The Airline Credit Card Is a Member of the Rebate Cards Family
The airline credit card is just another card that promises you some benefits in exchange for extensive usage of the card with usually high rates and defaults. Most of the time, Visa airline or miles cards will reward you one air mile in exchange for every one dollar spent with the card. By their nature all mileage credit cards can be classified as rebate cards.
There are a million cards offering flight rewards. At this time the most advertised are: Gold Delta SkyMiles, AAdvantage World MasterCard, Northwest Airlines’ WorldPerks Visa Signature Card, and Asiana Visa Platinum.
How Do Air Miles Work
Let’s take a closer look at the Gold Delta SkyMiles card offered by American Express. The card’s APR is as high as 14.99 percent with a balance transfer rate of 9.99 percent.
Outrageous late fees of $38, over limit fees of $35, and the default 26.99 percent APR should be carefully considered. If you are late just once with a minimum payment, the default card APR will be applied for 12 months and the account will become ineligible for bonus miles.
Watch out for the annual fee of $95 that will apply after the first year grace period which effectively reduces the card benefits.
The Bonus Miles Redemption Process
What about the actual bonus miles redemption process? It is quite complex. Gold Delta SkyMiles give 20,000 bonus miles right after your first purchase. However, you need at least 25,000 bonus miles to redeem any domestic flights with Delta or its partners.
Also, think about this. You aren’t cashing in your bonus miles for a free airline ticket. You still have to pay taxes, redemption fees, and partner airline handling charges if applicable.
For example, I would pay $160 in fees and charges for a roundtrip ticket from Denver to Seattle by redeeming 35,000 bonus miles. This saves me $200 than if I had to buy a ticket directly from Delta.
Get the Most of an Airline Card
How can you get the maximum advantage from your airline card? Use your card to redeem miles on the longest domestic and international destinations with the schedule far in advance from today’s date.
Here’s another example. You would need 25,000 bonus miles and have to pay $170 in taxes and fees to get a roundtrip ticket from Miami to Seattle. You would save $309 on the transaction. Or better yet, go to Paris and utilize 50,000 bonus miles paying $110 in fees and save $1,100 on the trip. Not bad, huh?
The only problem I see is how to get a decent amount of bonus miles. Gold Delta SkyMiles doesn’t explicitly tell what credit line amount is offered and assuming an average credit line of $12,000, you would have to make a lot of multiple transactions to get your miles.
However, the more transactions you make the more uncontrollable your spending becomes. And you will end up carrying a balance which reduces your benefits as well.
Overall, it seems possible to get some benefits from airline credit cards, but it requires careful planning and financial discipline to utilize the card.