Are Airline Credit Cards Worth It? | WSJ Your Money Briefing
Introduction to Airline Credit Cards
In this section, the speaker introduces the topic of airline credit cards and discusses the benefits and perks typically associated with them.
Benefits of Airline Credit Cards
- Airline credit cards offer perks such as waived fees on checked bags and priority boarding. Accumulating miles or points is a common feature that can be used for reward travel.
- The rate at which miles or points accumulate varies from card to card. Sign-up bonuses are often offered when opening a new card.
Considerations for Frequent Flyers
- For frequent flyers who already have status with an airline, having an airline credit card can help earn qualifying points towards maintaining or upgrading their status.
- However, some benefits offered by the credit card may overlap with those already received through frequent flyer status, making the annual fee less worthwhile.
Benefits for Occasional Flyers
- Airline credit cards can be beneficial for individuals or families who only fly a few times a year. The perks like free checked bags can offset the annual fee and provide convenience during limited travel.
- Lounge access may also be available through the credit card, offering additional comfort during occasional vacations.
Choosing Based on Proximity to Airline Hubs
- Living near an airline's hub can influence the decision to sign up for an airline credit card tied to that specific carrier. Accessing flights from that hub becomes more convenient, making the benefits of the card more valuable.
Devaluation of Miles/Points and Travel Budget Planning
This section discusses how accumulated miles/points may not go as far as they used to due to devaluation by airlines. It also provides advice on planning travel budgets when using miles/points.
Devaluation of Miles/Points
- During the pandemic, many people accumulated a significant number of miles/points while spending on credit cards but not traveling. As travel has picked up, airlines have devalued the value of each mile/point to maintain revenue.
- Airlines prefer passengers paying for fares rather than using points/miles, leading to increased redemption rates for booking flights.
Planning Travel Budget with Miles/Points
- Due to the devaluation over time, it is advisable not to hoard miles/points for too long. Instead, use them within a reasonable timeframe to avoid potential further devaluation.
- It is important to consider the limited availability of award seats and plan accordingly when budgeting for trips using miles/points.
Conclusion
Airline credit cards offer various benefits and perks that can help reduce travel expenses. Frequent flyers and occasional travelers can both find value in these cards, depending on their specific needs and circumstances. However, it is essential to consider factors such as frequent flyer status, proximity to airline hubs, and the potential devaluation of miles/points when making a decision.
New Section Managing Points and Miles: Avoiding Extra Fees
In this section, the speaker discusses the common mistake people make when managing their points and miles - forgetting to account for extra fees. They emphasize that while booking with points and miles may seem like free travel, there are still taxes and fees to be paid.
The Biggest Mistake in Managing Points and Miles
- People often overlook the additional fees associated with using points and miles.
- Booking with points and miles is not entirely free as taxes and fees still need to be paid.
- For example, when flying business class on a transatlantic flight to London using points, the accumulated fees can amount to hundreds or even thousands of dollars.
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