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May 29th, 2010
04:41 AM ET

Are Airline Credit Cards Right For You?

From financial analyst Clyde Anderson:

From free round trip tickets to checked bag fees being waived, airline credit cards promise to give you the biggest bang for your buck, but is it really worth it? The answer is both yes and no. It really depends on several factors. So, before you sign on the dotted line make sure you do your homework. I think the first thing you must do is ask yourself a few questions:

Are you already in deep debt?
Do you travel infrequently?
Do you travel on multiple airlines?

If you answered yes to any of the above questions, my advice to you would be to stay away from airline credit cards and consider a card affiliated with a bank. Airline credit cards often come with baggage (no pun intended). Points or rewards are accumulated and distributed based on how much the credit card is used. If you’re already deep in debt, more credit isn’t what I would prescribe. Instead I would recommend paying down your debt. If you are unable to create a budget, consider seeking assistance through non-profit organizations such as CCCS that provide assistance to individuals carrying a large debt load and not quite sure how to shake it. High APR is the first thing that jumps out at you, but if you shop around you may be able to find a few deals with low introductory rates. You also have annual fees on some as much as $95.

If the extent of your travel is family vacations once a year, this may not be the card for you either. In order to get the rewards you need to fly often and use your credit card to book the ticket. If you do this about six times on some cards you just may be ready to reap some of the rewards, but beware of blackout dates and minimal free seats. Last, but not least, if you change your airline of choice frequently to the lost-cost provider of the day, you may want to pass on the airline card.

The true benefit comes to the frequent traveler and active credit card user who prefers to fly one airline consistently.

Look for Clyde Anderson's Home School segment in the 7 o'clock hour of CNN Saturday Mornings with TJ Holmes.

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soundoff (3 Responses)
  1. Carl

    They are NOT a good deal for the average customer that uses the airlines in a limited way for vacations. The price of small freebees that the cards provide are not worth the 25% interest charges. Stay away from them. Behind those convenient cards stand multinational banks like Citigroup who are trying to reach into your pockets even further.

    May 29, 2010 at 6:43 am |
  2. Colin dean

    I was able to score a free flight with southwest's rapid rewards program inside a year, but I'm going to have a difficult time earning another. I fly once or twice per year, but use my credit cards like debit. Southwest gives users lots of extra chances to get credits, such as dining rewards at certain restaurants, double or triple points periods with hotels and car rentals, and even one month last year where one could get a credit for using the card 25 times in one month, regardless of how much was spent. Biggest problem? Free flight must be used within a year of the transaction which earned the flight, even if that transaction was a flight which won't be taken for 6 months.

    May 29, 2010 at 8:03 am |
  3. Michael Armstrong Sr.

    By the time you pay the interest on the credit card you would have bean better off paying by cash or check .

    May 29, 2010 at 10:36 am |