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As of October 1, American Airlines will charge customers a fee of at least $50 to use their miles to buy a one-way upgrade on many types of tickets. (AA didn't charge a fee before.) US Airways has chosen to charge a $25 quick-ticketing fee to customers who redeem their frequent-flier miles for travel within 14 days of their departure. Delta isn't charging a fee, but it is watering down the value of its miles by raising the minimum number of miles you need to earn to redeem for tickets for many types of tickets.
In light of these changes, are credit cards that promise free flights worth it?
Fortunately, long-time personal finance writer Ron Lieber has come up with five quick questions to help you figure out the answer:
Do you pay off your balance each month? If so, then a rewards card might be good for you. If you don't, you should cancel your rewards card because it probably charges a high annual fee and a high interest rate. (To find a low rate alternative, visit bankrate.com or kiplinger.com.)
Are your kids in school? "If they are, you'll be fighting everyone else who wants to travel at the same time," says Lieber. "The airlines, knowing your desperation to get out of town, may make fewer free seats available during school vacations, since the airline will probably sell all the seats on those flights anyway."
Do you have elite status? If yes, you should probably keep your rewards card. The major airlines, such as American and United, make it easier for passengers with elite status to redeem miles, boosting the value of the miles you earn on your card.
Do you own your own business? If so, you can probably charge up a lot on your credit card. Once you start charging more than $100,000 a year, you'll be earning enough miles to earn premium-class tickets. The airlines make sure that "miles are worth a lot more if you redeem them for this sort of travel" because they want to retain the loyalty of big spending customers.
Do you value upgrades? "It can be easier to get upgrades from coach using miles than it is to book free seats." So if upgrades matter to you, then a rewards card may be the best value way to get upgrades. But watch out for those increasing redemption fees!
FROM BUDGET TRAVEL
Don't Let Reward Miles Vanish
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OH YES!!! I can't tell you how many free flights I have earned from my rewards travel. This year alone I went to Italy and am going to Panama with my miles. Whoo hoo!!!
Posted By Crlyblu on August 18, 2008, 12:19 PM
This year I have used my USAirways miles for a trip to San Francisco, and am using my Delta miles for a birthday trip to San Francisco in the fall. Things just worked out!
Posted By Anya on August 21, 2008, 4:23 PM
Where can I get a free rewards mile trip for 85,000 miles. It's up to over 140,00 miles for after-peak season trip. I have Capital Rewards System. Any suggestions? Thanks. Jo
Posted By JDiFilippo on August 21, 2008, 6:46 PM
I have had a rewards credit card with Emirates airlines since the airline began, and so I fly with them most of the time. As I'm a professional travel writer, I fly a lot, but I know travellers who don't fly as frequently and still get the same generous rewards - access to the business class lounge (free champagne and fabulous food!) no matter what level you are, frequent upgrades, generous luggage allowance, and lots of cash-plus-miles deals where you can combine points with cash to get dirt-cheap flights. I pay off my credit card monthly so I have no interest and the annual fee is only $150 a year so it's definitely worth it.
For US travellers who may not be able to get the credit card (although I know they offer them in Australia), it's worth just joining the frequent flyer program.
I'm based in Dubai so I fly all over the world with them from the home port. For US travellers, however, you'd need to fly to their New York hub and then via Dubai but it's definitely worth it for trips to the Middle East, Asia, Africa and Australia. They're a superb airline and a stopover in Dubai is not so bad.
Posted By lara dunston on August 22, 2008, 12:12 AM
Next Wednesday I am flying to France with Delta FFM. I pay off my credit card every month and since I am retired I can fly off-season. My husband and I were questioning the value of FFM until I landed this ticket, because I had pay for some of the miles ($250.00), but after I priced a ticket on several airlines (over $1,300.00) I am sold on airlines credit cards. I have also used the airlines offers of doubling or increasing a % of miles when transferring or buying miles, they work if you, your spouse or one of your children/grandchildren is close to an award.
Posted By Mercedes on August 22, 2008, 2:38 PM
Agree with Mr. Lieber on the questions. I've had a USAirways Mastercard, Amex/Delta SKymiles cards for years, use them for everyday purchases, have gotten many free tickets - caribbean, paris, italy . But I pay my balance monthly, otherwise the interest charges would be high. I dont travel enough for elite status, and dont use it for business purchases. The cards /miles are worthwhile, but the Airlines are a real pain in the a$$ when it comes to redeeming and trying to plan a trip. It's definitely not easy. Frequently had to change destinations if I wanted a free ticket. It's a shame the airlines charge so much for tickets, and then push these cards, but make the miles so hard to use by limiting seats so much, even months in advance. I wonder how much they really care about customer loyalty. They're really stingy and greedy in my opinion. They want to charge fees for everything - what's next, a fee to breathe the air inside the plane ?
Posted By Mike on August 24, 2008, 8:34 AM
I don't think rewards cards are worth it, there is no way that could be. If they were that would mean that credit card companies are stupid, they just decided to give money away, NO. By the time they give you any points for rewards, they have made 5 tor 10 times as much, so it just means that, you would have to keep using the card, paying their interest fees for quite a while before they give you any rewards points. If that's the case, then why don't people just put some money away, BY SAVING IT ON THEIR OWN. Then they don't have to feel rewarded by a credit card company, but feel rewarded by themselves for a job well done on saving what they wanted.
Truly yours,
George Grimes
Posted By George Grimes on August 26, 2008, 1:09 PM
I have never carried a balance on a credit card, but I do charge EVERYTHING on the card monthly. I'm not a big consumer, actually I'm down right cheap. I've attained Gold Medallion status with Delta through bonuses with the card, allowing me to travel first class when I buy a low cost ticket and accrue almost a million miles with bonus mile offers etc. I annually redeem 6 to 10 trips, always with at least 2 for 1st class international travel. I pay $85 per year for the card fee, never pay interest on purchases, and yet get back thousands of dollars in flight benefits I've accrued. Granted, if everyone paid off their card monthly I wouldn't reap the rewards I do but, I'll let others pay the high interest to let me travel.
Posted By PC on August 29, 2008, 3:00 PM
personally I think the miles cards are worth every cent spent I don't pay int. I pay off every month but only accrue about 1200 miles a month and most or half is for gas.A lot of airport driving. If I didn't have the card I wouldn't have the miles. So when I have enough miles for a free trip it would have been worth the trouble. I would have used a credit card anyway so why not one that gives miles. It's a no brainer. jerry hyer ps I use a USAir card and love it.
Posted By jerry hyer on September 3, 2008, 12:44 AM
I've had one for many years and it used to be great! You could use up to $660 for a domestic ticket, which was pretty easy to do, fly on any airline and no restrictions as they outright purchased the ticket. Now with Bank of America Elite Rewards, they've dropped the cash value of the ticket to $350, which is nearly impossible to get a ticket for unless there are super sales. In which case, I used to pay for a ticket and save my miles for the most expensive trips. Wish I used them up sooner, and changed credit cards.
Posted By Mary on November 13, 2008, 3:28 PM
I had an AmEx rewards card. By using it extensively I earned enough for a free ticket or maybe a free ticket and a half each year. I switched to an AmEx card that gives a cash rebate. Each year I earn enough to buy a ticket to a ticket and half. Needless to say, I can get the ticket on any airline at anytime. I don't see the point of an airline reward card when cash rebate cards are available.
Posted By David on November 13, 2008, 4:34 PM
I have been able to use my miles going to Argentina, South Africa, Germany and many domestic trips from using miles from credit cards tied to United, American, and Delta plus I have a World points cards from Bank of America and a Amex Rewards card. I love playing the games to get the most miles, double miles when and where available and taking advantage of any promotions I can.
I use my cards for everything I can and pay the balance in full each month. My only complaint is like most people who have airline reward cards is being able to use them when I want. I find Delta and the Bank of America miles the most difficult to use unless I want to pay double or more than double mileage.
Overall the best reason for me to play the mileage game is to fly either business or first class. There is no way I could afford it otherwise and on long international trips it is well worth the extra miles.
Posted By pooky on November 13, 2008, 9:34 PM
Although limited to the US, Southwest figures in in a different way when considering the value of frequent flier value. They rarely cancel flights, are always helpful if there is an issue (can not say that about other carriers these days), and give you a real return on your investment, that is: They get you there and they offer you free flights anywhere after only 8 roundtrips. We tend to use other airlines only when there is no choice. Still, we have enough miles for a major trip, are flexible about when we want to travel, and still can't find a way to collect on those Delta miles.
Posted By anita durel on November 14, 2008, 10:32 AM
how many reward miles did you need to fly to Italy?
Where did you fly out of and how many stops?
Posted By Pat on January 8, 2009, 5:55 PM