Wanting a Frequent Flyer Credit Card?
If you're after a rewards program for your credit card then choosing one that offers frequent flyer miles may be your best bet. However, if it's the only reason you're getting a credit card then you're making a big mistake.
If you're good with handling your money and can manage it well then adding a rewards program like frequent flyer miles to your credit card can work for you. Each dollar you spend accrues flyer miles and can be redeemed on available air routes across the country or internationally. If you use your card well, paying it back within the interest-free period and not buying spontaneously, you will accrue your frequent flyer miles quite cheaply.
However, if you're spending habits are erratic and uncontrolled and you're hoping to get cheap flights throughout purchasing on credit you will be sadly mistaken. The costs for this type of spending habit are incredible.
If I want to redeem my frequent flyer points on a flight from Perth (Australia) to Los Angeles (USA) it will cost me 120,000 points. The same flight would only cost me A$2563 if I purchased them today. Now considering that each point would cost me $1 of credit card purchases (may be less with increased transactions) it calculates to be more than $46 for every $1 spent.
A local bank here in Australia is also offering other rewards instead of frequent flyer miles. These are even worse. One of the rewards you can trade your points in for is a men's Philips HQ6707 Philishave electric shaver. These retail in Australia for $159 but would cost you 16,250 reward points. The trade off to accrue these points is $1.50 of credit card purchases for every 1 point. Calculate this and you'll find that you need A$153 for every $1 of spending.
You also need to understand that these cards usually charge an extra annual fee to participate in the reward program and the interest rates charged on these cards are usually 16-18%pa.
The verdict: If you're good with your money these are a great benefit but if you're struggling to manage your money already stay away from them or at least get a low interest credit card.
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