Summer vacation is just around the corner, and generous credit card reward programs can help you earn a free plane ticket for that upcoming trip. But consumers need to pay attention to the fine print of these credit card offers since many come with higher rates, annual fees and spending requirements.
“Credit card issuers currently have very attractive offers on airline miles, but these ‘free’ tickets can often come with many strings attached. Airline points are good bait to generate new applications, but credit card issuers find subtle ways to help pay for this generosity, like higher rates and fees. Consumers need to check the card’s terms and conditions to see all the details of the offer.
Here are some consumer tips for comparing and using airline rewards cards:
* Airline rewards cards typically charge higher interest rates than other credit cards, so only apply for an airline reward card if you completely pay off your balance each month. If you carry a balance from one month to the next, the miles are not worth the extra money you will pay in interest penalties.
* Pay attention to the annual fee. Many airline credit cards come with an annual fee of $59 to $95. Some issuers may waive the annual fee during the first year, which can make the card financially attractive for at least a year.
* Many cards now have minimum spending requirements that must be reached to earn your bonus points. Chase Sapphire Preferred offers 50,000 bonus points, but you must spend $3,000 with the card in the first three months. Consumers need to keep track of your spending because if you do not reach the spending threshold, you miss out on the points.
* Pay attention to the perks. Some cards now waive bag fees for cardholders, saving up to $50 per bag. The United Mileage Plus Explorer card and the Continental Airline OnePass allow the cardholder and a companion to check the first bag free. The Delta Platinum Skymiles card allows the cardholder and eight companions on the reservation check the first bag free.
* You might lose miles with a late payment, if your account is closed for any reason or if your account has been inactive for 18 months.
* The ticket may be free, but you will probably still be responsible for the taxes and fees. These can include federal excise taxes, passenger facility charges, September 11th security fees and international air transportation taxes. Check the carrier’s fine print to see what these fees may cost.
* If you book over the phone, many airlines charge a $25 reward booking fee for each ticket.
Here are some cards that offer attractive airline bonuses:
Capital One is currently running its “Venture Double Miles Challenge.” For a limited time, new applicants for the Capital One Venture Card can get up to 100,000 bonus miles per dollar for up to $50,000 spent on purchases in 2011 on a single major U.S. consumer travel credit card. The promotion will end when one billion miles have been given away, or May 1, whichever comes first. You must spend $1,000 in the first three months of having the card. This card also has one of the most generous reward offers available: 2 miles per $1 spent on all purchases. The APR is 13.9%-20.9%. The $59 annual fee is waived the first year. There is no fee for foreign transactions.
Chase Sapphire Preferred. This card gives 50,000 bonus points, which is $625 toward airfare or hotel accommodations, but you must spend $3,000 with the card during the first three months. Earn two points per $1 spent on travel, dining (including fast food), and one point per $1 spent on all other purchases. Receive 7% annual points dividend on all new points earned. The APR is 15.24% and the $95 annual fee is waived the first year. There is no fee for foreign transactions.
Citi Platinum Select AAdvantage World MasterCard. This card gives 30,000 bonus miles after you make $750 in purchases within the first four months of card membership plus an additional 10,000 bonus miles after $5,000 in purchases during the first 6 months of card membership. 40,000 bonus miles can be enough for two free tickets for some flights in the continental U.S. Earn two miles $1 spent on eligible American Airlines purchases and one for every $1 spent on other purchases within the first 12 months of card membership. After that, you’ll continue to earn one mile per $1 you spend on purchases. The APR is 15.24% and $85 annual fee is waived the first year. There is a 3% fee for foreign transactions.
United Plus Explorer Card. This card give 25,000 bonus miles (enough for one round-trip ticket in the continental US) within the first two months of card membership. Earn 10,000 bonus miles every year if you spend $25,000 on your card within that calendar year. Earn two miles for every $1 spent on United Airways airfare, and one mile per $1 spent on everything else. First bag is checked free. Priority Seating service which allows you to take your seat before general boarding. The APR is 15.24% and the $95 annual fee is waived the first year. The card charges a 3% fee for foreign transactions.
Southwest Airlines Rapid Rewards Plus Card. This card gives 25,000 bonus points after your first purchase plus 3,000 points every year on your Cardmember anniversary. First and second checked bags fly free. The APR is 15.24% and there is a $99 annual fee. There is a 3% fee for foreign transactions.