Getting a credit card from an airline is not something to be taken lightly. Credit card companies have a lot of different reward programmes, and each one has its own rules and requirements. Frequent flyer programmes are especially hard to understand, though. There are annual fees, mileage systems, redemption policies, and miles that expire, and this is just a small peek behind the curtain. To make a good decision, you should think carefully about the following things.
- Know the rate of interest. Airlines usually charge higher interest rates on their credit cards to cover the costs of the extra benefits. In fact, CardWeb.com found that airline cards have interest rates that are about 5.9 percent higher than cards that don't give rewards. With a number like this, you owe it to yourself to look for the lowest possible interest rate.
- Credit cards from banks vs. credit cards from airlines. It's important to know the difference between the two because it affects how your miles can be redeemed. The airline-sponsored card is only good for one airline, and you can only earn and spend miles on that airline. If you always fly with the same airline, this would be the best choice. The bank-sponsored card gives you more options and would be better for a thrifty traveller. When choosing between the two, it's important to think about which airlines fly out of which airports. Signing up with an airline that doesn't even fly out of your nearest airport would be a bad idea. When it comes to airline cards, it's clear which airlines you should look into. However, if you're interested in a card from a bank, you should make sure to ask which airlines are part of their programme.
- Make sure you know the rules. You have to act like a lawyer when it comes to the terms and conditions. Read the terms backwards and forwards, and then read them again. Make sure you understand everything, and if you don't, ask questions. Pay close attention to the following:
- Know how much the annual fee is. Most credit cards don't have an annual fee, but airline credit cards do. Compare the annual fees and look for deals like not having to pay the first year's fee.
-How the miles programme works
-Can you only get miles by flying, or can you also get them by shopping at other stores?
-Can you get double or extra miles for anything you buy?
-How many miles do you need to turn in to get a ticket?
-Do the miles ever stop being good?
-Is there a cap on how many miles you can get in a year?
-Are there dates when you can't book a room, even during busy times or other times of the year?
-When I sign up, do I get any extra miles?
-Are there any fees I don't know about when I redeem miles over the phone or in person?
Taking all of this into account, you should ask yourself if you are the right kind of customer for an airline credit card. Due to the high interest rates and annual fees, the people who benefit the most usually have good credit, fly a lot, charge a lot on their cards, and pay off their balances every month. If you don't fit into most of these groups, you might want to think twice about getting one of the most complicated credit cards on the market.
