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Saturday, November 9, 2024

What Are Air Miles? A Guide to the Popular Credit Card Rewards Option

What Are Air Miles
Eric Bank

Writer: Eric Bank

Eric Bank

Eric Bank, Finance Expert

Eric Bank is an M.B.A. who has covered financial and business topics since 1985, appearing regularly on Credible, eHow, WiseBread, The Nest, Zacks, Chron, BadCredit.org and dozens of other outlets. Eric specializes in taking complex subject matters and explaining them in simple terms for consumer audiences, particularly in the world of personal finance. Eric holds a Master's in Business Administration from New York University and a Master's in Finance from DePaul University.

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Lillian Guevara-Castro

Editor: Lillian Guevara-Castro

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Lillian Guevara-Castro brings more than 30 years of editing and journalism experience to the CardRates team. She has worked at The Atlanta Journal and Constitution, Gwinnett Daily News, Gainesville Sun, and The New York Times, where she covered demographics, consumer issues, and the business and financial sectors. Lillian has a degree in journalism and communications from Georgia State University and brings her fact-checking expertise to ensure Digital Brands content is accurate and engaging.

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Jon McDonald

Reviewer: Jon McDonald

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Jon leverages 15-plus years of journalism expertise to inform financial consumers about emerging trends and companies making an impact in the industry. He is most knowledgeable in the areas of budgeting, credit card rewards, and responsible credit use. Jon has a passion for writing and editing, and his articles have appeared in publications produced by The New York Times.

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If you spend a lot of time 40,000 feet above the ground, air miles should be a part of your lifestyle. Air miles are rewards you earn when you fly with an airline or use a credit card linked to an airline’s reward program. You can collect these miles for free flights, seat upgrades, hotel stays, or other travel-related benefits

The more you fly or spend with the associated credit card, the more air miles you can earn. Different airlines have different programs, so the rules and benefits vary.

How to Earn and Redeem Air Miles

First, you must earn your air miles before redeeming them. That’s easy as pie. Let’s see how to do it.

Earning

Earning air miles can be straightforward if you know where to focus your spending. One of the best ways to earn air miles is through travel-related purchases, such as flights and hotels, as these typically offer higher miles rates. 

Tips for earning air miles graphic

Some credit cards also give bonus miles when you buy from specific airlines or travel partners, so you accumulate points faster. However, earning air miles isn’t limited to travel expenses; you can also earn miles on purchases such as groceries and gas. Most cards also offer at least one point or mile per dollar spent regardless of purchase category.

Additionally, some cards have bonus categories that change every quarter or year, allowing you to earn extra miles on certain types of spending during those periods. You can maximize your miles by using your credit cards for these purchases. Accruing these rewards over time can help you enjoy free or discounted travel.

Redeeming

Getting something in exchange for the effort you’ve put into accumulating air miles can be just as satisfying as acquiring those miles in the first place. You have choices when it comes to redeeming your hard-earned miles. It’s not always an easy decision, but it doesn’t have to be complicated either.

The most direct path is to go through the airline or credit card you earned the miles with and book the flights with them.

Tips for redeeming air miles graphic

It’s crucial to check out seat availability and blackout dates, for these can impact the conditions and times when you can use your frequent flyer miles.

Besides booking flights, you can redeem miles for business or first-class seat upgrades. Some airlines even allow you to combine miles and cash for upgrades. Understanding how your redemptions work will let you make the most of your air miles.

Types of Cards that Offer Air Miles

One of your first decisions is whether to get a co-branded travel card or a general-purpose one. Each has its strategic advantages, but nothing stops you from owning some of each type.

Co-Branded Cards

Co-branded cards are affiliated with specific airlines and offer higher earning rates when you make purchases with that airline.

co-branded cards graphic

These cards often include airline-specific perks such as free checked bags and priority boarding. 

With a co-branded card, you can earn miles faster when you fly with the partnered airline, making it an excellent choice for frequent travelers of that airline. Many of these cards offer other rewards for car rentals, hotel stays, and more.

These benefits help you save money on travel-related expenses.

General Travel Rewards Cards

General travel rewards cards are not explicitly associated with one airline and offer flexible choices regarding where and how you can use the miles you’ve earned.

general travel rewards card graphic

These cards are like the free agents of the miles-earning world because they aren’t loyal to a single mileage program. They let you, the traveler, decide where those points should go when redeeming them.

One of the nice things about this system is that you are not bound to just one airline. You can redeem your points through multiple carriers, giving you more options for finding convenient flights.

Furthermore, you can also move the accumulated miles to various partner programs. This allows you to use the same rewards for different airlines. These cards are perfect if you travel with other airlines and want to have a range of options with which to spend your rewards.

Premium Travel Rewards Cards

You may earn premium rates when you use elite travel rewards cards to pay for flights and hotels. With indulgent benefits that include access to airport lounges and free baggage checks, flyers who carry super posh travel rewards cards can command a certain kind of respect. 

premium travel rewards card graphic

To earn those rewards, you must buy tickets and book rooms with the rewards cards upfront. Also, these cards typically command a super-sized annual fee, offset by even more indulgent credits and rewarded perks—when redeemed.

An illustration of significant value when you exchange your points is the Chase Sapphire Reserve® card. When you use the points you’ve earned through this card to purchase at the Chase Ultimate Rewards portal, they’re worth 50% more than if you made the same purchase with cash or using any other kind of credit card. 

This card comes with its own set of premium perks and benefits, like free access to airport lounges, that add up if you’re a frequent traveler looking to maximize your rewards without compromising your travel experience.

The following chart compares the features of the three mileage card types:

FEATURECO-BRANDED CARDSGENERAL TRAVEL REWARDS CARDSPREMIUM TRAVEL REWARDS CARDS
AffiliationSpecific airlineNot tied to a particular airlineNot tied to a particular airline
Earning RatesHigher rates on affiliated airlinePoints/miles on a variety of purchasesPoints/miles on flights, hotels, and more
Additional BenefitsAirline-specific perks like free checked bags and priority boardingFlexible redemption options, transferable pointsExtensive travel benefits such as lounge access, travel credits
Annual FeesVaries, generally lower than premium cardsModerate to highHigh annual fee
FlexibilityLimited to the affiliated airline and partnersHigh flexibility, transferable to various airline programsEnhanced redemption rates through rewards portals

These cards generally require you to have good to excellent credit. Their credit limits vary by issuer, but the premium cards have the highest.

How to Maximize Your Air Miles

Maximizing your air miles can help you get the most out of your travel rewards. After all, if you’re going to play the game, you may as well play to win.

Use Signup Bonuses

Signup bonuses are among the best ways to extract the most value from your mileage cards. Travel rewards credit cards often offer large signup bonuses to new cardmembers. 

You must meet the minimum spending requirements within a specific period, usually three months, to earn these bonuses. You can quickly gain a lot of miles by planning your spending to meet these requirements. 

This strategy helps you build up your miles faster, but only if you haven’t previously owned the same card going back a specified number of years.

Spend Strategically to Earn More

Begin by directing your spending toward those categories of purchases that will yield the most significant rewards. For instance, if you have a credit card that gives you two miles for each dollar you spend, that’s a 2% return on your money. And the better cards don’t limit your high yields to certain purchases, either. 

It’s a good idea to work with multiple credit cards. These cards often come with different kinds of rewards in mind.

For example, use one to get double rewards when you pay for travel and another to accumulate triple rewards when you buy a meal at a restaurant. By juggling your various credit cards and the rewards they offer, you can earn the most rewards without spending any more money than you usually would.

maximize credit card rewards graphic

Also, watch out for any bonus categories that may rotate on your cards. Some credit cards change their bonus categories throughout the year, often in three-month increments. To earn the higher rewards, you’ve got to activate the bonus categories every quarter.

You can amass airline miles much more rapidly by directing your spending to high-reward categories and distributing it among several card types.

Differences Between Points, Miles, and Cash Back

Points and miles are often tied to specific travel programs, while cash back offers straightforward, unrestricted rewards. Moreover, point and mile values vary depending on how you redeem them, as opposed to the fixed value and easy usability of cash back rewards. The following chart summarizes the differences between the three types of rewards:

FEATUREPOINTSMILESCASH BACK

Program Affiliation

Often tied to specific travel programs.Often tied to specific airline or travel programsUnrestricted rewards, not tied to any particular program

Redemption Options


You can redeem miles for travel, merchandise, or gift cardsTypically redeemed for flights, seat upgrades, or travel expensesRedeemed for statement credits, direct deposits, or checks

Value Variation
Varies depending on how you redeem the miles.Varies widely based on the airline and how miles are usedFixed value, usually one cent per dollar, easy to understand and use

Usability


Requires understanding of specific program rules and restrictionsRequires knowledge of airline reward systems and availabilitySimple and straightforward, with no restrictions or special conditions

Many consumers choose to own cash back and travel cards. This arrangement helps them maximize their rewards by expanding the number of categories that receive bonus rates.

Benefits and Drawbacks of Air Miles

Using air miles has both benefits and drawbacks. The benefits can save you money and make travel more enjoyable. However, the drawbacks can make using air miles confusing and sometimes less valuable.

Benefits

  • Savings: Use air miles to book free or discounted flights, saving money on travel expenses. This can significantly reduce the cost of your trips, allowing you to travel more often. It’s a great way to stretch your travel budget.
  • Travel Perks: Enjoy perks like free checked bags, priority boarding, and lounge access. These benefits can make your travel experience more comfortable and convenient, allowing you to avoid extra fees and enjoy a more relaxed journey.
  • Redemptions: You can redeem miles for travel-related expenses, including hotel stays and car rentals. This flexibility allows you to cover more travel costs with miles, making your rewards more versatile and valuable.
  • Transfers: Transfer miles to partner airline loyalty programs for more redemption options. This gives you greater flexibility in using your miles, allowing you to find the best deals and maximize your rewards.
  • Travel Flexibility: Air miles can provide greater travel flexibility. You can often use miles to book last-minute flights without facing high cash prices, allowing you to be more spontaneous with your travel plans.
  • Special Promotions: Many airline loyalty programs offer special promotions that allow you to earn extra miles. These promotions can include double miles for certain routes or bonus miles for flying during specific periods. Taking advantage of these offers can help you accumulate miles faster.
  • Companion Tickets: Some programs offer companion tickets, allowing you to book a ticket for a travel partner at a reduced rate or even for free. This can make traveling with family or friends more affordable and a great way to share your travel benefits with loved ones.

Drawbacks

  • Navigating Program Rules: It can be quite a task to understand the rules and regulations of the many airline loyalty programs. Each program has its own, sometimes somewhat convoluted, set of rules, making it difficult to know what to do.
  • Blackout Dates and Seat Availability: To prepare for blackout dates, seat availability, and redemption rates, you must plan carefully. These three elements may work together to restrict when and how to use your miles.
  • Devaluation Over Time: The value of miles can decrease over time if redemption rates or program regulations change. In other words, the miles you earn today could be worth less when you’re ready to spend them. Use your frequent flyer miles quickly while enjoying the high-value rewards.
  • Frequent Program Changes: Frequent program changes can make it more challenging to get the biggest return on earned miles. Airlines periodically update their programs by changing the types of rewards or the number of miles required to get particular rewards.
  • Limited Availability: Seats on award flights can be scarce, especially when many people are traveling, such as during the holidays. That means finding flights you can book using your frequent flyer miles can be challenging.
  • Expiration of Miles: Some airline miles expire if not used within a certain period. This pressures you to use your miles within a specific period or risk losing them altogether.
  • Fees and Surcharges: You may need to pay fees or surcharges when you redeem your miles. Even after you’ve done all the work to secure your reward, it could decrease in value because of expenses like taxes and fuel surcharges.
  • Devaluation Risks: Increases in the miles required for a flight can swiftly devalue an airline’s accumulated miles. This can happen with little warning, turning miles saved for a trip into something less potent or valuable.

When evaluating the benefits and drawbacks of a particular mileage card, look at the big picture rather than focusing on just a few features.

Air Miles Can Be Rewarding Perks for Travelers

Frequent flying can pay off in terms of building up considerable air miles. Saving on travel and gaining access to valuable extras is a compelling reason to use air miles. Some programs come with blackout periods (when you cannot book) and fewer available seats to claim.

Still, experts recommend specific air miles or points cards for travel. For help deciding which ones to get, check out our reviews at CardRates.com.