A travel reward credit card helps a card holder to gain the benefit of free travel-based on the frequency of credit card usage. These reward points can be in the form of free gifts, electronic gadgets or appliances, cash rewards or travel miles. Find out how airline miles credit card works and how you can stand to benefit.
Travel reward credit card
The most common of reward credit cards is the travel rewards credit card.
An airline mile earning card literally means earning one mile for every dollar spent. A travel point card typically earns one point for each dollar spent and then these points can be redeemed through the credit card travel agency. A hybrid credit card earns one point for each dollar spent and then these points can be exchanged for airline miles or used as travel points through the credit card's own travel agency.
There is yet another type of travel reward credit card issued by the airlines, both major airlines and smaller ones. Here again the frequent flyer earns a mile for every dollar spent on the card. The issuer often offers some sort of perk, upfront to entice the customer into accepting the offer. Some of the incentives include travel companion certificate to enable a companion fly free, double mileage on certain purchases like groceries to encourage the frequent use of the credit card.
Benefits of travel reward credit cards
Airline miles credit card
The concept of a reward from airlines on usage of credit cards started as early as 1981 with American Airlines, who decided to start a loyalty program that would reward the customers who flew with them most. This idea indeed revolutionized the way customers traveled as they flew enough to be rewarded. Currently, several airlines have evolved the frequent flyer program that includes earning rewards by using credit cards.
Similar to this airline reward cards, travel reward credit cards are ideal for those who are looking for alternate options in redeeming travel related rewards for every purchase made on their credit card. Airline miles credit card provides the opportunity to the card holder to fly and save money simultaneously. Airline miles credit cards benefit frequent flyers.
The primary benefit that an airline miles credit card provides is the ability to bank miles. Miles here literally refers to 'flying miles'. A card holder who purchases an airline ticket using the credit card is likely to bank miles for his/her next trip. A globe trotter will have a golden opportunity to achieve this. Again a person who moves from place to place very often, and uses credit card for this purpose can also bank miles and save money. Although it is tough to pin down a monetary figure, these miles have an individual value.
The airline mile credit card can be used to buy everything from groceries, gasoline or clothing, at supermarkets or hardware stores or at the postal service. The card holder earns miles on purchases and these miles can be discounted for airline tickets wherever the customer would like to travel. Sometimes, extra miles are offered when the customer spends the card at certain locations or selected flight destinations.
Airline sponsored miles credit card: This has a limitation in that it allows the cardholder to focus on a single airline. The airline would control most of the routes to potential destinations. Although this will make the travel convenient, efficient and therefore economical in many cases, the destinations are fixed and the airline should have a hub in the city of the card holder.
Bank sponsored miles credit card: These cards are more flexible as the miles earned can be used with many airlines rather than a specific airline. For those customers who do not have a dominant airline or hub in their region, this card should be more suitable. This card also has another advantage in that the minimum mileage required for travel is lower than with airline sponsored cards.
The key to success with the travel reward credit cards as with any other credit card is to know the right way to use them. The card holder must exercise discipline when using the card. If the card is used frequently, then it would be better to pay off the balance in full every month. This will ensure that maximum benefit is gained for the least amount of cost. Otherwise, beware that the annual interest and additional fee will cost much more than the benefits.