Are credit cards that offer airline miles worth the annual fee?

I try to pay for everything I buy on my credit card (I think it’s more convenient than cash), and then pay off the balance every month. Because I pay it off every month, I don’t care about the interest rate charged by my card. I am thinking of getting a credit card that gives airline miles, so that I get something back for the money I spend.

Does anyone here have one of those credit cards? How hard is it to redeem miles? Is it worth the annual fee, in your opinion?

Another question- I have a credit card with one of the banks that offers a card that gives you miles. Are they likely to give me another account with a similar credit limit, or would I have to get it raised gradually over several years, as I did with my current card? I like having a high credit limit, because it means I’m sure I won’t go over it and have to dig in my wallet for another credit card, or have to pay an “over-the-limit” fee.

I don’t pay any annual fees, and you should avoid them.

However, if you fly often enough to make back the cost of the fees, then it’s worth it.

General answer is: It depends. What airline? (some are easier to redeem miles on than others. Some are affiiliated w/other airlines) How often do you travel or alternatively, how much do you spend on the card? (These cards give you bonus flying miles)

Please believe me, I’m not trying to interrogate you or make you feel ignorant. There are just so many issues that depend on your own unique circumstances, that it is impossible to give a good, straight answer to your vaery valid question.

I’ll muddy the waters further: Depending on your circumstances, it may even be better to get a hotel card if you stay a lot at a particular chain. You can exchange those points for free tickets. Or free stays. Or Alaska cruises. And so on.

This is NOT an easy call.

I wouldn’t dream of using a credit card that doesn’t give some sort of incentive back. It’s like free money. And many don’t have annual fees. (I would never get one that did.) I use my discover card whenever possible (getting back 1-1.5% in giftcards to places like Bed, Bath & Beyond, or Borders) and use a Chase visa (1% back) at places that don’t take Discover, places like Walmart/Target/Sam’s Club, who give <1% back for Discover, or Amazon itself (which gives 3% back). I don’t fly enough to make a mileage one worth it, but shop around and find something worthwhile to you that doesn’t have a fee.

I have a United Airlines Mileage Plus Visa card. The annual fee is sixty dollars. The airline will sell miles in bulk for two cents per mile, so we can assume that they’re worth that much. Therefore, the first $250 I charge each month gives me 250 frequent flyer miles, which are worth five dollars and which offsets the monthly cost of the credit card. Or, if you want to be conservative, assume the miles are worth a penny each and therefore I need to spend $500 to compensate for the credit card fee. Anything I charge above $250 or $500 gets me miles for free. I travel several times a year, and often on United, so I do use the miles.

So I wouldn’t consider it if I were you if you charge less than $500 per month.

My brother, on the other hand, has a Citibank credit card with no annual fee that returns cash back up to $300 per year. And actually he has a second Citibank credit card that returns up to $300 per year (because he used to have an ATT Universal Card that got bought out by Citibank). So by being careful which card he charges to, he can get back up to $600 each year.

According to this website, there’s only one card that gives you airline miles with no annual fee (but a high APR on all of them listed, assuming you don’t go over your grace period, you’ve got nothing to worry about).

I’ve got USAA for my main credit card and it’s fee free. They give me options for cash back (at about 1% for all purchases) and it’s airline rebates are as followed:
1 Point for each dollar spent
Points Bonus
15000 $150 Dollars Off Airline ticket
20000 $225 Dollars Off Airline ticket
25000 $300 Dollars Off Airline ticket
35000 $420 Dollars Off Airline ticket
50000 $600 Dollars Off Airline ticket
75000 $900 Dollars Off Airline ticket
100000 $1,200 Dollars Off Airline ticket

I can’t say enough good stuff about USAA. (And no, I don’t work for them.) Points never expired, but there’s fineprint:
*You may use Points toward the purchase of an airline ticket on any airline that is available through the booking system at our USAA Total Rewards Redemption Center. Tickets must be booked through the USAA Total Rewards Redemption Center. All tickets are subject to airline restrictions. Tickets can be First Class, Business, or Coach, with no restrictions on dates, times, or seating. Tickets can be one-way, multi-leg, or round-trip in and out of any airports serviced by the airlines included in the Program. *

If you’re going to fly a lot and have a partner going with you, the AMEX platinum card seems to be a great one. You get free companion airfare if you book business/first class internationally but a $395 annual fee. However, Blue Sky from Amex is a fee free airline card.

As others have said there are a lot of factors concerning whether or not a particular card is worthwhile.

I would highly recommend checking out

They have the vital stats on a whole range of cards

I like my Shell Mastercard. It gives me a 5% rebate on all gasoline purchased at Shell stations. In other words when everyone else is paying $3.00 a gallon, I’m only paying $2.85. Shell stations have generally the same prices as every other station around.

There is no annual fee and I pay off my balance every month.

They hate me!

Definitely worth it. I pay $50 a year for an American Airlines card and I’ve gotten much more than that in free travel.

/travel guru hat ON/

for the most part…no

/travel guru hat OFF/

When I got my first points-based card from MBNA, I had already had a card with them for 5 years or so. I definitely wanted to keep the old card (old credit = good credit) and have the new one, although I wasn’t really going to be using the old card.

The person who set up my new card said that I was approved for a total of $10k from MBNA (which was the limit on the existing card) and I could split that credit however I wanted between the 2 cards. So I chose to have $5k on each (was still paying down the original one).

I am guessing that if you get a card from the same bank they’ll do the same for you. Let you decide how much credit should be “transferred” from your old card to the new one.

In about 2 years both of my cards are up to about $10k again. My theory is that the less interest you end up paying them (like you do now), the more they are going to raise your limit to entice you to spend in amounts that you can’t possibly cover in one month - then they get interest.

Thanks! That is a very informative site. It told me that one of the cards I was considering is definitely not for me (the miles expire).

But it’s with American Airlines- after my last experience with them, I avoid them whenever possible. They seemed to be trying to prevent another 9/11 by not having any of their flights leave on time. I’m sure the policy of understaffing the check-in counters and making everyone wait in line for-freaking-ever had something to do with deterring terrorists, too :wink:

Not worried about that. As a pre-emptive strike against credit cards reducing their grace periods, I’ve set up an auto-payment of more than the minimum payment is ever at all likely to be five days after the statement date.

Care to elaborate?

I’ve had a Visa card that gives AA miles for years now. It runs me about $60/year, but I end up with about a free flight per year. Last year, I spend a $50 cash plus 2 years miles and flew the 2 of us to Mexico for a vacation. No, I couldn’t have booked the tickets for $170 total. They run between $400 and about $600 each.

I’ve had very little trouble using the miles with AA. As long as I either fly during off hours or plan in advance, I can find seats. I’ve been able to use my miles to get tickets for others. Generally, it takes 25k miles to get a round trip contiguous US ticket. You’ll need to do the math to figure out if it’s worth it for you.