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Flying High with Your Credit Card: Six Tips for Going the Distance with Airline Mile Rewards

by Barbara Marquand

On a dreary winter day, nothing quite beats the idea of jetting off to a tropical beach, just for the price of using your credit card to buy stuff you needed anyway.

It's no wonder free airline miles remain a tempting credit card perk. But before you slip deeper into your tropical daydream, wake up to the realities of credit card rewards, which carry restrictions and in some cases may not be all they're cracked up to be. In fact, last year Consumer Reports advised against most airline rewards credit cards because of the precarious financial condition of some airlines and the tighter restrictions on using miles.

Still, with some careful attention, you can get decent mileage out of airline rewards. Here's how:

1. Credit Card Spending Requirements

Look for a credit card with a good sign-up bonus, and figure out how much you'd have to spend to earn enough miles for a trip. If the spending requirements are unrealistic, consider a cash-back rewards card instead and use the money to supplement an airline ticket purchase.

2. Credit Card Rewards Restrictions

Read the fine print about blackout dates and other restrictions. How tough will it be to cash in your miles?

3. Airline Stability

Your miles will be worthless if the airline goes bust. Choose a card affiliated with a stable airline or a card that offers the ability to transfer miles to a variety of airline frequent flyer programs.

4. Monitor Credit Card Rewards Expiration Dates

Keep track of your miles and check the expiration policy. In some cases, you have to use the miles within one or two years or lose them. Once you've earned enough miles, book the trip right away. If you don't have enough for a trip and the expiration deadline is looming, consider redeeming them for other perks, such as hotel discounts, or donating them to a good cause.

5. Avoid Late Credit Card Payments

Credit card companies can stop adding points if you pay late.

6. Avoid Carrying a Credit Card Balance

Interest rates are typically high on rewards credit cards. You'd probably be better off choosing among low interest credit cards and using the money you save on finance charges to pay for extras rather than getting a rewards credit card.

Published 07/18/10 (Modified 03/18/11)

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