Airline Co-Branded VS Rewards Credit Cards

It is recommended to never carry the balance on a travel rewards credit card to get the most out of earned rewards. When you carry the balance on your credit card, you are charged interest. Depending on the transactions, you may be charged interest on purchases, cash advances and balance transfers. If you pay your bill in full every month, you can avoid paying interest on purchases and thus save hundreds of dollars. In addition to paying off your card balance, try to make all monthly payments on time. Paying late your credit card bill can result in a penalty fee and APR. Average late payment fees range between $25 and $37, and penalty APRs may go up to 39%.

That's the most expensive transaction you can do with your credit card, especially when you withdraw cash while traveling abroad. Cash advance interest rates can be as high as up to 30% and the interest starts accruing on the day of transaction - there is no grace period for cash advances. That means you will pay interest in any case, even if you pay off the card balance next day. Add here cash advance fees which are charged for each transaction performed, ATM fees (some ATMs do charge fees) and you may get a jaw-dropping bill.

When you rcredit card allows you to earn miles, points or cash back on your purchases, make sure you know everything about terms and conditions of the rewards program. Know where you will earn biggest rewards, and if there are rotating categories, make sure you don't forget to enroll. Another important thing to be aware of is redemption terms. Many cards, especially co-branded airline cards, allow earning miles fast but members find it difficult to redeem them because of restrictions that are set by airlines. And when you cannot redeem your miles, they can expire or sit in your rewards balance forever.