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Q&A: Should I Just Dump My Airline Credit Card?

Dear Tim—

I recently became aware of the Chase Sapphire card, and am wondering whether to make a switch to it from my other Chase credit cards.

I use a United Mileage Plus card (for personal purchases) and a Marriott Rewards card (for business purchases). I happen to like these travel companies, and if I have the chance to blow some points on travel, I am happy to use United and Marriott. But I am not dedicated to these companies to the exclusion of others.

Chase Sapphire seems to give me more flexibility to choose multiple airlines and hotels. They also offer a straight exchange of points for dollars, so that if I want to buy an airline ticket for $500, it costs me 50,000 points. But, for domestic travel, United would charge me 25,000 (saver award) or 50,000 miles (standard award). I find that when I book United Mileage Plus travel, it must be booked way in advance in order to get the flights I want, which means I might have been able to find a low fare. So, I might be getting a better deal sticking with the United Mileage Plus program.

Any thoughts?

Marc in Maryland

Dear Marc—

What you’ve described is a dilemma faced by a large and growing number of travelers.

Where once the choice was between competing airline or hotel cards, today’s consumers increasingly find themselves torn between two categories of rewards cards. On the one hand, there are the credit cards uniquely affiliated with a single airline or hotel program, like the United Mileage Plus Visa or the Marriott Rewards Visa. On the other hand are the cards with no particular affiliation—what I call proprietary bank rewards cards—represented by the likes of the Chase Sapphire card and the Capital One Venture Rewards credit card.

Perhaps the best way to understand the difference between the categories is by comparing and contrasting their strengths and limitations in both earning points and redeeming them for rewards.

Earning

The great strength of program-linked cards is the ease with which miles can be accumulated. In a program like United’s Mileage Plus, members can earn miles for hundreds of partner companies, ranging from other airlines to hotels to mortgage companies to online retailers to Netflix.

By contrast, bank card users generally earn miles when and only when they make purchases charged to their cards, and only for the amount of the transaction. So they would, for example, earn 450 miles for purchasing a $450 cross-country ticket from United. But the actual flight miles—around 5,000 of them—cannot be applied to their bank card accounts.

Using a bank card, in short, means you’ll have to carry at least one additional card, or else forego potential mileage-earning opportunities only available with airline and hotel cards.

Redeeming

It is on the redemption side of the ledger that traditional airline programs have run afoul of consumers. For all the opportunities to build up significant account balances, the most-requested reward—a round-trip domestic ticket—has been in exasperatingly short supply as the profit-starved airlines have focused on filling flights with paying passengers. And miles that cannot be readily redeemed aren’t worth much, whether they’re earned for using a credit card or for something else.

The bank cards suffer from no such downside. In fact, it is to just such redemption bottlenecks that the bank cards owe their popularity. As the cards themselves point out in their marketing pitches, their awards are mostly restriction-free. The Sapphire card’s own webpage boasts the following: "No Blackout Dates or Travel Restrictions." And you probably remember the TV ads for Capital One cards, starring David Spade as a supercilious loyalty program supervisor who bullies his front-line agents into denying all requests for free trips. There again, the message was that where the airlines hoarded award tickets, the bank card offered hassle-free redemption.

The reason for the bank cards’ largesse is straightforward. Unlike the airlines—which give away their own seats as awards, potentially displacing paying passengers—the bank programs simply purchase tickets for cardholders when they redeem for a free trip. Because they’re paid tickets, the awards are not encumbered by the restrictions that so frustrate members of airlines’ programs.

A quick reality check is in order here. While Sapphire points are worth 1 cent each and can be cashed in for tickets and other awards with few restrictions, there are some constraints on award availability with many bank cards. First, there’s typically a price cap: The market price of the award ticket can’t exceed a set amount. And second, there’s usually an advance-purchase requirement, also designed to keep the cost of award tickets under control.

Still, those are relatively benign requirements compared to those associated with airline miles.

(It’s ironic, and telling, that all three cards you either have or are considering are issued by the same bank, Chase. So when they promote the Sapphire card on the basis of its easy award redemption, it’s a thinly veiled criticism of one of their own products, the United Visa card.)

What to Do?

So to put it in the starkest possible terms, the choice is between cards that offer a wealth of earning opportunities but limited award availability, and cards that limit mileage-earning to charges but feature ready access to free tickets.

Both involve tradeoffs; neither is best for every traveler.

Given what you’ve shared about your travel and consumption inclinations, I’d suggest you keep the Marriott business card, since there’s no Sapphire business card.

And in place of the United card, try the Sapphire Preferred card for a year.

There are two versions of the Sapphire card, the regular and the Preferred. The Preferred card, while it has an annual fee ($85, waived the first year), also boasts points that are worth 25 percent more when redeemed for airline flights, and a 7 percent points bonus at the end of the year. Plus it allows points to be transferred 1:1 into the programs of Continental, British Airways, InterContinental, Marriott, and Amtrak.

If after the first year you’re not happy with the Sapphire card, cash out your points for a ticket, or transfer them to Marriott’s program. It’s also possible that by then, the points transfer will be extended to United, following the Continental-United merger, in which case that will be an option as well.

  • stanley merentie

    I am currerntly serving in the military and last year something happen to me, i purchased an United Airline tickets to Miami, my vacation was cancelled due to a military deployment to Iraq and when i tried to pay the penality fee and rescheduled for a later time, I found out i could not do it and not only that UA cancel my frequent flyer miles in the amount of 376,000 miles and talking to their customer service. I was treated like a “dog” Do you know of anyone with a similar problems and how did they resolve it. Stanley

  • Lucky Striker

    I was a big fan of AMEX’s Membership Rewards program until they dumped Southwest a month or two ago. I dumped most of my MR points into my Delta Skymiles account to take a trip for 3 of us to Hawaii in F last year (105K each) and for 2 of us to Hawaii last month, coach out and F back (105K each). I now charge everything to the Southwest Chase card because we fly Southwest a lot and redeeming free tickets is absolutely painless. Southwest and Chase have a deal going where if you charge $19,200 between last May and next April you get 2 free tickets instead of 1 and I’ll either end up with 4 or 6 free tickets by next April. What does $19K get me on AMEX? Not even one free ticket on their airline partners and I get two on Southwest? It’s a no brainer for me.

  • Victoria

    Stanley… Contact chris@elliott.org
    He is amazing at helping resolve these types of problems. Good luck

  • Elena

    Victoria – just so you know, Starwood by Amex has a redemption with SWA. They are great because you earn hotel AND airline miles. I love that card!

  • Bob Marderosian

    Marc,

    I have a US Bank Travel Rewards card called FlexPerks. It’s their Visa Signature card. No annual fee for the first year. After the first
    year, the annual fee is $49 and is waived if your net spending is $24K/year or more. Here are the benefits:

    . Earn one FlexPoint for every $1 of eligible
    net purchases charged to your card.

    . Two FlexPoints for every $1 spent on: gas,
    grocery or airline purchases, most cell phone
    expenses, including phone purchases, monthly
    bills, accessories and internet charges.

    . Earn frequent-flyer miles/points on the airline you fly for your FlexPerks Visa award
    travel.

    . No preset spending limit with your card.

    . Receive an airline travel allowance of up to
    $20 with every award travel ticket – to use for
    possible baggage fees, in-flight food or drinks and more.

    Airline Award Tickets:

    Search for and book your award flight on more
    than 150 airlines (powered by Travelocity).
    . No capacity controls or blackout dates.
    . No redemption fees for award travel tickets
    . Earn frequent-flyer miles/points on the
    . airline you fly for your award travel
    flight.
    . 20,000 pts: Up to $400 Ticket Value
    . 30,000 pts: Up to $600 Ticket Value
    . 40,000 pts: Up to $800 Ticket Value
    . 50,000 pts: Up to $1000 Ticket Value

    You can also redeem points for merchandise
    (laptops, digital cameras), gift certificates/ gift cards, and gift certificates you can use
    at major car rental companies, hotels, and
    cruise lines.

    In my opinion, I think this card is the best
    for travel awards. Bob

  • Bruce B

    I was pleased when my wife and I did not have to pay for baggage as we have AMEX Delta Platinum cards. When I say “we”, I mean we each have a card but get a single statement. Recently, the wife took a Delta flight and using her AMEX Delta Platinum card was required to pay for baggage, $26. When I complained to Delta, I was told that she was not the “primary” on the card so she was not elegible. I and up to eight others traveling with me would be exempt from baggage charges would be exempt since I am the “primary.” What a fraud! My wife uses the credit card as much as I do! Sometimes too much… To avoid this, I would have to change the “primary” to her everytime she flys solo. Or, get a second card in her name which has an additional annual card fee. Why does Delta and AMEX advertise this as a great deal when it only works for one when both of us are customers?

  • Mike H.

    Can anyone tell me if there is any credit card that 1. earns awards, either miles or points for travel, AND more IMPORTANTLY 2. does not charge for the conversion of foreign currency to USD. Capital One is the only one – AMEX charges 2%, other visa cards and MC 3%

  • Sunny Day

    Lucky Striker where is information on the the Chase/Southwest deal you mentioned in your post of 9/8?
    Sunny Day

  • Jerry Mandel

    Stanley. Talk (Free)to a lawyer in the military. UA might be violating some Federal law pertaining to active military.

  • Jerry Mandel

    We think airline cards are great. So far, we have taken several domestic trips, one Alaska trip, and four Europe trips using flier miles worth far more than the little cash back cards can supply. On another subject, overseas flights on AA get first checked bag free of fee. Sadly, Canada and Mexico are considered “domestic” and require bag fees.

  • Jerry Mandel

    Stanley-Send your story to chris@elliott.com He will battle UA for you. As a veteran, I am also PO’d about UA’s actions and treatment of you.

  • Tech_gut

    Stanley,
    Write Tilton (CEO of UA) and tell him your story. United is 80% retired military and had a soft spot for active duty.

  • John

    Great article/blog. Thank for the info. I think you should dump your credit card. http://www.seooptimizationservices.us

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