Some of the best deals on credit cards, particularly credit cards with rewards programs, are offered by airlines. While some credit card holders may find this puzzling, there are good reasons for this.
Airlines have quite sophisticated rewards programs in their own right, for example air miles. This means they already understand the benefits of a good rewards program and constant contact with their customer base. The airline rewards programs work on a very similar basis to traditional credit card rewards programs, which is that they will reward frequent use with free flights or other benefits.
Airlines are keen on these rewards programs because outside a few flight routes, most of their services operate with some spare capacity. These routes are still profitable for the most part, but there are some seats empty during each flight. As the cost to the airlines of these extra seats being occupied is minimal, they can offer them as rewards and at the same time they don’t need to lower their prices to fill them.
People who fly on the airline are invited to join a frequent flyer club. Those who accept the invitation are given a credit card, which they then use to purchase flights with that airline or with another, associated one. For each flight they take they are awarded with points that they can then renew against flights.
Credit cards rewards programs are very similar in that for every dollar the credit card holder spends, he or she is awarded points which they can redeem for rewards. With cash back cards, a certain percentage of each qualifying transaction is routed back as a discount to the account.
There are two major types of airline cards: those which are straightforward rewards cards and those that are integrated with frequent flier programs. Straightforward rewards cards simply offer rewards for spending on the card, although these rewards may be limited to the airline. For this lack of flexibility the card holder is often rewarded with a more generous point system, such as extra frequent flyer miles for some flights.
Cards tied into the airline’s frequent flyer program offer rewards for general spending as well as rewards from the frequent flyer program. Both of these types of cards tend to be branded with the airline logo, although they will be run by a bank or other financial institution rather than the airline.
good advice