Are Airline Credit Cards Worth It?

Airlines have been issuing their own credit cards for decades. In the past, accumulating “air miles” on credit card spending was an easy way to save money on flights – and it still is. But in recent years, more and more travel-related credit cards have entered the market, including general-purpose travel credit cards and hotel credit cards.

With so many travel-related cards available, how do you choose the right one for your lifestyle? Read on to learn how airline credit cards work and whether one of these miles-boosting cards may make sense for you. 

Like conventional credit cards, airline miles credit cards are issued by banks and card issuers. However, they also bear the name of the partnering airline. And instead of earning points or cash back rewards, card members accumulate air miles by making eligible purchases on the card. The rate at which you earn air miles depends on the card and the spending category. Purchasing goods and services from the partner airline usually earns more air miles, typically around two or three miles per dollar. Some cards may offer bonus rates for additional spending categories, such as restaurants or supermarkets.

Many airline credit cards also offer welcome offers that encourage card members to spend a certain amount on the card within a set time. For example, a card may award 40,000 bonus miles to new card members who spend $2,000 or more within the first six months of card membership.

When the cardholder has accumulated enough air miles, they can use them to buy flights to a range of destinations from the partnering airline. Depending on the card, miles can sometimes be redeemed for other goods and services from the airline and its partners, such as airport transit and hotel bookings.

 
Put simply, if you’re an avid air traveler – and are loyal to a particular airline – a co-branded airline credit card may be a good option for you. But there are other factors to consider, too.

Many airline miles credit cards come with valuable perks, such as priority boarding, airport lounge access, annual companion tickets, and travel insurance. While some of these cards may come with a higher annual fee (more on that later), they’re often the best airline credit cards for frequent travelers who value these additional benefits.

As a credit card holder, you may also get exclusive perks that can save money for you and your companions, such as one free checked bag for each for each person on a reservation. At a typical baggage fee of $30 per flight, a group of nine friends could save up to $540 per round trip.

Some airline credit cards give cardmembers access to some of the valuable perks and benefits that elite loyalty status members are eligible for. This may include lounge access, complimentary upgrades, and priority boarding. Certain cards could help to jumpstart your journey to elite status as well, by offering you elite-qualifying miles through spending on the card.

Annual fees on airline credit cards range from under $100 to over $500. Cards with higher annual fees tend to provide more perks and higher welcome offers. For example, a card with a $99 annual fee might offer benefits like free checked bags and various ways to earn miles. A card with a $550 annual fee, however, might offer additional benefits, like annual companion tickets, complimentary upgrades, and airport lounge access.

 
Meanwhile, no annual fee airline credit cards can offer a simplified way to earn bonus miles without many of the added perks – making them a good option for infrequent flyers who still want to build up miles over time. However, avid air travelers may be best suited for a higher annual fee airline credit card to earn more miles faster and enjoy certain perks – such as free checked baggage – that are not usually available on a no annual fee card.

 
Ultimately, the best airline credit card is one that matches your personal finance and travel preferences. Consider whether you’ll be able to get the most out of the card’s benefits without hurting your budget. For example, you’ll need to spend on the card frequently to maximize your miles. But running a balance – and having to pay interest – effectively reduces the value of air miles earned. As always, it’s best to pay your balance in full and on time every month. For more on picking an airline card, read “How to Choose the Best Airline Miles Credit Card.”

Perhaps the most important point is that airline credit cards are generally a better choice if you fly frequently with the same airline. The perks alone can considerably reduce the cumulative cost of travel while enhancing your journeys – especially if you qualify for elite status. But if you fly infrequently or prefer to use multiple carriers, you may find an airline card too restrictive for your needs. In this case, a travel card with transferrable reward points and multiple airline partners may be a better alternative.

For example, general-purpose travel credit cards let card members earn points that can be redeemed not only toward flights but hotel stays – among other things. Benefits might include air-related perks, like airport lounge access and checked bags, as well as hotel perks, like late checkout times and room upgrades. And, like airline credit cards, you can expect different tiers of annual fees – the higher of which tend to come with additional benefits that are often especially valuable for those who travel big and travel often.