Are Frequent Flyer Credit Cards a Good Deal?

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The NY Times recently published an interesting article about frequent flyer credit cards. Apparently there are about 45 million frequent flyer credit cards in circulation in the United States. Unfortunately, many of these cards charge an annual fee, and airlines have been making it more difficult (and costly) to redeem your miles.

All of this begs the question of whether or not you should bother with an airline credit card. Here are some questions to ask yourself before deciding to apply for a frequent flyer credit card:

  1. Do you carry a balance? This is an important point for reward cards of all flavors. If you carry a balance, you should shop around for the lowest rate, not the biggest rewards.
  2. Are your children in school? If so, then you’ll be trying to book your flights during exceptionally busy times (winter break, spring break, etc.) and you probably won’t have much luck redeeming your miles.
  3. Do you have elite status? If so, there might be additional reward seats available for your, making it easier to redeem your miles. Also, you might be able to avoid some of the junk fees associated with redeeming miles.
  4. Are you a big spender? If you’re wealthy are charge a lot of business expenses, you can pile up miles very quickly, allowing you to circumvent blackout dates, etc.

To me, the best deals can be found amongst the cash back reward credit cards. Frequent flyer miles are widely regarded as being worth roughly $0.01/each. That way you can build up the cash and just buy a ticket that suits your needs. Either that, or you can choose to spend your rewards on something entirely different.

Source: NY Times

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Comments (scroll down to add your own):

  1. Good points. 6 months ago we changed from a reward program that gave use 2% towards a cruise to the Chase Freedom. Now we get close to 2% but it’s CASH (well, a check) that we earmark in our budget as ‘Rewards’. Then we try to use it for whatever fun we can decide on.

    Comment by Eric — Aug 25th 2008 @ 1:32 pm

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