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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.

 

Co-branded airline credit cards like the Gold Delta SkyMiles Credit Card from American Express or the United Explorer Card can offer a lot of value for travelers. Generally speaking, they offer free checked luggage, priority boarding, and large welcome offer milage bonuses from time to time. Keeping one of these cards in your wallet for your preferred airline is almost always worth it.

But here’s the thing: The average traveler shouldn’t be using a co-branded credit card for their everyday spending. While it may seem smart to keep adding to your balance of SkyMiles or United miles, you can do much better.

More often than not, you’ll be better served by a flexible points credit card like the Chase Sapphire Preferred, The Capital One Venture Card or even the American Express Gold card.

Here’s why.

 

With Airline Cards, You’re Locked Into One Airline

When you focus on one co-branded airline credit card, you are locked into redeeming the miles it earns on one specific airline.

For example, if you carry the Gold Delta SkyMiles Credit Card from American Express, all of your spending will earn Delta SkyMiles. And that can be great … until you need to fly a different airline. It’s at this point you might realize your miles don’t have much value.

By using a 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. And when you do, your points will be worth 25% to 50% more, depending on which version of the card you hold.

 

Chase Sapphire Preferred vs Reserve

 

Earn More, Faster

Generally speaking, when you hold an airline’s co-branded credit card, you will earn 2x miles per dollar spent on that airline. So if you don’t spend a lot of money with that airline, you’re probably better off spending on 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. 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.

Both of these card options will provide you with a much better return on your everyday spending.

For example, if you spend $4,000 a year dining out at restaurants, you would earn 12,000 points on that spend from the 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.

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. It’s why we always encourage people to use your miles rather than hang on to them – that’s their purpose.

And when you only have points with one specific airline, they will simply devalue faster. Airlines can jack up rates at a moment’s notice, without giving any warning. 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 earlier this 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 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. This is commonplace for Amex, and we saw the first-ever Chase transfer bonus to British Airways earlier this year.

For example, last year American Express Membership Rewards was offering a mileage transfer bonus to Virgin Atlantic. 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’re more valuable than airline-specific miles. Make sure to check out our guide on all the current transfer bonus offerings

 

Our Analysis

Of course, there are many reasons to hold an airline card. For starters, if you have or are trying to attain elite status with an airline, holding the airline’s co-branded credit card can offer shortcuts to get there. But as we often say, loyalty is expensive and being a free agent is the best status you can have if you’re not a seasoned business traveler.

Additionally, if you check luggage instead of carrying on, an airline card can get you a free checked bag just for holding the card. And in many cases, you don’t even need to spend money on the card to receive that benefit. It is one of our favorite ways to beat basic economy fares on airlines like Delta, American, and United.

But all that said, if you’re only going to hold one or maybe two credit cards, you are going to get much better value from cards that earn flexible points. And it’s likely you can benefit from the airline card without 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.

Thrifty Tip: Need help deciding which version is right for you? See our full guide to help you make that decision.

The Sapphire Preferred earns 60,000 points after spending $4,000 in the first three months of card membership and earns 2x points on all dining and travel spending. It also has a $95 annual fee.

 

should I get an airline credit card

 

Click Here to learn more about the Chase Sapphire Preferred Card

 

And the more premium Ultimate Rewards earning card is the Chase Sapphire Reserve. 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. It also 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 $450.

 

 

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 35,000 Membership Rewards points after spending $2,000 in the first three 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 make it worth the $250 annual fee.

 

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. The card has an annual fee of $550, however, the card offers many premium benefits such as $200 in annual Uber credit, a $200 annual airline credit, a $100 credit for Saks 5th Avenue, lounge access, and up to $100 in fee credits towards 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.

And 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 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.

 

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Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer.

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

  1. MH says:

    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

    • Nick Serati says:

      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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