It must be emphasized that air miles credit cards are not for everyone. If you don't pay off your balances each month, there can be hefty interest charges that more than offset the possible travel benefits. Airline credit cards usually have higher rates than bank-based cards.
But interest rates are not the only factor in the decision process--in fact, they should be relatively unimportant. You should plan to use these cards as "plastic money," not as a way to borrow funds. If you can't pay off the balance most months, mileage cards are not for you. In fact, before you look at specific cards, ask yourself seven simple questions about reward credit cards to be sure you make choices based on your financial condition and travel patterns.
What follows are some picks for cards tied to banks but not individual airlines. This is not a blanket claim for the best credit card to carry with air miles. It is a selection of some top choices. All of these offers include hefty fine print sections. Please read them very carefully, and understand that terms change quickly.
Earn one Purchase Point for every $1 you spend on all purchases; earn one Flight Point for every 3 miles you fly; earn one Flight Point for every three miles flown by family and friends when you purchase their tickets with your card. The maximum number of points in one year is 100,000 (of which a maximum of 50,000 may come from miles flown). Round trip ticket rewards start at 25,000 points within continental U.S. and Alaska. Interest rates vary according to your credit score, but start at 11.99 percent. You must book through Citi's ThankYou Network. The card imposes a 3 percent processing fee on transactions made overseas and on balance transfers.
The good news: If you have a large balance on another card, you can transfer it here and not pay interest for 15 months. No annual fee is required with this card. The bad news: You must work through the "ThankYou Network" rather than having the flexibility to book on your own trip.
If you spend $3,000 in the first three months, you'll receive 25,000 bonus points. A premium is paid if you redeem the miles through the "Ultimate Rewards" program that amounts to an additional 25 percent in benefits. The first year, the $85 annual fee is waived. The interest rate is 12.24 percent.
The good news: No travel restrictions or blackout dates when travel is booked through Ultimate Rewards. The bad news: If you want to book outside the network, you don't receive the same level of reward. After the first year, the annual fee is steep.
The chief selling points are 1.25 miles for each dollar spent on purchases and mileage that never expires. No annual membership fee is required, and the purchase APR is 0 percent during an introductory period, after which the rate becomes a whopping 16.9 percent. Capital One has travel agents who will book your travel, but you also have the option of buying on your own so long as you use the card for payment. Rewards: up to $150 for 15,000 miles; up to $350 for 35,000; and 60,000 for up to $600. Beyond that, the mileage requirement is the price of your ticket multiplied by 100.
The good news: No airline or seat restrictions, no blackout dates and no fees for balance transfers and 1.25 miles per dollar spent. The bad news: A system of redemption that includes large mileage gaps. For example, 15,000 miles (the minimum for redemption) entitle you to a $150 credit. If your ticket costs $150.01, you'll need 35,000 miles. Notice "ticket" is not plural. Redemptions only apply to single-ticket purchases.
American Express Preferred Rewards Green Card
Do you have points in a frequent flyer account that don't come close to a redemption total? This card from American Express allows transfer of points to 20 frequent flier programs on a "one point=one frequent flyer mile" basis. You can earn 2X points by booking trips online with American Express Travel, and 3X points if you shop online at 200 of their preferred retailers. New customers get 5,000 bonus miles opening the account. You cannot carry a balance on this card. If you don't pay off new monthly charges in full, there is a late-payment fee of up to nearly 3 percent. There is also a $95 annual fee at the end of the first year.
The good news:The ability to transfer miles to 20 different frequent flier accounts. The bad news: Stiff penalties for not paying monthly balances and a large annual fee beginning in year two.
