Airline Credit Cards Explained
Are Airline Credit Cards a Good Idea?
Using an airline sponsored credit card simply for the mileage benefit may be a bad idea. Considering each credit card offer is different, some of them may be good deals, but it’s important that you remember that these cards are a product of airline marketing. Of course, one of the primary objectives of the airlines is to increase the bottom line. What does this mean to you?
The Lowdown on Airline Credit Cards
It is difficult to sneak by the credit card kiosks at any major airport. The agents selling the credit cards are very aggressive boasting the mileage incentive for using the card. They also are known for giving out free gifts, such as t-shirts or pens for simply filling out an application.
The reward structures of airline credit cards are all similar. They usually always provide a reasonable large one-time mileage reward for opening the credit card. Then, they provide mileage rewards for all charges on the credit card.
It sounds like an excellent deal on the surface, although it may not be as great as you think depending on your lifestyle. The reason is that consumers overvalue the worth of each mile. They think that 30,000 miles is worth thousands of dollars. In reality, 30,000 could only get you a free roundtrip domestic flight. And even that comes with blackout dates and restrictions.
The Bad News
Airline credit cards often charge an annual fee. The cost of this annual fee could probably get you an off peak domestic airfare. Another negative is that these credit cards always charge a high interest rate well above 20%. There are ways to make airline credit cards work to your advantage, but just keep the above information in mind before picking a card that is right for you.