People are just too excited by the allure of free flights that they overlook how their credit card is creating higher expenses. Let s look at some of the ways that an airline credit card costs you more.
The biggest way that an airline miles credit card costs you more money is the increased frequency of taking vacations. Previously you may have taken a big vacation every 2 or 3 years. When you know your credit card purchases are helping with the price of the flight, you might increase that to an annual vacation.
The problem is that the plane ticket is only part of your vacation expenses. Don t forget how much everything else adds up hotels, car rentals, dining, entertainment, souvenirs and sometimes even extra time off work. Plus you may go on vacation before the points cover the full price of the flight.
I felt the true brunt of this a few years ago. As a performance bonus at my job, my boss gave me and my girlfriend round trip tickets to wherever I wanted to go. We chose Australia and it ended up being an awesome trip. Still, it turned cheap airline out to be a fairly expensive vacation even though our airfare was covered. We spent a lot of money and my online business was essentially put on hold for 2 weeks. We also used up vacation time at work that we would ve probably cashed out at the end of the year instead.
With airline credit cards , people tell themselves that they ve earned the vacation since they racked up so many miles. What a convenient excuse to spend more than necessary. It s like justifying any other expensive purchase just because it s on sale.
The more attractive the rewards program, the higher the annual cheap airline fee. Several of the better cards charge cheap airline upwards of $400 annually. That s a lot of money! Since the potential rewards calculation can be quite tricky, some people go with one of these cards just assuming that the high annual fee is worthwhile. That s not always the case though. You have to charge a significant amount each year to offset that fee.
The few airline cards that don t have an annual fee tend to earn mileage at a very slow pace. With those cards you also have to watch out for various travel restrictions such as blackout dates, limited unpaid tickets per flight, few airlines to choose from and unexpected redemption fees. Also, your points may eventually expire if you don t use them in time. Even when paying an annual fee you may not be immune to some of these limitations.
What happens when you are suddenly putting every possible expense cheap airline on your credit card? Can you maintain that same level of commitment when you start getting 4 figure credit card bills? With that high balance and high interest rates, carrying over a balance results in a hefty interest charge.
Some people may be especially excited about future free flights, to the extent that they use it as an excuse to spend even more than normal. They may justify that it is time to replace that couch since they d be earning miles now. Maybe they d cover the dinner bill when out with friends knowing full well that not everyone will remember to pay them back. Just the thought of that upcoming vacation may cloud their judgement.
I m not saying that everyone gets the short end of the stick with airline credit cards. It is just very common to get less benefit than you had anticipated. You just have to decide if your spending cheap airline and travel habits truly make it worthwhile. If you re unsure, it might be better off to just keep it simple and opt for a cash back card instead.
I like how you put miles in quotes. I should ve mentioned something about that in the post. Sure all the rewards program calls them miles, but they re really just points and they have their own calculation for what that actually gets you. Cash back is just so much easier and it doesn t force you to spend extra.
We use a travel cheap airline points cheap airline card but it only works in our favour. We have to travel 2-3 times a year so the savings on the flights really cheap airline helps. Plus, we pay it off in full every month and only use it to pay for bills we would have regardless. It works out really well.
I knew there would be some people commenting who have benefited cheap airline a lot from airline credit cards. People who have to travel a lot anyway would be the main group. You can often get higher rate of points accumulation when using the card on travel related purchases too.
I don t know why I ve avoided them I guess I ve just avoided all credit cards in general. We have 2 as of this moment but don t use them. I m going to be looking to get one for my business expenses here soon but I think I ll go for a cash back program as opposed to airline miles.
I think once you get a cash back credit card, your view on credit cards will change. You ll realize that by paying with cash you are voluntarily paying 1-2% higher. I m sure you ll eventually want to put more and more of your regular expenses on a cash back card.
I don t have a flights rewards card right now but we are considering one for the sign-up bonus. We fly several times per year for obligation travel anyway, so getting maybe one flight cheap airline for free would be a great relief and wouldn t increase our spending. If we get the new card the plan is to get the annual fee waived cheap airline in the second year or cancel the card, and of course we never carry a balance. In general though, we prefer cash rewards cards.
That obligatory travel is a good reason to get an airline credit card. They do have attractive rewards for people who won t just use them to take unnecessary cheap airline vacations. They may very well waive that annual fee if you threaten to cancel the card. I recommend looking for one that gives you bonus points for travel purchases.
My wife and I travel a lot as it is. It s the reason we are frugal in other areas of our lives. I have an American Airlines business credit card and it s worth it for me. I received 50,000 AA miles when I signed up and I pay it in full each month. Nothing wrong with free airfare and not paying interest charges cheap airline by paying your balance in full
I knew you d be one of the ones arguing in favor of these kinds of credit cards Sean. When travel really is a major priority in your life, an airline credit card makes a lot of sense. You just have to make sure that you still do what you can to avoid any interest charges.
I just choose to get regular credit card rewards for a lot of points you make here. I d rather take the cash back or gift certificates than earn miles. My roommate travels a lot and loves to get miles and maybe one day if I travel a lot, I ll do it also but until then, I m happy getting gift cards to Amazon!
I think they have the propensity to make people think they *can* travel more, but there are a lot of people who *do* travel frequently for work. I know someone who travels weekly and sometimes cheap airline twice in the same week. He s hardly ever home! He has to have all the frequent flyer cards and credit cards, cheap airline and it works out to his and his company s benefit.
I should ve mentioned how useful those cards are for people who are already frequent travelers. Those are the people who would get a ton of benefit from an airline miles credit card. Having to travel once or twice a week makes it so that they shouldn t be considering any other kind of credit card.
I d totally get one if it didn t have the fees. Even though I d be going on more vacations spending more money on the ground, if it balanced out because I was saving on airfare that sounds like a great plan to me!
I guess it also depends on your current financial situation and long term goals. If you can afford to travel lots and just want to save money, I figure why not. I just personally can t afford to travel much with my current financial goals.
This is also the reason that time-shares simply cheap airline don t work. Just because you get a free trip somewhere doesn t mean you should take it. Unless you fly a lot or travel cheap airline regularly, I would just stick to a cash-back or points credit card. I m rocking the Fidelity American cheap airline Express. I have a target of $1000 cash back this year
Interesting comparison to time shares. With both you do have somewhat of an obligation to spend money on regular vacations. $1000 cash back is an impressive figure. I d be interested cheap airline to know what cash back percentage you receive to reach that.
I signed cheap airline up for mine initially for the bonus miles and saved about $500 on a vacation right away (in 2011). We have also saved enough miles for a wedding we re attending in November, so that saves another $800 or so. We do pay the $75 annual fee, but so far we re coming out ahead. cheap airline We also get a 2nd passenger flies for $99 voucher each year, no matter cheap airline the cost of the first ticket, which is cool. This is in addition to the miles. I may be looking for another card soon, if we decide to not travel as much.
I can see how it encourages more travel, but we budget for a small vacation each year, and having cheap airline the card allows us to go further, instead of staying in-state for our vacation. Also, I have family in other states, so it s great ot be able to hop a plane and stay with them (low cost) and not pay $600+ for a trip.
I like the feature you mentioned about the 2nd passenger flying cheap airline for $99 once each year. For someone who is careful with their money and does annual flying anyway, I think you re making cheap airline the right move with that card. That s a good idea to keep your eye out for better cards though. Lots of cards do come with great welcome cheap airline bonuses for new members. When you are calculating whether you come out ahead or not, you should cheap airline be comparing to what you could get if you had instead used a cash back card.
Agreed. I am looking into a few cash back cards and calculating the money I would have received. Also, I might just credit card hop to get new bonuses every few years. I just don t want too many cards open
I d be careful about hopping from credit card to credit card. That could have a negative effect on your credit. I should probably try to confirm that since there is a credit card that I want to switch to, but am wary of havin
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