The competition for customers has been fierce, said Pam Girardo, spokeswoman for Capital One, which launched a double-miles card earlier this year. To boost sales, credit-card companies have focused on stealing customers away from competitors, offering plush sign-up bonuses and more perks, says Randy Petersen, president of Frequent Flyer Services, which publishes newsletters and websites for road warriors.
Hear Scott McCartney explain why now is an excellent time to review your airline rewards
.Despite blackout dates and limited availability of award seats, airline-miles programs are popular among credit-card customers. A survey by the Federal Reserve Bank of Boston published last year found 59.6% of consumers have reward cards, and 24.4% use only reward cards.
There are basically two kinds of travel-reward cards. One is tied to an airline's frequent-flier program and pays one mile for every dollar charged on the credit card. It lets you redeem those miles, mixed with miles earned flying, for award tickets. The other kind is more open-ended, letting consumers' purchases earn miles at one or two per dollar. Consumers may then redeem them for tickets at a rate of one penny per mile, booking any seat on any airline.
Each kind of card has its advantages and disadvantages. With the frequent-flier card, a $400 ticket might be available for 25,000 miles, but it comes with airline restrictions. The open-ended card doesn't have the restrictions, but an awards ticket costs more—a $400 ticket would cost 40,000 miles, for example.
Paper or Plastic?
To lure new customers, some credit-card offers include benefits that go beyond points and miles:
Cards that cover baggage fees, change fees, pet fees and even on-board sandwiches.
Elite-level early boarding and security-line access
Access to airport lounges
.These days, new or expanded offerings are coming mainly from the bank-issued cards. Many, like the double-miles offers, make the cards that are not tethered to a particular airline more appealing. But cards tied to a particular airline can still offer better value if you are willing to work through limited availability and rules at airlines. Cards that cover fees and other perks may be best for travelers who don't have those perks already as elite-level frequent fliers. Bottom line: It's a good time to reassess your card choice, but be careful to pick a card suited to your travel needs.
Capital One's heavily advertised "Venture" card pays two miles for every dollar charged. That means the basic $400 domestic coach ticket could be had with purchases of $20,000 on the card. Discover now offers a double-miles card as well, and several other companies offer bonus miles on purchases at certain kinds of merchants, like groceries or gas stations.
Associated Press
A parrot is loaded onto a Continental Airlines plane.
.But even with double miles, airline programs can still offer more buying power, especially if you prefer saving up miles for expensive tickets or upgrades. Consider a business-class ticket to Europe, offered by many airlines at 100,000 miles round-trip if you book far enough in advance and avoid peak travel periods. You'd typically have to pay $3,000 or more to buy a business-class seat, so that means with a double-miles card, you'd still have to spend $150,000 to get enough miles—300,000—to cover the fare. With an airline card, you'd have to spend $100,000 to get the 100,000 miles needed for the same ticket, if it's available.
"Good luck getting that ticket you want with airline miles," said Capital One's Ms. Girardo.
In general, one penny a point is a modest value—you pay for the convenience of avoiding maddening airline rules and limits. On average, frequent-flier program experts say, consumers get about 1.5 cents for every mile, such as using 25,000 miles for a $375 ticket. Using miles for business-class or first-class tickets or upgrades can often translate to 3 cents a mile or more.
Instead of pumping up miles, American Express has focused its new perks on airline fees—a scourge for many travelers. The company's gold card branded with Delta Air Lines' SkyMiles frequent-flier program waives the first-bag fee on Delta for card holders and up to nine traveling companions. (Continental Airlines also offers a Chase MasterCard that waives the first-bag fee.)
And earlier this month, the American Express platinum card added a unique benefit—American Express will wipe $200 worth of airline fees and charges off your bill each year. That covers everything from baggage fees to in-flight movies and food, including ticket-change fees.
"Customers feel nickel and dimed by all the fees, and we're focused on making travel easier and taking away irritants," said Robin Korn, senior vice president for consumer charge cards at American Express.
The platinum card, which costs $450 a year, is loaded up with perks for high-end travelers, including access to airport lounges at American, Delta, US Airways and, until September, Continental airlines. A one-day pass to an airport club can cost $50; an annual membership costs $300-$450, so the card may be worth considering if you travel a lot, pay lots of fees and enjoy airport clubs. The card also comes with a program offering companion tickets on certain routes at some airlines, as long as you buy an eligible fare, and offers a 20% rebate on miles when you redeem through American Express.
Continental offers a card that, for $395 a year, offers club membership at Continental, first- and second-bag fee waivers on the airline's flights, elite-level early boarding and security-line access at airports and some elite-level qualification miles for spending.
Several programs have tried to get consumers to switch cards by offering giant bonuses for signing up, in addition to waiving the annual fee for one year. The British Airways Visa Signature card, which offers British Airways miles redeemable for trans-Atlantic tickets and upgrades or for domestic trips on BA's partner, American, created a bonus frenzy last year when it offered 100,000 miles for signing up and spending at least $2,000 with the card.
Citibank, which is the main partner in American's frequent-flier program, responded with new customer sign-up offers of 75,000 and 100,000 miles. United went as high as 50,000 miles.
Most sign-up bonus offers have settled into the 10,000-mile to 25,000-mile range. A few, including United's Mileage Plus Chase Select Visa, offer 30,000-mile bonuses to new customers. And British Airways is still offering 50,000-mile bonuses to new customers. In addition, its card pays 1.25 British Airways miles for every dollar spent. Both the BA Visa Signature card and the Capital One Venture card also don't have foreign transaction fees when you travel abroad.
While many customers were tempted to change or add cards because of the bonus offers, others were forced to rethink their airline awards because of airline mergers.
The merger of Delta with Northwest Airlines left Northwest's credit-card partner, U.S. Bancorp, without an airline, so the company created a "Flex perks" reward that looks like an airline program but lets card holders redeem miles for trips on any airline. Delta courted Northwest frequent fliers heavily with its SkyMiles American Express card.
Even with the added perks, airline-connected cards still aren't necessarily the most generous for people who want travel bargains. Mr. Petersen continues to prefer hotel cards, such as the Starwood American Express card. You can transfer Starwood points to many airlines, including American, Delta, US Airways and Alaska, and get a 25% bonus, so 20,000 hotel points become 25,000 airline miles. If you charge $30,000 on the card within a calendar year, you get gold status at Starwood properties, too.
And using points for hotel rooms when you travel can save you more money than spending them on airfare. With 20,000 Starpoints (and the 5,000-point bonus), you can get an airline ticket worth $300-$400, for example, or one night at the W Hotel on Miami's South Beach that sells for $629.
