I get a steady stream of questions from readers asking about the “best” credit card for earning airline mileage. Many readers aren’t clear about the difference between cards that generate credit in an airline’s program and those that generate credit in their own programs.
My recommendations about the relative merits haven’t changed much—the choice depends on how you earn miles and how you prefer to use them—but my overview on the whole subject has soured. Right now, I’d say it’s time to re-think the whole idea of airline miles and to focus instead on more rewarding programs.
Airline cards: real miles
The first credit cards to offer air travel credit for each purchase on the card were tied into individual airline programs, and they’re still important. The miles you earn go into your airline account, where you combine them with the miles you earn by flying. Most cards are tied into just one airline, but you can transfer AmEx and Diners Club points into programs of more than a dozen airlines (different lines on each card). An airline card is your best choice if:
- You earn lots of miles by flying and want to augment those miles through your credit card
- You use your frequent flyer credit mainly for upgrades or premium class seats
If you fall into either of these groups, your best bet is the credit card co-branded with the airline you fly the most. AmEx or Diners are also good, if your number-one airline participates in either of those programs. Because list-price premium tickets are so expensive to buy—and a bank can’t buy upgrades at all—an airline card is virtually your only choice for premium class seats and upgrades.
Bank-buys cards: no blackout dates
These days, quite a few big banks issue MasterCard and Visa cards that accumulate credit (miles or points) in an account with the issuing bank. When you get enough credit, the bank buys you a ticket—usually on just about any airline, and without regard to individual airlines’ limitations on seats they allocate to frequent flyers. A bank-buys card is your best bet if:
- You earn your miles mainly by credit card purchases
- You need to fly where and when you want
- You’re happy flying coach/economy
If you fall into any of these groups, your best bet is a bank card with a generous payout percentage. Right now, the most generous card I know is Capital One, which credits you with 1.25 cents toward the purchase of a ticket on any airline for each dollar you charge to the card, but several other cards are in that range. These days, with frequent flyer seats so scarce—and if you’re happy flying coach—you’re far better off having a bank buy you a ticket.
Blurring the lines
In the last year or so, the distinction between airline and bank-buys cards has blurred. Specifically, some airline cards—plus AmEx and Diners—now offer a choice of airline miles or bank-buys tickets. United has even formally changed its frequent flyer program from “miles” to “choices,” which you can use as either miles or credit toward a purchased ticket.
Most bank-buys cards allow you to use points for purchases other than air tickets. The typical “exchange rate” on bank-buys points is one point equals one cent. However, when you use your points for merchandise or non-airline travel, the point-based “prices” for most such exchanges are usually puffed. You realize less than the full value of one cent per point. Also, the rate on United’s Choices is less than that for any exchange other than United tickets.
Time to forget miles?
Most of us, I think, should consider abandoning our quest for miles entirely and start looking for other options. While the airlines continue to bombard us with opportunities to earn their miles, they have made frequent flyer seats so scarce as to be virtually unattainable.
Earning one cent per dollar charged on a bank-buys card amounts to a rebate of one percent, and there’s no particular reason that you’re better off dedicating that rebate to air tickets—especially if you can get a bigger rebate some other way.
Are there better rewards than air tickets? Certainly.
- The Chase Perfect Card MasterCard gives a three percent rebate on gasoline purchases from any gas station, up to a maximum of $15 a month, as well as one percent rebates on many other purchases. Some other gasoline cards go up to five percent, with restrictions.
- The GM MasterCard gives a five percent rebate toward the purchase of a new GM car. Several other cards give similar rebates or two to five percent toward the purchase of a car or other automotive purchases.
- And, of course, there’s always cash—if you can get one percent back in cash, why limit your rebate to air tickets?
Several online sites provide extensive comparisons of various credit cards. Index.Credit.Cards probably has the most listings, but other sites are easier to search and navigate. However you check, you can probably find a card that is more rewarding than a card that limits you to air miles or air travel.