'Best' Credit Card for Frequent Flyers

By Ed Perkins

"What is the best credit card for frequent flyers?" That's one of the questions readers ask most frequently, and like so many such broad questions, there is no "one-answer-fits-all" response. Although I've gone over this ground regularly over the last several years, some readers are still unsure of the details -- and even those of you in the know could use a quick refresher.

The most critical point of departure is that credit cards targeting frequent flyers come in two basic flavors:

-- Cards that earn miles in airline programs.

-- Cards that earn credit in an issuing bank's program.

Most of the world's big airlines -- and many of the smaller ones -- partner with a bank that issues credit cards "co-branded" with the airline. Most airlines sponsor MasterCard or Visa cards; a few go with American Express. The typical formula is that each dollar you charge on such a card -- with a few exceptions -- earns one mile of credit in the sponsoring airline's frequent flyer program, with bonus miles for some purchases. You can combine the miles you earn through card purchases with the miles you earn by flying and use them for the airline's frequent flyer awards (although card miles generally don't count toward elite status). Airline cards are probably your bet if you earn a lot of miles by flying or if you like to fly in a premium class:

-- Combining your card and flying miles gets you to useful credit levels faster than maintaining two separate accounts.

-- Airline miles are the only kind of miles that are useful for upgrades and premium tickets.

The big disadvantage of airline cards is that piling up the miles is easy; finding available award seats and upgrades is difficult to impossible. And you're confined to the one airline.

Although airline cards limit your earnings to the sponsoring line, AmEx green, gold, and platinum cards earn credit that you can transfer to any of several airline programs, including AirTran, Continental, Delta, Frontier, JetBlue, Southwest, and more than a dozen foreign lines. And you can exchange AmEx Starwood card credit into several airline programs, with a 25 percent exchange bonus with some transfers.

Most big banks issue credit cards that earn credit -- usually "points" rather than "miles" these days -- in an account with the bank. When you want to fly, the bank buys you a ticket. As with airline cards, the usual earning formula is 1 mile or point per dollar charged, often with bonuses for some types of purchases. And the typical redemption formula is 1 cent per point toward the purchase of a ticket (or, in most cases, practically anything else). Bankcards are probably your best bet if you earn most of your credit through the card and are happy to travel in economy class:

-- Because the bank buys your ticket, seats are not limited by stingy airline allocations; it's easy to arrange travel when and where you want.

-- You can use credit in most bankcard programs to buy lots of goods and services other than air travel -- in effect, these are really cash-rebate cards rather than frequent flyer cards.

The biggest disadvantage is that bankcard credit is not practical for premium-class travel or upgrades.

Recently, some cards started offering "hybrid" benefits: Your choice of airline miles or bank-buys credit. Among the big U.S. airlines, United's card offers that option, as do several varieties of AmEx.

Which card? The key decision is between an airline and a bankcard:

-- If you opt for the airline, obviously choose the line you fly most -- or AmEx, if it partners with that line.

-- If you opt for a bankcard, forget the "miles" aspect and go for the card with the highest rebate percentages.

The other non-rebate variables are far too complex for me to go into here -- annual fee, APR, credit requirements, enrollment bonuses, and such. For those details, log onto a comparison site such as www.lowcards.com, www.bankrate.com, www.cardoffers.com, www.cardratings.com or www.creditcard321.com to sort out the details.

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