Frequent flier? Opt for airline card over cash back
|
Cashing In
|
|
|
Cathleen McCarthy is a journalist whose articles on travel, commerce and consumer topics have appeared in dozens of publications. She writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com
Ask a question.
'Cashing In' archive
|
|
Dear Cashing In,
I'm looking for the best deal in a rewards credit
cards. In your opinion, is it better to have an airline credit
card and earn miles or a cash back card and use the cash to buy airline
tickets? Thanks. -- S. Godwin
Dear S,
Short answer: If you're going to use the card
to purchase airline tickets -- and if you can take advantage of the extra travel
it affords -- go with an airline credit card.
The main reason for choosing a cash back card
instead of one that offers frequent flier miles is that the cash gives you more
flexibility to choose how you use your rewards. If you fly often enough to know
you're going to be using your rewards only (or primarily) on travel, then I
would go with an airline credit card -- particularly if you can keep your
flights to one airline or network of airlines.
Using an airline credit card is a way to take
maximum advantage of the airline's loyalty program. Miles beget miles. If you
buy your tickets using your airline credit card, you often get twice the miles.
If your lifestyle involves a fair amount of plane travel, you should take
advantage of that.
Let's say you want to book a $574 Delta
roundtrip flight from Atlanta to Vancouver. Whether you pay for it using cash back
rewards or frequent flier miles, the ticket isn't going to cost you anything
and your Delta Skymiles account will be credited 4,724 miles -- roughly the distance traveled on the trip. If you
use a Chase Freedom Visa or a Citi Dividend World MasterCard, which both award
the standard 1 percent in cash back on this purchase, you will earn a grand
total of $5.74 in rewards. You don't get any additional benefits for using
cash back rewards to buy a plane ticket.
If you book the same flight using your Delta
Skymiles American Express card, on the other hand, you get an extra 574 miles
(one mile per dollar spent) added to your Skymiles account, which brings the
total reward miles to 5,298 for booking that flight. Also, if you don't have enough
miles to cover your flight, you can purchase part of the flight using Skymiles
and put the rest on the card, earning miles for that amount. If you only apply
10,000 frequent flier miles to your flight purchase using the card, you can
knock $100 off the price of the flight.
You also get one free companion ticket with
this card each year and 10,000 Medallion Qualification Miles when you reach $25,000 in eligible purchases during a calendar year. Those miles, often called elite qualifying miles,
help you achieve elite status. (Miles earned from credit card purchases typically aren't counted toward elite status, only actual miles flown or elite-qualifying miles.) If you use your card to buy
food, beer or other items on the plane, you can add more miles. End result: You
end up with more than 3,000 miles in your account by the end of the trip -- and
more opportunity for travel in the future.
If more travel ranks as a major reward for
you, remember that you can maximize miles on your card by shopping through
the airline's online portal -- in the example I'm using, that would be SkymilesShopping.com -- especially if you take advantage of "bonus miles"
promotions that allow you to double or triple miles per dollar spent.
On the other hand, if that flight to
Vancouver is the only flight you're going to book this year, then it makes more
sense to get a cash back card. All those extra miles won't do you much good if
you don't use them, and this way you can start maximizing your cash back
instead.
See related: Want to be elite? Know that all miles aren't created equal, Your credit card can make you elite
Cathleen McCarthy is a journalist whose articles on travel, commerce and consumer topics have appeared in dozens of publications, including the Washington Post, Wall Street Journal and Portfolio.com. Cathleen answers a question about a rewards and credit or debit cards from a CreditCards.com reader each week.
Send your question to Cashing In..
Published: October 8, 2011
 |
 |
 |
|
Three most recent Cashing In stories:
|
|
 |
|
 |
|
|
|
|
CreditCards.com's newsletter
Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!
 |
|
|
|
|
|
