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The Delta-Northwest Merger Is Creating a Credit Card Crunch

For members of Northwest's WorldPerks program, the Delta-Northwest merger is mostly a matter of keeping up with the consolidation of the Delta and Northwest mileage programs, and confirming that their Northwest miles eventually land in a Delta SkyMiles account.

But assuming that they embrace the merger, and plan to participate actively in the surviving program, Delta SkyMiles, Northwest customers do have one weighty decision to make: which credit card to use for future mileage-earning.

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The credit card affiliated with the merged programs will be the current SkyMiles card, issued by American Express. As a consequence, the Northwest WorldPerks Visa credit card, issued by U.S. Bank, is being phased out and replaced by the new FlexPerks Visa card. According to Northwest's website: "As early as June and no later than July 17, 2009, WorldPerks Visa credit card holders will no longer earn WorldPerks and the card will no longer allow charges."

During that transitional period, current WorldPerks Visa cardholders will automatically be issued new FlexPerks cards, which they can choose to activate and use, or not. They will also receive solicitations from American Express, offering bonus miles and other incentives to sign up for a SkyMiles card.

So, which card—the American Express SkyMiles card or the U.S. Bank FlexPerks card—will best meet their needs?

In the end, this isn't so much a battle between American Express and U.S. Bank as it is a battle between different species of credit cards. The American Express SkyMiles card is an airline-affiliated card, much like the cards linked to other major airline programs. The U.S. Bank FlexPerks card is a bank card with a travel rewards feature, much like the Citibank PremierPass or Bank of America Elite Rewards cards.

Like other bank cards, the FlexPerks card earns one point for every dollar charged to the card for most purchases. The points can be redeemed for free trips, starting at 20,000 points for a less expensive ticket.

But compared to a traditional airline-affiliated card, like the SkyMiles card, the FlexPerks card has one notable advantage, and one notable disadvantage.

On the plus side, the FlexPerks award tickets are not subject to the blackout dates and capacity controls that can prove so frustrating to consumers trying to redeem airline miles for free seats. That's because the bank cards simply purchase tickets for cardholders when they redeem their points.

On the minus side, FlexPerks points cannot be combined with miles earned in the SkyMiles program. So SkyMiles members who also earn points with the FlexPerks card will be dividing their earning efforts between two incompatible currencies.

For those who earn the majority of their miles through credit card charges, the relative ease of securing award tickets makes FlexPerks-type cards a good choice.

For those who earn a significant proportion of their miles through flying, hotel stays, and car rentals, it makes more sense to focus on an airline-hosted program, like SkyMiles, and use its affiliated credit card for charges.

While the choice is straightforward at the extremes—bank cards for frequent buyers, airline cards for frequent flyers—the reality is that most credit card users fall somewhere in between.

For them, the past can be helpful in choosing a future direction. If they previously chose to use the WorldPerks Visa card, and have been satisfied with award availability, then they'll most likely want to continue along the same path, adding to the Delta/Northwest miles already in their accounts. That means signing up for a SkyMiles card.

(The pros and cons of airline and bank cards are discussed in more detail in the Joy of Miles series.)

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