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Best holiday travel credit cards

Save money on flights by using the right card

Last updated: December 2013

The promise of free air travel seems too good to pass up. Just sign up for a credit card, the offers say, and you’ll get enough points for a round-trip domestic ticket.

But it isn’t that simple. That 25,000-point sign-up bonus might get you only a one-way ticket, and airline and credit-card annual fees could make that ticket anything but free. Picking the right card for travel requires you to determine how often you’ll fly, to where, and on what airlines. And if you want to maximize your rewards, how you use your card matters.

Should you use an airline or bank card?

You can earn rewards toward free travel from an airline card linked to a specific carrier or from a general bank credit card that pays points you can use to buy tickets on multiple airlines. Up-front bonuses of 25,000 to 50,000 points have become common among travel cards, especially the airline ones. Occasionally, you’ll see a juicy 100,000-point offer. Bear in mind that these deals change frequently, including the card deals we recommend in the video below, so compare current offers before you sign up for either kind of card. 

Travel cards, either airline or bank cards, often charge annual fees, though many are waived the first year. But the perks those cards provide—expedited security clearance, priority boarding, free checked luggage, car-rental insurance, travel insurance, and access to airport lounges—can more than make up for the annual fee. For example, Delta SkyMiles offers the first checked bag free for up to nine people on the same reservation.

Airline cards typically aren’t as generous with rewards as bank cards. As a result it can be difficult to accumulate enough points to get a free flight through purchases alone. So try to score a decent up-front bonus—50,000 points is a good number to shoot for. You’ll need to spend a specific amount, generally within the first three months, to get the bonus points. The amount you'll have to charge might range from $750 to $3,000. One exception is the US Airways Dividend Miles MasterCard; it gives you 30,000 miles after your first purchase, whatever the amount, and payment of the $89 annual fee.

The value of your points depends on the airline’s conversion rate. Though major airlines generally say that 25,000 points is the minimum needed for a round-trip domestic flight, smaller airlines use different conversion formulas. Jet Blue, for instance, considers 10,000 points the minimum for a round-trip ticket.

But you might need to spend 50,000 points for a domestic unrestricted round-trip ticket. If you want an airline-specific card, it might make sense to wait for a big sign-up offer before applying. If you’re already enrolled in the airline’s frequent-flyer program, you can combine your credit-card points with miles earned through partners and actual flight mileage. You might earn enough miles to fly your entire family free.

Bank travel cards work differently. You earn points on your purchases and can spend them on any airline. Some cards require you to book your travel through their own travel agent (or they provide an incentive to do so). Others let you book on whatever site you want; you then request that your points be redeemed to pay for the airfare on your next statement.

An advantage with bank cards is that you aren’t subject to the blackout dates and capacity controls imposed by most airline frequent-flyer programs. Also, points on airline cards, unlike most bank cards, expire if you don’t use them regularly or spend enough on the card.

For more ways to save on travel, watch our videos on travel website gotchas, the best hotel deals, when it makes sense to pay for travel insurance, and more. Our airline travel buying guide with Ratings detail more ways you can save on airfare.

Get the best offer

Illustration: Christoph Hitz

If you’re a frequent traveler who always flies on the same airline, the right travel credit card for you will probably be the one offered by that airline. If you’re enrolled in multiple frequent-flyer programs, you’ll probably be better served by an American Express card, which allows transfers of earned points to a variety of airline programs, says Tim Winship, editor of FrequentFlier.com.

If you’re not a frequent flyer but you want to earn travel rewards from purchases you make on your credit card, bank cards might be the better option. Fees and APRs tend to be lower than those of airline cards, and they’re simple to understand: 10,000 points equals $100 spent on a flight at the market rate. With airline points, you could spend 25,000 points on a flight that might cost you $100 or $600. You have to shop aggressively to get the best deal for your points.

Test marketing is ubiquitous in the airline-card world, so you might get a different offer in the mail from someone else based on where you live and your credit score. And those offers might be different from what’s shown on the airline’s website. So consider the offer you see on an airline website as a starting point, says George Hobica, founder of Airfarewatchdog.com, which tracks airline deals. Hobica recommends calling and asking for double points, or double points in the categories in which you spend the most. And ask if you can get the annual fee waived both when you first sign up for the card and at the end of the first year, before the second year’s annual fee kicks in.

Watch out for surcharges

Airline cards often tack on excessive fees and taxes to reward flights. For example, the British Airways Visa card application states: “At time of publication all reward flights and travel-together tickets are subject to taxes, fees, and carrier charges of approximately $650 per person in economy or $1,100 in business class based on travel from New York to London.”

But British Airways occasionally offers 100,000-point sign-up bonuses. If you book flights with its partner airline, American Airlines, you might be able to avoid some surcharges. Most airlines are part of alliances that include many regional carriers, but that might not be apparent when you go to redeem your points on the airline’s website. Instead, you might need to call the reservations desk to book flights on partner airlines. That will often run you $15 to $25, but it might save you a lot in surcharges and make upgrades easier. It also lets you see a wider range of fares than those available on the website.

Before you sign up for any travel card, consider whether a good cash-back card might suit your purposes better. They typically pay cash rewards of 1 to 2 percent, which you can use for anything, including flights. “Increasingly, cash is king,” Winship said. “The value of a frequent-flyer mile is in a gradual decline, while award prices go up and availability goes down. But a dollar is still a dollar.”

Editor's Note: This article appeared in the February 2013 issue of Consumer Reports Money Adviser.

   

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