Are AIRLINE CREDIT CARDS Worth It?

with as much time as we spent talking about cards at the amateur cards city premiere chase sapphire preferred and others you might be wondering well what about all the airline cards out there are they worth getting and i'm happy to announce that by watching today's video you have a very clear answer to that question hey everyone it's mark i'm here to help you put more money in your pocket through credit cards and smart financial habits if that sounds good to you do me a quick favor and click on the like and subscribe button down below also check out the links down below in the description area to view some great credit card offers to get some additional cash back when you shop online through racket10 and to sign up for maths rewards which is a great app to manage all of your credit cards and rewards in one place the battle between the general travel cards and the airline cards begins now okay let's tackle the big question to get it out of the way first are airline credit cards worth it and here's my answer yes absolutely yes but only for specific situations and the first part of all this will be the negative side of it all so airline credit cards are generally bad for earning travel rewards on everyday spend earning miles on your preferred airline believe it or not and third flexibility so for number one what i'm referring to here is using your airline car to buy all of your stuff like groceries gas go into department stores whatever it is if you use an airline car for your normal transactions all the time with the intention of earning miles you're probably getting a very low return on your spend and there are other cars that will be much better suited for that for early miles on your preferred airline i'm sure that surprises you a lot for example if you want to earn delta airline miles or or they're called delta sky miles you probably don't want to use a delta credit card if you want to earn united miles you probably don't want to use a united credit card and i'll explain all that a little bit later in this video and third for flexibility i'll also cover that and unpack what i mean there as well so let's start with number one here earning travel rewards on everyday spend here are four really common and well-known credit cards in the airline space the city advantage platinum select world elite mastercard the delta sky miles gold american express card the united explorer card and the southwest rapid rewards premier credit card let's now expand these a bit further and view their rewards categories so pretty much all these cards here have double mile per dollar categories for example the aaa delta united cards all earned double miles on their own airline purchases as well as double at restaurants or a dining and then a few other categories so for example aa earns double on gas delta's double on groceries and united is double at hotels then the southwest card there at the bottom earns triple on southwest so a little bit better and then has some 2x categories as well and then they all earn one mile per dollar on the other category but one mile and one program is not necessarily equal to one mile in another program so to even the plain field and compare these uh appropriately we want to convert them into the cashback equivalent basically the percent return you get on your spend so here is the average value of one mile in each program aa is at 1.4 delta is 1.1 cents uh united at one point four cents per mile and then southwest at one point three cents so if we take these values here and multiply them by the category of multipliers basically three f's two s and one x this is what we'd get the american current is getting two 2.8 return on its double mile categories delta at 2.2 percent united at 2.8 percent and then southwest at 2.6 and then it's got 3.9 on southwest airline purchases specifically because it earns 3x points there so the absolute best we're getting here is less than three percent of the top tier earning categories and then on all the regular categories it's about 1.1 to 1.4 return and remember we've got the city double cash card and some other cards that earn two percent on all purchases all the time with no annual fee and if i'm guessing correctly you probably have a good amount of spend outside of the 3s or 2s categories meaning you're only earning about one mile per dollar here so the return there is quite poor on airline cards now to give you all a little bit of contrast and comparison here let's compare these to some other cards that are also very well known but they're not airline specific they're more general travel type cars the city premiere card the american express gold card and the chase sapphire preferred credit card expanding the rewards categories here we've got triple points in extremely useful categories like restaurants supermarkets gas stations air travel hotels all on the premiere card the amet's gold gets you four points per dollar on dining and u.s supermarkets up to a 25k spend cap also triple on flights and then the sapphire preferred has a five point per dollar category a bunch of three point per dollar categories a double point category and then one x on everything else all these cards have a base rate of one point per dollar and since the points earned on these cards tend to be much more valuable because you can use them in so many different ways here's the average value of one point in each of their respective programs for city it's about 1.7 cents each and then amets and chase are about 1.8 cents each sometimes you might see a valuation of 1.7 as well or even up to 2 cents per point if you look at some other valuations but i just put 1.8 here for the comparison then taking those figures and multiplying them by the category multipliers here's the result we get for return on spend the city premiere is earning over five percent in those useful categories that we mentioned earlier like restaurants supermarkets gas stations and so on the gold card earns 7.2 percent on dining and supermarkets 5.4 on flights and then the sapphire preferred whenever you book travel through the portal your effective return there can be up to nine percent followed by a bunch of 5.4 categories the ones that earn 3x points then 3.6 on other travel outside of chase's portal and 1.8 as the base rate there so with this in mind now let's put these cards side by side with the airline cards i put the four airline cards on the left and the three general travel cards on the right and then color coded the overlapping categories that are similar enough to be compared so in blue font we have everything relating to airfare then green we have restaurants or dining the orange refers to groceries or supermarkets then the pink or light purple refers to earning at hotels so by now it's probably becoming very clear which type of cards and rewards you want to be earning for your everyday spend year and if it's not yet crystal clear here are the average returns across the cards so for the airline cards it's as low as 1.93 and as high as 2.6 percent but for the general travel cards we have a low of 4.42 and a high of 5.4 percent meaning as long as you spend in the categories that are offered on the general travel cards on the right the airline card returns come nowhere close and that's why the trophy gets placed right over here now let's go into a slightly more controversial topic airline credit cards are generally bad for reason number two earning miles on your preferred airline i mean if you want to earn a lot of miles with a specific airline don't you want to use that airlines credit card not necessarily so let's first begin with a little bit of an exception here that american airlines card we can't really compare it to any of the general travel cards because right now no other card issuer allows you to transfer points into the american airlines program city did test that for a few months but right now as i film this video it went away and it expired so city really needs to make american airlines a permanent transfer partner ideally from the city premiere card or any other cards that they may change or launch in the future moving on to the delta gold card here it earns double miles on all delta flights but also if we compare that to the amet's regular gold card that one earns triple on all flights including delta and all other airlines so would you rather earn double on just delta or triple on delta and everything else that answer should be pretty clear and since delta is a transfer partner of american express you can take your amet's membership rewards points and literally transfer them over to your delta sky miles account on a one-to-one basis so if you have 50 000 emits points that will become 50 000 delta sky miles now that may or may not be the best transfer option for you and the itinerary that you want to build but i'm just showing you the option here if your goal is to strictly earn delta sky miles so basically the regular gold card from amets is an indirect way of earning 4x 3x or 1s miles with delta and that definitely beats the double and single mile per dollar categories on the delta sky miles gold doing the same comparison here for the united explorer card which earns double miles on united flights the sapphire preferred earns five miles per dollar when you book travel which includes flights through the chase ultimate rewards portal and double on all other travels and now united is a transfer partner of chase on a one-to-one basis so again 50 000 chase points could become 50 000 united miles if you just push them out to your united account meaning the sapphire preferred could be an indirect way of earning five three or one united mile per dollar which also beats the united explorer card and lastly with southwest which is also another transfer partner of chase the southwest rapid rewards premiere card does earn a little bit better here because it earns triple directly with southwest and right now southwest is not a bookable airline through the ultimate rewards portal you can call in and have a chase representative book it for you but then that would not be through the portal so with the sapphire preferred you just get double on your flights or with southwest you get 3x when you're booking of course online uh but in general the big picture is what we're looking at here you've got 5s and a bunch of 3x as well as 2 and 1x categories with the csp where the southwest is much more limited so if those categories on the sapphire preferred are useful to you and you regularly spend in them you could be earning five three or one rapid rewards point per dollar spent with that card simply by transferring them over and if you haven't figured it out yet airline credit cards are also generally bad for flexibility and here's why i say that because the miles you earn are generally only valuable on flights with one primary airline and the partner airlines to that airline so whether that's a direct partnership or a an alliance partnership like the star alliance or one world whatever it may be an example of an alliance partnership would be using american airlines miles to book a british airways flight for example so all of this is to say that if you're using an airline card for your regular span you're not only getting a low return on that spend but your redemption options are highly limited and the points earned on these cards here the general travel cards can be used on virtually any airline hotel car rental crews etc even if they don't have the transfer partners that you want or need they all have their own portals that function kind of like expedia where you get a long list of different search results with missed airlines missed hotels and you can always book through there if you need to it's those flexible and or transferable point currencies that tend to give you a much higher return on your everyday spend plus give you options to redeem and however you like so it's much easier to build out the trip of a lifetime so having said all that what are airline credit cards good for then well airline credit cards are generally great for earning miles quickly via welcome offers earning elite status through spend and perths and benefits let's move into the first one earning miles quickly via welcome offers here are a bunch of screenshots that i took of the current offers across the major cards that we've been comparing in this video the aaa card to earn 50 000 miles the delta gold at 40 000 miles united explorer at 60 000 and then the southwest premiere at 40 000. now these are not necessarily the best offers ever but these are just the offers available as i made this video nevertheless the smaller offers also typically have a lower spend requirement so if you cannot normally meet the spend for the big bonuses which are typically you know three four five thousand in a three or four month period you might be able to spend one thousand or two thousand or so in the same three months reason two airline credit cards are also generally great for earning elite status through spend and here's some examples of that the american airlines card will allow you to earn one loyalty point per one dollar spent the delta gold that we've been using for our comparison does not actually work for elite status but if you want to level up and if elite status is important to you the delta sky miles platinum and reserve cards can also help you earn what are called medallion qualifying miles or mqms so the delta sky mods platinum will help you earn 10 000 mqms after you spend 25 000 on the card up to two times per year and on the reserve side you can earn 15 000 mqms after spending 30 000 up to four times the united explorer card actually will not help you earn status for some reason maybe that'll change in the future but the no fee united card the explorer or even the united club card which is that 550 top tier united card none of those help you with status at least at that time i'm making this video and for the southwest premiere card you can earn 1500 tier qualifying points for every 10 000 that you put on the card so for all you status chasers out there this can be a great way to help you earn toward status even while at home and not traveling and third and last airline credit cards are generally great for perks and benefits so if you're a frequent flyer with american delta united or southwest or some other card issuer like alaska or other ones that have their own co-branded cards too getting their card can be great especially before you've earned status or if you don't fly enough to actually earn full elite stats because a lot of these perks are kind of like light elite status notice how the first three here a a delta and united all give you a free first checked bag american gives you also the ability to add it for four companions on the same reservation delta gives up to eight companions and united is more limited with one additional companion southwest does not offer that benefit because regardless of you being a card holder you still get two free check bags which is a great benefit of their overall program then the first three cards also give you access to preferred or priority boarding so you can get on the plane earlier settle in relax and also pretty much guarantee yourself access to overhead bin space the southwest card also gives you a similar benefit there with two early bird check-ins per year which gives you a more favorable boarding position the american and delta cards also give the ability to earn a flight discount of 125 or 100 respectively after spending a certain amount of money on the card the united card does not do that but they do give you two united club passes per year and premier upgrade priority on award tickets which is kind of cool and all four cards give you an in-flight discount of about 20 to 25 and wrapping all that up here and putting on one slide here's a nice summary for all of you of where airline credit cards are generally good versus bad and those are the three topics that we covered in this video so hopefully that rundown was very helpful and enlightening for you all to make sure that you're using airline cards the right way and by right way i'm referring to helping you win and with all that said if you enjoyed today's video and believe it could benefit others then please help me get it in front of them by liking this video subscribing to the channel and turning on notifications also check out the links down below in the description area to view some great credit card offers to get some additional cash back when you shop online through racket10 and to sign up for maths rewards which is a great app to manage all of your credit cards and rewards in one place i thank you all for watching today's video i hope it brought you some great value and also clarity around what type of card is usually best to earn points versus what type of card is usually best for benefits i look forward to seeing you all again soon in future episodes and until then remember you are great now get on out there and fly like a vip

Channel: Mark Reese // Credit & Finance

Views: 88,604

Keywords: best airline credit card, american airline credit card, airline miles credit card, alaska airline credit card, southwest airline credit card, united airline credit card, citi aadvantage card, citi aadvantage platinum select, delta skymiles credit card, united explorer card, chase sapphire reserve, chase sapphire preferred, amex platinum card, amex gold card, citi premier card, ask sebby, ben hedges, graham stephan, travel credit cards, credit cards 101, marriott bonvoy, amex

Id: WhOdp8Qfyus

Length: 15min 49sec (949 seconds)

Published: Wed Jan 26 2022