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Points Principles: Quit Putting Everything on Your Airline Credit Card

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Editor’s Note: Welcome to our Points Principles series, an ongoing series dedicated to explaining the basics behind the confusing world of frequent flyer miles and travel rewards points. Follow along as we lay out some of the building blocks to travel for nearly free. And check back to the Points Principles page to see what ground we’ve already covered. 

Airline credit cards like the Delta SkyMiles Gold American Express Card or the United Explorer Card are a go-to for aspiring travelers. These cards (and most other airline cards) offer some good value, with benefits like free checked luggage, priority boarding, and the occasional big welcome bonus.

But here’s the thing: The average traveler shouldn’t be swiping one of these co-branded credit cards for each and every purchase. It seems like a no-brainer, right: Keep earning Delta SkyMiles or United MileagePlus miles, pay off your card immediately, and travel more? The thing is, you can do much better.

More often than not, you’ll be better served by continually using a credit card like the Chase Sapphire Preferred Card, The Capital One Venture Rewards Credit Card, or even the American Express Gold Card. Cards like these earn more points on your spending than your typical airline credit card. And the points they earn are far more flexible.

Keep reading to see why you need to change up your credit card strategy to travel more for less.

 

With an Airline Credit Card, You’re Locked Into One Airline

When you focus on spending on just one co-branded airline credit card, you are locked into earning and using the miles through that one airline.

For example, let’s say you you carry the Delta SkyMiles Gold American Express Card. Swipe your card at the grocery store and out to eat, and all of your spending will earn Delta SkyMiles.

That can be great … until you need to fly a different airline. Or when you find a great deal to book a flight that requires American AAdvantage or United MileagePlus miles. That’s when you might realize your miles don’t have much value.

By using a credit card that earns flexible points, you keep your options open. Not only can you use your points to fly Delta, for example, but you can also use them to fly on almost any airline, or even use them for hotel stays.

It’s one of the main reasons we love Chase Ultimate Rewards points. You can use them to book flights on almost any airline through the Chase travel portal. You even get a bonus when using your points to book travel with your Chase card, where each point is worth up to 1.5 cents.

But that’s just one of the many ways to use Chase Ultimate Rewards points. And this flexibility is what makes them so valuable.

Read our Master Guide to Earning & Burning Chase Ultimate Rewards Points. 
 

Chase Sapphire Preferred vs Reserve
 

Earn More Points, Faster

Generally speaking, when you hold a co-branded airline credit card, you will earn 2x miles per dollar spent on that airline. And that’s it.

This has changed some recently as airlines have tried to keep customers happy during the pandemic. BNut even now, most airline cards will offer bonus points on spending with the airline and maybe one or two additional categories like restaurants, supermarkets, etc.

So if you’re not spending a lot of money with that airline, you’re probably better off charging your everyday expenses to a different card.

For example, if you hold the Chase Sapphire Reserve, you will earn 3x points per dollar spent at restaurants and 3x points per dollar on any charge that codes as travel – think flights, hotels, cruises, and the list goes on. The Chase Sapphire Preferred Card earns bonus points on these same categories but only 2x points per dollar in each. You can also pair either of these cards with a no annual fee Chase Freedom Card to earn even more on your everyday spending.

Or if you hold the American Express Gold Card, you will earn 4x points per dollar at restaurants worldwide and 4x points per dollar at U.S. supermarkets (up to $25,000 each year then 1x) and 3x points per dollar on flights booked directly with the airline.

All of these card options will provide you with a much better return on your everyday spending than simply swiping your airline credit card.

For example, if you spend $4,000 a year dining out at restaurants, you would earn 12,000 points on that spend from the Chase Sapphire Reserve or 16,000 points from the Amex Gold. That’d be just 4,000 SkyMiles on your Delta card. Considering you could turn around and transfer those 16,000 points from the Amex Gold to your Delta SkyMiles account, it’s an easy choice.

It’s the reason why credit cards that earn American Express Membership Rewards cards top our list of the best credit cards for Delta flyers.

Choosing a flexible currency card will provide you with a much better return on your spending.

 

Airline Miles Lose Value Quicker

One thing is certain in the world of points and miles: They aren’t getting more valuable.

Over time, airlines and hotels will devalue their points and miles by charging more for the same redemptions. That’s why we always encourage people to use your miles rather than hang on to them – that’s their purpose.

And that’s especially true when it comes to miles with one specific airline: They will simply devalue faster. Airlines can jack up rates at a moment’s notice with no warning – as was the case with Delta’s recent devaluation of partner award rates.

So while flying from point A to point B used to cost 60,000 miles round trip, an airline can decide to begin charging 75,000 miles. There’s nothing we as consumers can do about it, and it’s one of the unfortunate things about award travel.

But with flexible points programs like Chase Ultimate Rewards or American Express Membership Rewards, these devaluations sting less. That’s because they offer a stable of airline and hotel transfer partners and a plethora of ways to use the points. So if there is a devaluation in one program, say Singapore Airlines, which happened last year, there are still plenty of other ways to use your miles.

Having points in flexible programs is essentially a way to hedge the inevitable devaluations of loyalty programs.

 

Flexible Points Programs Offer Transfer Bonuses

One of the best things about flexible points programs like American Express Membership Rewards and Chase Ultimate Rewards is that they frequently offer bonus miles when you transfer your points into certain airlines or hotels. We’ve seen less of this in 2020 due to the current economic and travel environments, but they are still happening.

This is commonplace for Amex, and we are seeing this more frequently with Chase Ultimate Rewards. Just recently, Chase offerred a 20% transfer bonus when moving points to Southwest Airlines.

In 2018 and again in 2019, American Express Membership Rewards offered a mileage transfer bonus to Virgin Atlantic – something they have done a few times since. For every 1,000 miles you transferred, you would receive a 30% bonus in your Virgin Atlantic account (1,000 Amex points = 1,300 Virgin Atlantic miles).
 

should I get an airline credit card 

And since can you use Virgin Atlantic miles to fly in first class on one of the top three airlines in the world, All Nippon Airways (ANA), I only had to transfer 93,000 Membership Rewards points to receive the 120,000 miles needed to book a round trip first-class flight to Tokyo.

If I was paying cash, the flight would have cost over $20,000.
 

Amex Virgin Atlantic Transfer Bonus 

These transfer bonuses can offer huge value when it comes time to redeem your points, and it is a big reason why they make credit card points more valuable than airline-specific miles you earn from an airline credit card. Make sure to check out our guide on all the current transfer bonuses available

 

Our Analysis

Let’s be clear: There are still many reasons to hold an airline credit card.

For starters, many airline credit cards offer a free checked bag just for holding the card. In most cases, you don’t even need to purchase your flight with that card to get a free bag. With bags costing at least $30 each way, that benefit alone can justify keeping an airline credit card with a $95 or $99 annual fee open.

And if you’re trying to earn or retain elite status with an airline, holding that carrier’s co-branded credit card can offer shortcuts to get there.

But that doesn’t change the fact that these airline credit cards are rarely worth continually spending money on. If you’re content with just one or two credit cards, you’ll get much more value from using cards that earn flexible points like Chase and American Express. And keep in mind you can still benefit from an airline credit card without continually spending money on it.

 

Our Favorite Flexible Points Credit Cards

When it comes to flexible point credit cards, your best bets are going to be cards that earn either Chase Ultimate Rewards or American Express Membership Rewards.

With Chase Ultimate Rewards, there are two options worth your consideration. The Chase Sapphire Reserve and the Chase Sapphire Preferred Card. Both cards earn Ultimate Rewards points but provide vastly different benefits.

It earns 2x points on all dining and travel spending. And starting on November 1 and running through April 30, 2021, you’ll also earn 2x points per dollar spent on grocery store purchases up to $1,000 each month.

You’ll also get $60 in statement credits towards a Peloton membership through Dec. 31, 2021.

The card has a $95 annual fee, but with the 60,000 bonus points you can earn after spending $4,000 in the first 3 months of card membership, it is easy to come out way ahead on that investment.
 

should I get an airline credit card
 

Click Here to learn more about the Chase Sapphire Preferred Card
 

The Chase Sapphire Reserve is its premium sibling. It earns 50,000 points after spending $4,000 in the first three months of card membership and earns 3x points per dollar spent on all dining and travel.

Starting Nov. 1 and running through April 30, 2021, you’ll also earn 3x points per dollar spent on grocery store purchases on up to $1,000 each month.

You’ll also get $120 in statement credits towards a Peloton membership through Dec. 31, 2021.

It comes with lounge access, a $300 travel credit, a credit to reimburse the cost of Global Entry or TSA PreCheck, and a host of other premium benefits. This all comes with an annual fee price tag of $550.

If you’re torn between the two options, we think it almost always makes sense to start with the Sapphire Preferred Card and later upgrade to the Reserve.
 

Sapphrie Reserve
 

Click Here to learn more about the Chase Sapphire Reserve. 
 

With American Express Membership Rewards points, there are two main options worth your attention. The Platinum Card from American Express and the American Express Gold Card.

The American Express Gold Card has a welcome offer bonus of 60,000 Membership Rewards points after spending $4,000 in the first six months. It earns 4x points per dollar spent at restaurants and U.S. supermarkets (up to $25,000 annually than 1x per dollar). It also offers a host of other benefits which I feel makes it worth the $250 annual fee.

Read our full review of the American Express Gold Card
 

should I get an airline credit card
 

Click Here to learn more about the American Express Gold Card. 
 

The Platinum Card from American Express is currently offering 60,000 Membership Rewards points after spending $5,000 in the first three months of card membership. But be sure to check CardMatch to see if you are eligible for a welcome bonus offer of up to 125,000 points after spending $5,000 in the first three months.

It’s not cheap, as the card has an annual fee of $550. But the Platinum Card offers many premium benefits such as $200 in annual Uber credits, a $200 annual airline fee credit, a $100 credit for Saks 5th Avenue, lounge access, and up to $100 in credits to cover an application for Global Entry or TSA PreCheck.

You will earn 5x points per dollar spent on airfare purchased directly with airlines or the American Express Travel portal. The major reason we think it’s the best card for booking airfare.

If you want a card that will get you airport lounge access, there is no better option. The American Express Platinum card will get you access to the Delta Sky Club (when flying Delta), the American Express Centurion LoungesPriority Pass, and a host of other independent lounge networks like the Escape Lounge.
 

should I get an airline credit card
 

Click Here to learn more about the Platinum Card from American Express. 

 

Bottom Line

Airline credit cards certainly have their place. They can provide free checked luggage, shortcuts towards elite status, and large welcome offer bonuses from time to time. But for the average traveler, having a card that earns flexible points will suit you better in the long run.

You’ll get a better return on your everyday spending and not lock yourself into using your points and miles with just one airline.

 

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

2 Responses

  • I would disagree as there are some cards that allow you to have a waiver for MQD based on credit card spend. SWA gives you a companion pass for 110k points earned

    • As I mentioned in the article, spending towards status on an airline card can certainly make sense. But I would argue that having status doesn’t make sense for many.

      Regarding the companion pass on Southwest, it’s a great point. But you can earn the 110k from two welcome offer bonuses from credit cards. So spending beyond that would be better suited for a Sapphire Card. You could ultimately move the points into your Southwest account if you wanted.

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