Frequent flier cards evolve: more complex, but more rewarding
Comparison shop carefully and you can boost your points, rewards
After being pounded for years
for running frequent flier programs that made it hard to book free flights,
airlines are now freshening up their credit card reward programs to make them
They're offering new perks to
cardholders, such as waiving those pesky baggage fees. They're jacking up bonuses
to use the cards, so that now nearly every program offers enough miles for a
free ticket, and occasionally two, for newcomers. And they're evolving more toward a system
that ties the reward to the actual cost of the ticket, instead of the length of
Weigh choices and win
For consumers willing to
weigh the costs and advantages of so many different reward programs, the
changes can be a real boon. But there's also no denying that deciphering reward
programs is becoming more complicated.
"If you're savvy, it's
really, really good for you," says Randy Petersen, editor of Inside Flyer
magazine, which tracks travel rewards programs. "But it's also bad because it's
really confusing out there. The average person gets carried away with all these
bonuses, and they're not looking at the details."
Capital One commercials a few years ago that featured comedian David Spade saying "no" to
airline customers who wanted to redeem the miles they had accumulated on their
airline credit cards? Capital One and other bank reward programs, such as Citi's, found success by tapping into the widespread perception that airline
mileage awards were hard to redeem.
Changes take flight
Airlines took note of the
attacks, says Michael Pool, partner marketing manager with US Airways, the
nation's fifth-largest carrier. The credit card programs are important to
airlines, because in addition to keeping fliers from defecting to other
carriers, the airlines' banking partners pay them hundreds of millions of
dollars a year for the right to issue the cards.
"We obviously are attuned to
the competing messaging they were putting out," Pool says. "We understand
customers want to use those miles when they want to use those miles."
So airlines adapted. In 2006,
United Airlines unveiled its "Mileage Plus Choices" program, which for the
first time allowed customers to redeem miles for purchases on the airline's Web
site. In 2008, Delta followed suit with a similar program called "Pay With
Miles." In the last year and a half, Virgin America and JetBlue have launched
similar programs pegging awards to the cost of the tickets. Other airlines have
recently reconfigured their awards programs to open more seats to frequent
fliers, though at higher award levels. These moves have helped blunt the
criticism from the bank reward cards by allowing the airlines to claim that
award seats are available on every flight.
At the same time, airline
cards are offering more perks than in the past because of changes in the
With airlines adding fees for
checked luggage and reserved seats, some cards offer ways to avoid those
nuisances. For instance, the Continental Airlines PresidentialPlus World
MasterCard, issued by Chase, allows cardholders not to pay baggage fees, which
for two bags can run $50 each way. The card's annual fee is $375.
It's pretty much a matter of getting the most reward for least dollar spent.
Frequent flier mile saver
Airlines have also added
perks to their cards, such as expedited check-in or boarding and access to
exclusive lounges. United's Mileage Plus Access Visa by Chase, at $275 a year,
includes year-long upgrades to Economy Plus class. Others, such as the $450-a-year
Delta Reserve card from American Express, allow cardholders to more quickly
gain access to elite flier status, which can set off a chain reaction leading
to more miles, upgrades and free trips.
Because airlines control so
many aspects of flying, it's hard to outdo them on travel reward cards, says
Jay Sorensen, president of IdeaWorks, a Wisconsin
airline consulting firm that works on loyalty programs.
"The airline makes the
rewards," he says. "They always have the ability to give it away for hardly
Sign-up bonuses earn more points
In addition, signing up for airline credit cards has become more lucrative. Cards used to come with bonuses of
10,000 or 15,000 miles. Now, 25,000- or 30,000-mile bonuses are standard. In
December, British Airways offered 100,000 miles to people who applied for and
used the British Airways Visa Signature card by Chase -- enough for two
transatlantic round-trip tickets.
Bonuses like those appeal to Joe Rundell, a 27-year-old chemical engineer from Glen Ellyn, Ill.
He signed up for a Citi AAdvantage Visa last fall to instantly earn 30,000
miles on American Airlines. Rundell hopes to amass 200,000 miles so he can fly
first-class to Australia
with some buddies in 2012. He charges almost everything onto the American
Airlines Visa, except for gas, which he puts on a Chase BP Visa because he
earns 5 percent back on gas purchases.
He also has a Bank of America
World Points card, but he rarely uses it because he considers its rewards not
worth the cost, though he says it makes sense for big purchases because the
interest rate is lower.
"It's pretty much a matter of
getting the most reward for least dollar spent," he says.
Choosing the right rewards card
Still, different cards appeal
to different people. Those who want more flexibility in the kinds of awards,
such as merchandise or cash back, might prefer a bank rewards card.
Chase, for instance, offers
cards with Continental and Southwest Airlines. But it also has its own reward
program, Ultimate Rewards.
Chase spokeswoman Gail Hurdis
says it depends what customers are looking for: Airline or hotel cards are
"best for accelerating their rewards in a loyalty program," while a bank
rewards card "may work better for someone who is looking for more general
rewards, such as points or cash back."
|Features of co-branded airline travel cards vs. bank rewards cards
|In choosing a rewards card that's right for you,
experts say you need to understand what you want from a card and then evaluate
|CO-BRANDED AIRLINE CARDS
|BANK REWARDS CARDS
| Higher annual fees and
||Better for customers who
want greater selection of awards
|Include travel perks such
as free luggage, expedited boarding and club access
||Easier to use and
understand award qualification and redemption
|Often more complex
accumulation and redemption rules
||Lower (or no) annual fees
and lower interest rates
|Better for customers who
primarily want flight rewards
||Can get rewards with fewer
dollars charged, because award levels start lower
|Better for frequent
travelers, especially those who fly on one or a few airlines
||Able to stockpile points for longer periods
before they expire
|Comparison shop for airline rewards cards
||Comparison shop for bank rewards cards
See related: Pitfalls of pumping, dumping sign-up bonus cards, Have card, will travel: A guide to traveling with credit cards
Published: January 21, 2010