Today’s contribution comes from Jason Steele who writes for Ask Mr Credit Card and his personal blog Steele Street.


Some of the first reward credit cards were airline rewards credit cards. The airlines already had their loyalty programs set up, and all the banks had to do was to tie in with them. In the beginning, you earned a set number of points, and then you booked a ticket. Most of the time, you just had to name your flight. I can remember booking a flight using miles in 1997 and being offered several different choices for travel that same day! Those were the good old days.

Today’s airline rewards landscape has changed dramatically, and smart reward card holders must change their habits to continue to get decent value from their miles earned through credit card rewards.

Deflation Is Rampant

Today, there are so few awards available for 25,000 miles, that their value is hovering at just a little over 1 penny per mile. For any kind of last minute or multi-leg itinerary, the legacy carriers are going to ask for 40,000 or 50,000 miles. The worst is Delta, followed closely by United, US Airways, and Continental. Only American has a respectable inventory of domestic award seats at 25,000. Among the discount carriers, Southwest also deserves a mention for having very good award availability at their lowest point redemption level. Frontier is seemingly trying to emulate United or Delta by offering extremely few seats at their base redemption level.

How To Get Value From Your Cards

First, an airline credit card should be doing things for you other than simply earning miles. You should be getting waivers from baggage fees or other fees. You should also be awarded with elite qualifying miles. The Delta Reserve card even gives you priority on standby wait lists. Second, you should look at your travel habits, comparing the value of your reward seats to the best price available. For example, if you regularly travel from New York to Los Angeles, you might find that coach tickets are priced so low, that you are not getting much value from a 50,000 mile domestic redemption, which is now the standard. However, if you find yourself traveling from Albany, New York, to Sacramento, California, 50,000 miles might return excellent value, especially if you travel at the last minute.

Where The Real Value Is

The true frequent flier mile gurus know that the real value comes from premium (business or first) international awards. I personally have booked flights to Europe in international first class for 125,000 miles that were selling for over $25,000! That works out to a whopping 20 cents per mile. In a world where a domestic ticket is lucky to return 2 cents per mile, that is an order of magnitude greater value. That said, there is no way anyone I know would actually pay $25,000 for a seat on anything short of a spaceship, so the value isn’t truly money saved. The value is derived from the enjoyment of the first class comfort for a reasonable “price”. Here, the price is the opportunity cost of not using a cash back card.

The Best Cards For Short Range, Domestic Travelers

The reality is that most reward travel is leisure travel, and most of that is to the same destinations. For many people, a non-stop flight of less than 3 hours or so just isn’t that expensive to purchase. For those travelers, you should seriously reconsider earning miles for purpose of redeeming awards for seats that could have been inexpensively purchased. For example, the Capitol One Venture rewards card offers 2% cash back as a statement credit towards any travel expenditure, be it hotel, rental car, or a inexpensive airline ticket.

Times are changing in the field of credit card rewards and airline loyalty programs. Like any wise investor, you need to occasionally re-evaluate your portfolio to make sure you are getting the most value from your reward credit cards.

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2 Responses to “Getting Value Out Of Your Credit Cards With The Airlines”

  1. krantcents says:

    I have used airline cards for over 20 years and enjoyed many first or business class flights to Europe using miles. I certainly feel it is worth it. I try not to use it domestically too often, because it is a better use for longer trip. I will be going to New Orleans over Spring Break and used miles because the ticket was over $400 each.

  2. MoneyIsTheRoot says:

    One big issues consumers have with these cards is signing up for what they perceive to be the best deal! You should always sign up for a credit card that exclusively caters to an airline that has a hub at your local airport…otherwise you can amass all the miles you want, they wont get you anywhere without a connecting flight.

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