional Bonuses

Aside from travel-specific benefits, airline credit cards can also play a role in building and improving one’s credit score. Responsible use of the card, including timely payments and maintaining a low credit utilization ratio, can positively impact creditworthiness over time.

Additionally, many airline credit cards entice new users with sign-up bonuses, offering a substantial number of miles or points after meeting an initial spending requirement within the first few months. These bonuses alone can often justify the cost of the card’s annual fee, providing a head start on earning rewards and sometimes even covering the cost of a round-trip ticket.

The Cons of Airline Credit Cards

While airline credit cards offer a plethora of benefits that cater to frequent flyers, they also come with certain drawbacks that potential cardholders should consider. Understanding these cons is essential to making an informed decision about whether an airline credit card aligns with one’s financial and travel goals.

High Costs and Fees

One of the most significant disadvantages of airline credit cards is their high costs and fees. Numerous cards carry significant annual fees, varying from under $100 to several hundred dollars for premium cards that provide enhanced benefits.

Compared to standard credit cards that typically have no annual fee, the noticeable difference in cost becomes evident. For individuals who do not travel frequently enough to take full advantage of the card’s benefits, the annual fee can quickly outweigh any potential rewards, making the card costly.

Limited Flexibility

Airline credit cards often restrict reward redemption, such as blackout dates and limited seat availability for award flights. These limitations can make it challenging for cardholders to use their miles when they want to, potentially diminishing the perceived value of the rewards earned.

Furthermore, being tied to a specific airline’s ecosystem means that cardholders are at the mercy of any changes the airline might make to its loyalty program, including devaluations of miles or changes to benefit structures. In contrast, general travel cards offer greater flexibility, allowing users to redeem points across airlines and travel services without such restrictive conditions.

Potential for Overspending

The psychological effect of chasing rewards can lead to unnecessary spending, as cardholders may be tempted to make purchases they wouldn’t otherwise consider just to earn more miles. This behavior can quickly lead to a situation where the balance between spending and rewards becomes skewed, resulting in financial strain rather than benefit.

The allure of earning miles and unlocking travel benefits can overshadow prudent financial management, leading to higher balances carried month-to-month and accruing interest, further diminishing the value of any rewards earned.

Making the Decision: Are Airline Credit Cards Worth It?

Determining the value of an airline credit card hinges on your travel patterns and financial situation. Consider how often you fly, especially with specific airlines. Loyalty to one carrier can bring benefits like earning miles, travel perks, and gaining status faster. Calculate rewards against costs like annual fees and interest rates for balances. If you don’t travel much or aren’t loyal to one airline, the benefits may not outweigh the costs.

When selecting an airline credit card, explore alternative options like general travel and cashback cards. General travel cards provide more flexibility in redeeming rewards, allowing points to be used across different airlines, hotels, and travel expenses without blackout dates. On the other hand, cashback cards offer simple rewards that can be used for any purchase, providing a versatile benefit without the complexities of airline loyalty programs.

To maximize your chosen card, consider strategies like focusing on sign-up bonuses, knowing the best redemption choices, and using the card for daily purchases to earn rewards quickly. By avoiding common mistakes like overspending for rewards and staying informed about the card’s terms and benefits, you can optimize your credit card selection to fit your lifestyle and financial objectives.