Recently, the only credit card applications that have been showing up in my mailbox have been co-branded airline cards. Co-branded airline cards, like the ones for Continental, US Airways, United and Delta, to name a few, offer some appealing perks. The major perk is free miles. However, these cards generally come with sky-high annual fees and equally lofty interest rates.
The most recent offer I received was for the US Airways Dividend Miles World MasterCard. Now, I've read more credit card offers than anyone should ever be forced to read. And let me tell you, this one was difficult for me to understand.
First off, the headline advertisement was for up to 35,000 free miles, However, unless you do a balance transfer-which has a 4% fee and a 0% rate that only lasts 6 months-you only get 25,000 miles.
The lowest available interest rate on purchases, and on the balance transfer after 6 months, was 15.24%. The second rate was 18.24%. Both of these rates are high compare to general airline credit cards.
Already confused? I was too. And I got even more confused when I tried to understand the annual fee disclosures. This card did not offer a fee-free first year. In fact, the annual fee was $89 for people with excellent credit who qualified for the Premier World MasterCard and $49 if you were only approved for the Platinum MasterCard. Of course, you wouldn't find out what your annual fee would be until after you submitted your application.
While I'm using the US Airways Dividend Miles card as an example, these types of offers are pretty common on any credit card that is attached to a single airline. And that is why I strongly advise readers to look at airline credit cards that allow you to earn miles that can be used on any airline. These cards generally come with no annual fees and significantly lower interest rates than cards that tie you to one airline.
Additionally, with a general airline rewards card, you can shop around for the best priced and most convenient flight, rather than just the flights available from a single airline. When you add in the fact that paying a $90 annual fee takes away the rewards you earn from the first $9000 you spend every year, opting for a standard miles credit card seems to be the wise choice.
To get an estimate of how many miles you can earn with a miles card, try the CardWisdom rewards calculator. For more information or to apply for a rewards card, please see the credit card rewards section.
Author's Note: I know there are people out there who are experts at earning frequent flyer cards that swear by airline specific rewards cards. If you have any tips you'd be willing to share, please shoot me an email. It would be much appreciated.
