You may want to shredder your airline-branded credit cards

Wednesday, March 5th, 2014
Updated: March 5th, 2014
The content is accurate at the time of publication and is subject to change.

Airlines tend to devaluate their frequent flyer programs, so it’s time for you to consider switching to a new rewards credit card.

Delta announced recently that it will change rewards system for its consumers in 2015. Delta will start rewarding consumers based on the ticket price rather than on the miles they travel. This will firstly hurt those passengers who fly longer distances for lower fares – the round-trip tickets will become less rewarding.

Delta is not the only airline making changes to their miles program. Southwest Airlines, JetBlue Airways and Virgin America (and several international airlines) have already reworked their programs: they emphasized ticket spending over miles.

This trend will most likely continue developing like a snowball involving more airlines. One of the reasons for this is that flights are a low margin product, and the amount of unused points is rather large – that makes every point worth less.

Such devaluation may be the reason for some consumers to switch from their airline-branded credit card to a general travel rewards card. If you do not have preferences for a specific airline, then it may be worth throwing away your airline-branded frequent flyer cards.

Make some analysis. Look at the annual fee on the card and compare it to what you’d spend if you had to pay out of pocket for checked bags and airport lounge access or other perks that you typically use. If you do not use such additional perks, you may want to ditch your frequent flyer card. Only people who use these perks frequently will benefit from keeping airline-branded cards.

A general travel reward credit card will be more lucrative, if you are not a frequent international premium class flyer. And it will be easier to redeem the earned points (or miles) because such cards offer flexibility to redeem earned points or miles toward any flight. And that’s what you should consider first when picking a travel rewards card. There is no point in earning points or miles if you cannot use them.

Also, consider whether you’ll earn enough rewards to outweigh an annual fee. And you should not carry a balance on a travel reward credit card because interest payments may eat everything you’ve earned. Consumers may want to consider a credit card with cash back if they do not travel often.

Whichever kind of credit card you have or going to choose, redeem early and as often as possible. Minimize the miles you have sitting around to minimize the possible losses.

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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