Should you get an airline credit card or a travel reward credit card?

Many people like to have an airline credit card to help them earn faster miles towards their next free flight. However, one of the problems with an airline credit card is the high annual fees. Most airline credit cards charge anywhere between $45 to $130 for the annual fee.

The high annual fee is an issue because a roundtrip economy ticket within continental USA will cost anywhere from $99 (for short haul flights) to over $300 (if you fly coast to coast). Hence, the annual fee that you pay for a frequent flyer card can almost buy you a roundtrip ticket for a short haul flight. There are two important things to consider.

How frequently do you travel on a particular airline?

You need to fly frequently to make paying the annual fee of an airline credit card worthwhile. Assuming you do business travels twice a month and each roundtrip ticket cost $300. That means you will spend $7,200 a year on airline tickets and earn 7,200 extra miles (you also earn miles from the number of miles you fly). If the credit card allows you to earn double miles, you would have earned 14,400 miles. If you fly business class, you will earn even more miles.

Most frequent flyer program and travel reward program require you to earn 25,000 miles or points to redeem a roundtrip restricted economy domestic ticket within continental USA. If we use the example above, you would have earned 14,400 miles if you get double miles. That is still not enough to get you a free ticket. But if you combine it with the miles you have accumulated on your frequent flyer program, you will probably come close to getting a free ticket. This brings us to the second thing to consider.

How much do you spend a year on your credit card?

If you only spend $10,000 for example, it will take you more than two years to earn 25,000 miles and get a free flight. The annual fee you pay for two years may be enough to get you a ticket. Hence, you need to charge a lot to your credit card to make paying the annual fee worthwhile.

To sum up, as most airline credit cards charge a high annual fee, you should only get them if you

  • Fly frequently on a particular airline - if you only fly three times a year, forget about getting a frequent flyer credit card
  • You need to spend more than $25,000 on your credit card in a calender year or spend enough to get at the very least one free ticket a year. If it takes you two years to get one free ticket, you could have saved yourself paying the annual fee (which may have been enough to get you a ticket)

You can check our airline credit card directory if you want to get a frequent flyer credit card. I suspect many people would be better off getting either a no annual fee travel reward credit card or cash rebate credit card.

Which leave us with another question. If you decide that you are better off getting a reward or cash rebate credit card (even if you intend to use rewards for free airline tickets), which should you choose? Travel or cash rebate credit card? Read our article How to decide between a travel or cash back credit card to get your free airline ticket? to find out.

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