An airline credit card is a type of travel rewards credit card that allows consumers to earn airline miles and other perks with a specific airline in exchange for making purchases.
Understand how an airline credit card works and whether it's worth the application.
Definition and Examples of an Airline Credit Card
An airline credit card typically refers to a co-branded travel rewards credit card offered jointly by a card issuer or network and a particular airline. It qualifies a cardholder to earn frequent-flyer miles for awards travel with that airline, or other airline-specific benefits, when they put spending on the card. You typically earn a set number of miles for every dollar you spend.
Examples of popular airline credit cards include the United Explorer Card and the Southwest Rapid Rewards Priority Card.
How Does an Airline Credit Card Work?
Whether you're required to fly often for work or you love to travel for leisure, you may want to pick up an airline credit card to be rewarded for your flights.
Airline cards are typically co-branded, or marketed under two brands: one being a card issuer or network, and the other a specific airline. You can use the card at any business in the card's network, and when you make purchases, you’ll earn miles with the airline’s frequent-flyer program that you can use to book award flights with that airline and any other partnering airlines or make other qualifying travel purchases.
The rewards structure varies by airline, but most airline credit cards offer more points (usually two miles per $1) for purchases made with the airline and only one mile per $1 spent on other purchases. However, some airline credit cards designate “bonus categories” that dole out more rewards, like spending at grocery stores or restaurants. So, you can use your airline credit card to make airline purchases, but you can also use your card to earn miles for everyday expenses or miscellaneous purchases.
For example, let's say that Mia frequently flies with American Airlines. She signs up for the Citi AAdvantage Platinum Select World Elite Mastercard, issued by Citi in conjunction with American Airlines and valid for use in the Mastercard network. The card earns two AAdvantage miles for each $1 she spends on qualifying American Airlines purchases (for example, flights or even purchases made at American Airlines Admirals Club) and purchases at gas stations and restaurants. It earns one AAdvantage mile for every $1 spent on other purchases.
If she purchases a $1,000 ticket through AA.com and $250 in food and drinks at the Admirals Club in a given year, she'll earn 2,500 AAdvantage miles that she can redeem for award travel via American Airlines, American Eagle, or one of American Airlines' other partner airlines, to a host of destinations worldwide. If she prefers, she can use the miles toward flight upgrades, rental cars, hotels, tours, and other activities.
Benefits of Airline Credit Cards
There are many other perks you can get from an airline credit card besides miles with your favorite frequent-flyer program, most commonly:
- Attractive sign-up bonuses: Airline credit cards also offer bonus miles if you make a certain amount of purchases within a certain period of time after opening the account. For example, the Citi AAdvantage Platinum Select World Elite Mastercard offers 50,000 bonus miles if you make $2,500 in purchases within the three months of account opening.
- Priority boarding: Priority boarding makes you among the earliest to board a plane and may even allow a speedier route through security and check-in. The Citi AAdvantage Executive World Elite Mastercard is an example of an airline credit card offering this benefit.
- Free checked baggage: With this airline credit card perk, you can check in a certain number of bags at no cost. For example, the earlier mentioned Citi AAdvantage Platinum Select World Elite Mastercard allows cardholders and up to four others to check in one bag for free for domestic flights.
- Access to airport lounges: Many airline credit cards offer entry into airport lounges around the globe. The Delta SkyMiles Reserve American Express Card grants you complimentary entry into the Delta Sky Club.
- Elite status: If you have elite status with an airline, you can earn even more miles on airfare purchases as many offer a higher earning rate for elite members. You'll also be eligible for more upgrades and free checked bags, among other benefits that vary by airline. For example, earning the "Gold" status with American Airlines means you’ll earn 40% more miles on airfare than non-elite program members do. Ordinarily, you have to fly a certain number of miles or make airfare purchases of at least a certain amount to achieve a certain status. But some airline credit cards award bonus miles you can use toward your mileage requirement or even waive the airfare spending requirement if you make a substantial amount in other purchases.
How Much Does an Airline Credit Card Cost?
For all their benefits, co-branded travel rewards cards often come with fees and other costs you should examine closely before you apply. Namely, some airline credit cards charge an annual fee simply for keeping the account open, though no-fee cards can be found, and cards like the Citi AAdvantage Platinum Select World Elite Mastercard waive the fee for the first year.
Annual fees on co-branded airline credit cards start around $69 (the Southwest Rapid Rewards Plus Card, for example) but many hover just under $100 (the afforementioned World Elite Mastercard sneaks in at $99). As a general rule, the more benefits a card offers, the higher the annual fee is. As mentioned earlier, the Delta SkyMiles Reserve American Express Card grants access to the Delta Sky Club, which normally starts at $545 per year. But you’ll have to pay a $550 annual fee, which erodes the benefit.
Then, there are foreign transaction fees that some cards apply to international charges, which can cost anywhere from 1% to 3% of the purchase price.
It's also important to factor in financing charges, which depend on the interest rate. Rewards credit cards as a whole carry higher interest rates than basic credit cards, but you can find airline credit cards with a 0% introductory rate.
If you can’t pay off your credit card balance in full every month, the seemingly “free” perks can start costing you a lot of money in interest. That’s true for every credit card, but especially so for rewards cards, which generally feature higher interest rates.
How to Get an Airline Credit Card
You can generally apply for one of these cards online, either through the website of the card issuer or the partnering airline.
When deciding on a card, choose from among those that work with an airline you intend to fly with, and that too, one that offers benefits you can actually use, with fees and an interest rate you can afford.
Bear in mind that premium airline credit cards with robust benefits and higher annual fees typically also require good to excellent credit. If that's the type of card you desire, and your credit isn't up to snuff, work to improve it before you apply in order to improve your odds of approval. Or, opt for a card with fewer benefits and a lower or no annual fee, which are often available to those with insufficient credit history.
Is an Airline Credit Card Worth It?
An airline credit card is generally worth an application if:
- You plan to use the partnering airline regularly and avail the benefits that the card offers.
- You'll get an attractive introductory package (sign-up bonus and interest rate).
- There's no annual fee, or you expect to get back in benefits more than you pay in fees.
- You have good to excellent credit, which can qualify you for a lower interest rate.
If you don't plan to fly with a particular airline or use the card benefits enough to compensate for the annual fee, or its introductory package is underwhelming, you may want to forgo one of these cards.
A good credit score translates to a FICO score of 670 to 799; excellent credit refers to a FICO credit score of 800 to 850.
Alternatives to Airline Credit Cards
If you travel often, but an airline credit card isn't right for you, consider general travel rewards credit cards. These cards tend to offer more flexibility in how you redeem rewards, and some, such as the Capital One Venture Rewards Credit Card, have no annual fee. You'll typically earn points or miles for all card purchases (although some earn a higher rate for travel-related purchases), and you can either redeem rewards for cash back toward travel or other purchases so that you're not tied down to a specific airline. Alternatively, transfer your points for use at certain airlines or hotels. That said, you won't get the airline-specific perks you can get with a co-branded airline credit card.
- An airline credit card allows cardholders to earn frequent-flyer miles or and other perks with a specific airline, such as flight upgrades.
- Miles can be redeemed for award flights or other qualifying travel purchases.
- No-fee cards are available, but many cards come with annual fees of $75 or more.
- Consumers who enjoy travel, but not necessarily with a specific airline, should consider general travel rewards cards.