AIRLINE CREDIT CARDS; WORTH IT?

Nowadays it seems like everyone has a credit card that they are pushing and the airlines are no different. Who can blame them though with the sky-high interest charges most of these cards have, it's just extra money to line their quickly depleting pockets as there is almost no money in the airline industry anymore so airlines are trying to diversify to bring these funds back.

If you travel a lot or shop a lot and can pay off the balance before the end of the month then these cards might fit your lifestyle. However for most people, it's just another way to end up deeper in debt so if you cannot risk being stuck with the bill then don't risk it.

As you may have started to notice, most of these cards are forced down your throat just after the safety announcements on most major airlines (or in the forced video you have to watch) so if you have flown in the last couple of years I'm sure you've heard about a few of them. While I sound negative on the subject (and most flight attendants do too) they are not all bad as there are a way to make them work for you even if you don't want to use it as a form of payment.

How; you might ask. Well just because you have a credit card does not mean you need to use it to take advantage of various perks. Some airlines know this though so there may be a yearly fee but depending on the type of perks and how often you travel, they might still be worthwhile.

**all prices and inclusions are based on 2020 offers

Example: Gold Delta Skymiles Credit Card

Includes:

- Priority boarding

- One checked bag for free

- Discounted Delta Sky Club Access

If you use the card to buy things then you also get:

- 2 miles on Delta purchases

- 1 mile for every dollar spent (at select retailers)

- No foreign transaction fees

- The option to buy things with miles

- 20% in-flight savings when you use your card

Cost: U$ 95/year (first year is waived)

Example: TD Aeroplan Visa Infinite Privilege Card (Air Canada)

Includes:

- An upgrade toe Zone 2 priority boarding (where available) for you and people on your reservation

- Priority check in for you and people on your reservation

- One checked bag for free just for you - 4x one time use only, Maple Leaf Lounge passes per year

- 50% discount on a companion ticket (if booked in business class)

- VIP fast track at Vancouver, Ottawa, Montreal-Trudeau airports

- Dedicated airport taxi and limo line in Vancouver

- access to dedicated premium parking spots in Vancouver & Ottawa

- Special invites to the Visa Infinite Dining Series

- Enjoy exclusive wine tasting benefits at select wineries in Ontario & BC

If you use the card to buy things then you also get:

- Earn 1.5 miles on every gas, grocery, drugstore, and Air Canada purchases

- Additional perks at select hotels when you book through the Visa Infinite Luxury Hotel Collection

- 10% off the lowest rates in Canada & the US or 5% off the lowest rates internationally on select car rentals at Avis & Budget

When the trip is booked on your card, you also get:

- up to $5 million worth of travel medical insurance delayed & baggage insurance

- flight/trip delay insurance - common carrier travel accident insurance

- trip cancellation/interruption insurance

- auto rental collision/loss damage insurance (for up to 48 hours)

Cost: C$ 399/year (you need to make at least C$ 200,000/year to qualify)

Example: Cathay Pacific Visa

Includes:

- roadside dispatch

- emergency cash disbursement & card replacement

- Marco Polo Green membership for the first year (U$ 100 savings)

- priority boarding - two pieces of checked luggage (most flights)

- 2 day priority discount flight access

- hold your fare for up to 72 hours when you book your flights

- 2-day access to PressReader before your flight

- personalized baggage name tags

If you use the card to buy things then you also get:

- spend U$ 2,000 within 90 days of opening an account and receive 40,000 bonus Asia Miles (expired March 31, 2019)

- earn 2 Asia Miles per U$ 1 spent on Cathay travel & in-flight purchases

- earn 1.5 Asia Miles per U$ 1 spend on dining

- earn 1.5 miles per U$ 1 spent on purchases outside of the USA - earn 1 Asia Mile per U$ 1 spent in the US

- no foreign transaction fees (when travelling outside of the US) save 10% on selection Asia Miles Gift Miles and redemption discounts through Travel Asia Miles

Cost: U$ 95/year

As you can see there is a varying degree as to what cards offer and charge. All cards will have perks that are aimed towards the clientele they serve or want to attract so if you find one that doesn't suit you then just keep looking.

Using the examples. if we look at Delta's credit card offer at U$ 95/year you would have to take at least 2 roundtrips a year to make the $95 worthwhile as Delta charges roughly U$ 25 per bag, per way depending on the fare that you book (basic economy charges U$ 60 per way for the first bag). However if you fly business class most of the time then this card might not be worth it for you as your first bag will already be included in the fare.

Cathay Pacific charges the same fee but offers completely different amenities. Looking at the perks, I would say that their clientele are more status focused and would probably spend money on luxury items. This means that getting a bag for free wouldn't make a difference as they are probably already buying a business class seat which is why they probably only include this perk for the first year (unless you pay U$ 100 to keep your Marco Polo status).

These are two examples of what I mean by you need to find one that would suite you since it's not always black & white when it comes to if airline credit cards are "worth it". Another thing to note is that some cards are also only available to certain people living in certain regions so you'll want to do your research first.

If you are interested in a card and want to keep it after the introductory period has expired or you don't feel that the perks are worth what you are paying per year then call and ask if they will reduce your fee. Most credit card companies would rather have you as a customer raking up interest and paying U$ 50/year then having no customer. However if you are going for one of the higher priced cards (ex. the Air Canada one) and you are not spending a lot of money then they probably won't reduce it as you are not giving them enough money to cover the cost of all the over the top perks they are giving you. The worst thing they can say is no so pick up the phone and ask.

Another way to make these cards work for you is churning the welcome bonuses. If you are organized and great at keeping track of things then this might be for you.

Churning is when you apply for a credit card for their bonus incentive, use the incentive, and then cancel the card before the annual fee comes up only to wait a bit before to resigning up to get the bonus again. A lot of people have taken discount trips (or even free flights) doing this but it can take a lot of planning and tracking. This also is not illegal and it might not hurt your credit score so if you have a trip coming up it might be worthwhile to look into.

When it comes to your credit score most people worry that applying for credit cards and doing the deep dive is what affects your score. While applying for a bunch of different cards may make it seem that you are in a dire need of having lots of funds available, this is just a small bit of what goes into calculating your credit score with the main item being if you are paying your cards off in time. If you miss a payment then the credit bureau may look closer at your previous three years of activity which could reduce your credit score.

For churning to work properly, do your research. Find a card that is free for the first year (at least) and offers a signing up bonus. Once you have those two items in place apply and then keep track of not only when you need to cancel the card before the annual fee kicks in but also the time line that you have to earn the bonus points. As soon as you've hit the criteria and you cancel the card you might have to wait 3 to 8 months before reapplying to get the "welcome bonus" on that card again. As you probably already see, this where where keeping track comes in handy as not only do you need to remember dates but also what cards you have already applied to.

There are lots of websites out there that list what cards are the best to apply for if you are planning on churning as well as when certain perks usually pop up (bonuses do rise and fall throughout the year). Also, be careful when it comes to signing up for too many at one time as it might make if difficult to hit the spending amounts to receive the welcome bonuses. If you do have to spend money to get these bonuses then also make sure to pay them off as it will affect your credit score!