Bank Cards

What we're calling 'bank cards' are also known as 'fake miles' cards and 'choose your own airline' cards.

They are bank-issued cards--typically MasterCard or VISA--with a travel awards program modeled on the airlines' frequent flyer programs. And they function very much like airline affinity cards: earn miles for purchases (usually 1 mile for every $1 charged); redeem miles for free tickets (a free domestic economy ticket can be had for 20 - 25,000 miles). The miles can also sometimes be combined with cash to secure a ticket.

In fact, calling the currency of bank cards 'miles' is misleading, since your earnings are based on dollar amounts charged, not distance traveled. Which is why some call them 'fake miles.'

Notwithstanding the surface similarities between bank cards and airline cards, the differences are real and substantial. First and foremost, the "miles" earned for bank-card charges are proprietary: they can ONLY be earned for charges made with THAT card. This severely limits your earning capacity--compared to miles awarded in an airline program, which can be earned for flights, hotel stays, charges with the program card, etc., etc. And of course, bank-card miles cannot be combined with your airline miles or hotel points.

On the award side, bank card programs claim two distinct advantages over the airline programs: (1) you can redeem your miles on any airline, and (2) there are no blackout dates for award travel. These benefits are possible because bank programs purchase award tickets on behalf of their members. And since they're revenue tickets, they aren't subject to the capacity controls airlines impose on their own award seats.

There are some important caveats to these programs, which may make them less generous and flexible than they appear at first blush. Consider the following typical policies:

• The value of award tickets is capped. If, for example, you redeem 25,000 bank-card miles for a free domestic ticket, the maximum value of that ticket might be $500.
• You must request your award ticket at least 21 in advance of travel. (This allows the bank card programs, through their travel agencies, to purchase discounted, advance-purchase tickets, thereby lowering their redemption costs.)

Given both the strengths and weaknesses of these cards' earning and awards, they are better suited to frequent buyers than to frequent flyers. If you travel often, you have more options for earning miles and awards through the airline-specific programs.

Here's a summary of the bank cards' pros and cons compared with the airline cards':