Frequent Flyer Credit Cards Getting Worse, Stick With Cash Back Rewards

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I just ran across an interesting article on frequent flyer miles in the most recent issue of Money Magazine. As I’ve noted in the past, I’m not a big fan of frequent flyer credit cards. The reason for this is simple: cash rewards can be spent on anything, whereas miles can only be traded for travel (and a handful of other things, like magazine subscriptions).

Unfortunately, the situation seems to be getting worse by the day. Travelers are facing new and higher service fees and airlines are starting to require more miles for flights and upgrades. In fact, starting in October, American will charge $50 each way for domestic flight upgrades, and up to $350 each way for international upgrades. On top of that, major airlines are cutting their frequent flyer capacity by 10-15%, meaning that it will be harder than ever to find flights.

So what’s a savvy traveller to do? Start by trading in your frequent flyer credit card. If you’re intent on earning travel rewards, go for something like the Amex Starwood Preferred Guest card, which comes is considerably more flexible and also comes with a 10k point signup bonus.

Alternatively, go with a cash back reward credit card like Blue Cash from Amex (review), or the Discover More reward card. After all, you can still spend your cash on travel, and you’ll avoid the blackout dates and extra fees.