How do travel credit cards work? - Frequent Flyer Miles FAQ

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Credit Card Applications » Questions » FAQs » Frequent Flyer Miles » How do travel credit cards work?

How do travel credit cards work?

Answered on | Updated on December 20th, 2017
The content is accurate at the time of publication and is subject to change.
This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Citi.

We all hear a lot about airlines miles and points and how vivid a life you're going to have once you start collecting miles. And while this frequent flyer miles science may seem confusing and complicated, in fact it's a piece of cake and everyone can learn how to earn for travel using credit cards. So, here we are to explain how travel credit cards work.

Co-branded credit cards

The first thing you need to know is that there are actually two types of travel credit cards - general and co-branded cards. Co-branded cards are those that are tied to a particular airline, for example, United Airlines, American Airlines or Delta. All of these airlines have a loyalty program that lets you collect miles every time you fly. They also have credit cards associated with them, and those credit cards let you earn miles too, and miles are added to your account. Such credit cards usually have increased rewards on this airline purchases and standard rewards on all other purchases. For example, the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® credit card offers 2 miles per dollar on American purchases, at gas stations and restaurants. Besides, such cards often have sign-up bonuses, which grant you additional miles if you spend a certain amount with this card. Co-branded cards typically have airline-specific perks, for example, a free access to a certain lounge or free checked bags.

However, there are certain drawbacks to these cards that you need to know about. First of all, they are linked to certain airlines, meaning that you are rather limited in how you spend the miles. Some airlines let you transfer earned miles to partner airlines, but you may lose some value mid-course and generally it is far from convenient. Besides, airlines often impose restrictions on miles redemption. There can be blackout dates and no available seats, which is, admit it, just not good. And finally, the miles value may be different depending on what system the loyalty program operates. There are airlines that grant you a number of miles based on the distance you've flown, there are airlines that give more miles for more expensive tickets - i.e. revenue-based programs, and there are programs with fixed value. Ticket prices also vary depending on the class and status, and thus the value of one miles can vary quite a lot. Generally, loyalty programs tend to be overcomplicated, and it often makes no sense to work out the details.

General travel cards

As for general travel cards, the situation is quite different. They are more like typical rewards programs, meaning that you can redeem your miles on travel purchases regardless of what airlines you prefer and plan to use. Basically, general travel card miles are more like cash back, only named differently. They tend to have a fixed value - somewhere around 1 miles per dollar - and they are easily redeemable. There are no restrictions on seat availability or blackout dates. The earning system is more general - you earn more miles not only on particular airline purchases, but on all other purchases. For example, the Barclaycard Arrival Plus® World Elite Mastercard® credit card allows to earn 2x miles on all purchases.

In addition to this, general travel cards also have sign-up bonuses. The Barclaycard Arrival Plus® World Elite Mastercard® credit card, for instance, gives you 70,000 bonus miles as a sign-up bonus, and to get those you need to spend $5,000 on purchases in the first 90 days. There are also travel cards that separate different types of rewards and give you increased rewards on all purchases. Such is the Discover it® Miles. With this card you get 1.5 miles on all purchases, travel included. Redemption is also available on all categories - basically, your miles work like cash back that you can spend on travel with any airline or any other purchases, if you wish. Miles are worth $0.01 and are extremely easy to use. Discover also gives you an unusual sign-up bonus: at the end of the first year for new cardmembers all the miles you've earned are matched, meaning that you'll get twice as many miles. Thus, if you earn 30,000 miles, you'll get 60,000 miles at the end of the year. Basically, you become the master of your sign-up bonus.

All in all, it's up to you which type of travel card to choose. Evaluate your options carefully and come up with the one that will let you maximize your rewards and travel freely.
Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
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NEW: Earn 10,000 American Airlines AAdvantage® bonus miles and receive a $50 statement credit after making $500 in purchases within the first 3 months of account opening*
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Limited Time Offer: Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days
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