Airline Miles Credit Cards

Many people prefer airline miles credit cards such as the AAdvantage Mastercard or the Delta American Express card. However, these can be some of the most expensive cards out there. Annual fees range from $85-$135 a year, the terms are outrageous, the interest fees usurious, and the miles virtually unredeemable.

Airlines calculate the cost of each frequent flier mile as approximately 1.5 cents. You can buy miles (up to about 15000 miles per year for airline) for less than 3 cents per mile. Given the difficulty of redeeming miles as well as the likelihood the miles will expire or the airline go bankrupt before I use them, I generally round the value of a mile down to one penny per mile. When applying for such a card, keep these numbers in mind.

For instance, 15,000 miles is just barely worth it if the annual fee is $135 per year. Most cards offer no annual fee for the first year, so you can do better if you simply refuse to renew each card, and instead apply for a new card a month later. This also provides some additional protection from having your card number stolen, and from unscrupulous vendors and sites that automatically renew subscriptions for goods and services with or without permission. (I normally subscribe to a lot of onetime use sites in the last month of each card.)

All this applies only if you pay your balance in full each month. Interest rates on these cards are so high that if you keep any balance at all, you’d be better off using a low interest card from your credit union and just buying your airline tickets with the money you save.

One Response to “Airline Miles Credit Cards”

  1. toothpick_tp Says:

    I think that airline credit cards are a good idea for people who are fond of travelling. So they can combine travelling and earning some bonuses. If such cards exist, why not take advantage of them.

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