Can Bank Cards Contribute to Your Travel?
Some bank-issued cards come with a travel awards program that is closely modeled on the airlines’ frequent flyer programs. They may even function much like airline affinity cards. You can earn miles for purchases, usually 1 mile for every dollar that you charge, redeem 20 - 25,000 miles for free domestic economy tickets, and perhaps even combine miles with cash for tickets. However, calling the currency of these bank cards “miles” is misleading. Your earnings are based exclusively on dollar amounts charged and not distance traveled.
The differences between bank cards and airline cards are actually very important. To begin with, the "miles" earned with charges made on a bank card can only be earned for charges made with that particular card. If you travel frequently, this may limit your earning capacity in comparison to miles awarded in airline programs, which can be earned for flights, hotel stays, and charges with the program card. Bank card miles also can’t be combined with other airline miles or hotel points from another program.
With any type of reward or rebate program, it’s always important to carefully read and understand all of the programs and policies. In some cases there is a limit on the value of tickets. For example, the maximum value of a free domestic ticket might be $500 if you redeem 25,000 bank card miles. You must usually request your award ticket at least 21 in advance of your planned travel. This then allows the bank card programs to buy discounted, advance-purchase tickets through their travel agencies, which lowers their costs.
There is a bonus side to these cards. The bank card programs can claim some advantages over airline programs. One benefit is that you can redeem your miles on any airline. This means you are not limited to places that a specific airline travels and can choose the carrier that you prefer. The second benefit is that there are usually no blackout dates for your award travel. These benefits are possible because the bank programs aren’t using revenue tickets, and they therefore aren’t subject to the capacity controls airlines may have for their own award seats.
You should take into account both the strengths and weaknesses of these cards’ earning and awards before deciding which type of card is better suited to you. If you are more of a frequent flyer and travel often, you may have more options for earning miles and awards through the airline-specific programs. However, if you do more buying than flying, then you may want to consider either a bank card or other type of rebate card.
The fact is that mileage-generating cards actually use miles as a form of rebate or reward. While this may not be in the form of cash, you are still receiving something back in return for your purchases. You may want to think carefully before choosing a card that offers rebates in the form of free tickets if the value of another cash rebate is actually higher. The bottom line is that if you don’t want or need to travel frequently, a cash rebate may offer you a more realistic benefit than a ticket. You should think carefully about what you actually want to earn and will use before you choose any type of reward card.