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Credit Card Rewards–Are Miles Beside the Point?

by Indexcreditcards Indexcreditcards
Credit Card Rewards–Are Miles Beside the Point?

Credit card rewards that make you work

Susan Stellin wrote a heart-felt piece in the New York Times last week. She’d been a loyal user of an airline-branded credit card for some time, but had become increasingly frustrated by the growing number of hoops she was having to jump through in order to redeem her miles. So she changed credit cards.

She wasn’t alone with her problem. Many frequent fliers have found that being tied to their chosen airline has its drawbacks, especially as many fleets practise “capacity control,” which limits the number of “free” seats available on any given flight. This can make booking a trip on a popular route at a convenient time challenging.

Of course, this isn’t to say that everyone should trade in their airline-branded credit cards. If your flying habits mean that your existing card works for you, then by all means stick with it. And remember that many carriers’ cards offer other benefits (access to lounges, upgrades, no-cost insurance, a free checked bag…) that you should factor into the equation.

Credit scores can be affected

Another reason to think twice before changing a credit card is the impact it could have on your credit score. According to FICO®, the people behind the most widely used credit scoring system, your score could be damaged if you apply for too much new credit or open too many new accounts in quick succession.

Of course, one new credit card application is unlikely to be much of a problem. There’s a second reason to take care when changing cards. Credit scores are sensitive to the proportion of your available credit that you actually use. And, if you trade in a card with a $20,000 limit for one that offers $10,000, your “credit utilization ratio” can suffer.

To be clear, none of this should stop most people from changing cards, and you should only consider not doing so if you’ve recently made a number of other credit applications, could possibly be applying for a large loan (such as a mortgage) within a year, or are using a large proportion of your available credit.

However, some travel programs will make sense for many business or casual travelers. Since most travelers will likely use a credit card, why not earn extra perks or benefits from your loyalty? It takes a little effort to track down the card that best matches your lifestyle and needs. But failing to do so can cost you — in stress as well as dollars.

Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.

This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.

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