Airline miles and frequent flyer credit cards can be a great way to save money on vacations and airline tickets. As with most products, knowing the differences between the products that are available is the key to making sure you get your best deal.

Frequent Flyer Credit Cards – Frequent flyer cards are issued by banks with as a joint venture with specific airlines, i.e. Delta and so on. These frequent flyer cards will add miles to your account only when you fly on that specific airline. You can also earn miles by making purchases from specific hotels, restaurants, and car rental agencies.

The air miles that these cards accumulate actually have a cash value that can be taxed or even donated to charities. This card is meant specifically for frequent flyers, let's say more than 3 times a year, but more than 5 times a year is what we recommend at Direct Banc.

Advantages:

• Frequent Flyer miles accounts accumulate much quicker than air miles rewards cards.
• Can earn air miles from hotels, restaurants, and car rental agencies.
• Miles gain cash value that can be sold, traded or donated.
• Preferential treatment from the specific airline, (upgrades, waiting rooms ...)
• Most cards come with bonus miles upon approval.

Disadvantages:

• Must use miles on a specific airline
• Black-out dates and availability issues
• First come last served (you will be bumped if paying passengers are waiting.
• Higher interest rates
• Miles can expire.
• Annual fees

Air Miles Rewards Cards - Air miles credit cards with rewards are awarded by the banks that issue the cards, as opposed to a joint venture with a specific airline. The discounts/miles that you receive are strictly awarded from the purchases you make with the card. These cards will not accumulate air miles for the distances that you travel.

However, you will gain points from purchases from a much broader range of retail outlets and services as well as from specific hotels, restaurants, and car rental agencies. Most normal day to day purchases like, groceries, gas and even utility bills will build points and miles.

Since these cards are issued independent of a specific airline the card holder is free to use the air miles/points at any airline they choose. The card issuer will discount or award the tickets to you, not the airline. This also allows you to avoid black-out dates and being bumped in lieu of paying passengers.

Advantages:

• Can be used on any airline
• Avoid black out dates
• Broader range of eligible point/miles purchases.
• Miles do not expire (on most cards)

Disadvantages:

• Will typically accumulate miles slower than frequent flyer cards.
• Higher rates
• Annual fees

Why do Airline and Air Miles Credit Cards have Higher Rates – To break even on the awards they have to pay out. The only reason you should use a air miles credit card is to get the benefits. Your must pay the balance each month to benefit from the awards the card offers. If you carry a balance from month to month the higher interest will almost always negate any benefits you will receive.

Can I get an Air Miles Card without an Annual Fee? - Almost all of air miles credit cards have annual fees, however here are the few that do not:

Capital One® No Hassle Miles(SM) Rewards - Excellent Credit

Capital One® Business Platinum with No Hassle Miles(SM)

Capital One® No Hassle Miles(SM) Rewards - Good Credit

Citi® Bronze® / AAdvantage® MasterCard® for College Students

HSBC Platinum MasterCard® with Cash or Fly Rewards

Advanta Business World MasterCard