Are Airline Credit Cards Worth It?

The perks of credit cards tied to a single airline include hefty sign-up bonuses, free checked bags and access to airport lounges. These benefits can often pay for themselves.

Still, financial planners and travel advocates preach caution, particularly for frequent fliers who already earn status with an airline. Many of these jet-setters would be better off focusing their credit-card strategy on cards that offer more flexible rewards across a spectrum of travel companies, they say.

One reason is that these travelers often already get the same perks without the card. Take free checked bags, a benefit generally available to those with frequent-flier status. Because many airline credit cards come with an annual fee—which can range from $95 to $550—that redundancy can represent wasted money. (In some cases, the annual fee is waived for the first year.)

For a family that travels once or twice a year, the calculus can look very different.

“If they get a credit card with the airline that they tend to fly, those free checked bags alone could more than pay for the annual fee," says Ted Rossman, senior industry analyst at personal-finance website Bankrate.com.

The first question you should ask is how often you travel. Here’s what else to consider about airline credit cards before signing up:

How far do miles go?

Many fliers built up war chests of airline points and miles during early stages of the pandemic, says Matthew Klint, chief executive of Award Expert, a service that helps travelers strategize booking reward travel. Some earned thousands of miles spending money without traveling.

“Now there’s great interest in using these [points], and airlines have capitalized by raising prices because they can," says Klint, who is also senior editor of the Live and Let’s Fly travel website.

Airlines including Delta and United have in some cases ratcheted up the number of miles or points it costs to book an award flight. That means a bonus of 60,000 miles for opening a new co-branded credit card may not go as far as it once did.

Also keep in mind: Booking a flight with miles or points doesn’t make it free. Travelers still pay out of pocket for taxes, fees and surcharges. For certain flights, those expenses can cost hundreds or even thousands of dollars, depending on the seating class.

Jason Brusa, United’s director of co-branded credit cards, says the airline constantly evaluates the sign-up bonuses it offers across its six credit cards “to ensure that they remain competitive in the market." He says that United increased the number of miles required for award flights for some international flights, but says that cardholders have lower mileage requirements for award tickets.

Alaska Airlines has become strategic in offering better bonuses during certain times of the year or in certain markets, rather than blanket offers to all customers, says Brett Catlin, Alaska’s vice president of loyalty, alliances and sales. It has targeted card offers with large mileage bonuses to small-business owners in markets such as Boise, Idaho, and offers with the companion-fare bonuses to consumers in places such as Honolulu, Catlin says.

Which perks are most valuable?

Those interested in getting a new card should examine which benefits help them most. Many card issuers hype up lounge access as a premium benefit. But lounges are often so crowded at major airports that travelers might need to wait in line just to get inside.

Klint suggests that travelers ask themselves whether they would pay for a given benefit before leaping at a credit card offer touting it.

Certain benefits can be quite valuable. Some airline credit cards automatically qualify the cardholder for a higher level of status with the carrier’s frequent-flier program, potentially entitling them to upgrades or early boarding.

Credit cards co-branded with Alaska Airlines tout a companion-fare benefit that lets the cardholder purchase an extra coach ticket for a companion at a base rate of $99, plus taxes and fees, for any flight.

Southwest Airlines offered its Companion Pass, which enables the holder to bring a companion without paying for an extra ticket, as a sign-up bonus during a recent promotion for its credit card. Normally travelers must fly 100 one-way qualifying flights on Southwest or earn 135,000 qualifying frequent-flier points to access that benefit.

Apart from promotions, Southwest cardholders can earn the companion pass by spending with their cards more regularly, says Corbitt Burns, Southwest’s managing director of loyalty and ancillary products.

Which other cards are in your wallet?

Travelers often benefit from having multiple travel-oriented credit cards: one with an airline to get its ancillary benefits, and one with a bank for earning points to put toward future travel.

Nicole Elinoff, a 31-year-old public-health professional who lives in Washington, D.C., has three travel-oriented cards, including an American Airlines credit card, the Capital One Venture card and the American Express Platinum card.

Because Elinoff flies out of an American Airlines hub regularly, having the airline’s credit card gets her a free checked bag and early boarding. Her American Express Platinum card comes with a $200 credit for travel-related expenses, which she says she has used to offset the cost of travel with American even though it isn’t partnered with Amex.

Travel and financial advisers recommend paying more frequently with a general travel card, like the Amex Platinum or the Chase Sapphire. The points earned with these cards can go toward booking reward travel with several airlines, providing more flexibility.

Having multiple cards presents its own risks, including the potential of accruing a significant amount of debt. Financial advisers warn that no rewards are worthwhile if a person carries a balance, given how high interest rates on these cards can be.

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