Which are better – Airlines cards or Bank cards?
We received an email a little while back from Katie Pelletier, of Milecards, which is a website that, “that lets consumers compare travel credit cards based on their own personal travel goals and spending habits”. Her contention is that Airline cards are worse for generating miles on airlines than bank cards. Some examples are provided below, which is a copy of the email that she sent us. I will put my conclusion here, because it’s a lot of reading – I absolutely agree with her. Airline cards rarely provide any substantial category bonuses, and other than signup bonuses, category bonuses are one of the best ways to rapidly accumulate miles. Most airline cards provide maybe 2 miles/dollar on that airline’s purchases, and 1 mile/dollar on all other purchases, whereas most bank cards provide some compelling category bonuses, such as on grocery stores, restaurants, office supply stores, etc. And, depending on which rewards program you use, you can transfer to a variety of airlines, hotels, Amtrak, etc. You should use your Airline branded card for a signup bonus, and then PUT IT AWAY!
I have around 20 credit cards, but I don’t carry them all. What I carry around is thusly:
–Amex Blue Cash Preferred, which gets cash back – 6% at grocery stores, and 3% at gas stations
–Chase Sapphire Preferred, which gets 2 Ultimate Rewards points/dollar on dining and travel, although for April, June, and July I’ve substituted the Chase Freedom, which is getting 5 UR points/dollar at restaurants and Lowe’s.
–Chase Ink Bold, which gets 5 UR points/dollar at office supply stores, cell phone and internet service. And I only carry this when I know I’m going to Staples.
–Barclaycard Arrival, which gets 2.2% back on all purchases when redeemed for travel, and which I use for every purchase that doesn’t have a category bonus.
So really I only carry 3-4 cards. If I’m working on a signup bonus, I’ll also carry that card; for instance, I’m now working on my extra 20,000 Lifemiles bonus.
Without further adieu, I’ve included the email that Ms. Pelletier sent to us:
Let’s crunch the numbers using Delta and two new cards from American Express: the Amex EveryDay Card with no annual fee and the EveryDay Preferred with a $95 annual fee.
Both of these new cards earn Delta SkyMiles faster than credit cards which say Delta on them such as the Gold Delta SkyMiles American Express or Platinum Delta SkyMiles American Express.
MileCards.com Director Brian Karimzad breaks down the “Why”
1. The new Amex cards earn bonuses two ways. First, they can earn extra points on on grocery spending (2 – 3x) and the Preferred earns a bonus on gas spending (2x). The Delta cards do not.
2. The Amex cards earn a bonus on all spending when you use the card for enough transactions each month (20 times for the no fee EveryDay earns a 20% bonus and 30 times for the Preferred earns a 50% bonus).
3. The “Membership Rewards” points the Amex cards earn can be transferred directly to your Delta SkyMiles account with no dilution.
Here’s a look at the numbers:
According to the Bureau of Labor Statistics, the average family spends $212 a month on gas, $327 on groceries, and $223 on dining, with $1,815 total in categories commonly payable with a credit card.
Based on that spending, here’s how many Delta miles a family can earn in year with each card, assuming it’s used at least 30 times a month (about once per day):
Amex EveryDay Preferred ($95) – 48,258
Amex EveryDay ($0) – 30,845
Starwood Preferred Guest Amex ($65) – 26,780
Gold Delta SkyMiles ($95) – 21,780
Platinum Delta SkyMiles ($195)– 21,780
Amex Premier Rewards Gold ($175) – 28,248
The non-Delta cards earn 30% to over 2x more points than the Delta branded cards in this case. And they can all be transferred at full value to a Delta SkyMiles account.
What about other airlines?
Delta is not alone in having non-airline branded cards that could earn you more points than the airline branded cards. All of the biggest mile programs in the U.S. have alternative cards that can earn more points than the branded card:
United MileagePlus: The Chase Sapphire Preferred Card (2x points on dining, travel) and Ink Plus / Bold for Business (bonus points on office supplies, hotels, telecommunications) let you transfer points directly into United miles.
American AAdvantage: The Starwood Preferred Guest Credit Card from American Express lets you transfer to American miles with a 5,000 mile bonus for every 20,000 you transfer.
Southwest Rapid Rewards: The Chase Sapphire Preferred Card (2x points on dining, travel) and Ink Plus / Bold for Business (bonus points on office supplies gas, telecommunications) let you transfer points directly into Southwest points
What do you sacrifice?
More points might equal less perks: Airline branded cards typically include a checked bag fee waiver and priority boarding. So if you check a bag a few times a year it can be worthwhile to carry an airline card for the privilege. For frequent flyers, airline cards offer points toward elite status qualification which leads to even more special treatment for road warriors. Cards that let you transfer points to multiple airlines usually don’t offer this perk.
But you gain flexibility. The points you earn with cards that transfer to multiple airline programs give you several airlines to transfer to, opening up many more possibilities. For example the Amex cards transfer to Air France, Hawaiian Airlines, and JetBlue among others. In most cases these transfers are online and instant.
They also offer options to use your points like cash to book on any airline, meaning you’ll always be able to find value for your points.
How can you keep up?
Use an online tool. The CardFinder tool at MileCards.com is the only tool available that lets you filter cards by airline mile program and calculates the three areas of point earning based on personalized spending habits: category bonuses, annual threshold bonuses, and sign on bonuses. It shows the exact number of miles you will earn both from cards that earn directly into airline accounts as well as those that let you transfer points into the mile program. It also lets you factor the value of baggage fee savings and foreign transaction fee waivers.
Examples
Here are how the major airlines’ own cards stack up for mile earning against alternatives that let you transfer points into their programs
Delta SkyMiles
Gold Delta SkyMiles ($95) – 21,780
Platinum Delta SkyMiles ($195)– 21,780
Amex EveryDay Preferred ($95) – 48,258
Amex EveryDay (no annual fee) – 30,845
Amex Premier Rewards Gold ($175) – 28,248
Starwood Preferred Guest Amex ($65) – 26,780 (includes 5,000 mile bonus for transferring 20,000 points to Delta)
United MileagePlus
Chase Sapphire Preferred ($95) – 26,168
United MileagePlus Explorer ($95) – 21,780
United MileagePlus Club Card ($395) – 32,670
Southwest Rapid Rewards
Southwest Rapid Rewards Premier ($99) – 27,780
Southwest Rapid Rewards Plus ($69) – 24,780
Chase Sapphire Preferred ($95) – 26,168
American AAdvantage
Citi Platinum Select AAdvantage ($95) – 21,780
Citi Gold AAdvantage ($50) – 21,780
Starwood Preferred Guest American Express ($65) – 26,780 (includes 5,000 mile bonus for transferring 20,000 points to American)
Assumptions: According to the Bureau of Labor Statistics the average family spends $212 / month on gas, $327 on groceries, and $223 on dining, with $1,815 total in categories commonly payable with a credit card.
Happy Travels,
Kellie Pelletier
917-514-5851
