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If you’re planning on booking award flights this year, credit cards that earn you airline miles — in addition to awarding valuable sign-up bonuses — can be a huge help. Below, TPG Senior Points & Miles Contributor Nick Ewen takes a look at some of the best options to consider adding to your wallet.
Friends and family members constantly ask me, “What’s the best credit card for free travel?” While the Chase Sapphire Preferred Card often comes to mind, there isn’t an absolute nor an obvious answer to that question, as it depends on several factors, such as the type of traveling you want to do, where you want to visit, where you’re located and more.
However, given the global reach of airlines through their respective alliances and partnerships, earning airline miles can be a great way to unlock valuable redemptions, and today I want to go through the airline credit cards that you should think about adding to your wallet in 2016.
1. Southwest Rapid Rewards Premier Credit Card
Current sign-up bonus: 50,000 Rapid Rewards points after you spend $2,000 in the first three months your account is open (worth $650 based on TPG’s most recent valuations)
Earning rates: 2 points per dollar spent on Southwest Airlines and Rapid Rewards hotel and car rental partners; 1 point per dollar spent everywhere else
Other benefits: No foreign transaction fees; 6,000 bonus points after your cardmember anniversary; 1,500 Tier Qualifying Points (TQPs) for every $10,000 spent each year (up to 15,000 TQPs)
Annual fee: $99
Analysis: Based on online comments and conversations at TPG reader meet-ups, this card is a big hit with many travelers. One of the main appeals of this card is that the points you earn from it will count toward the Southwest Companion Pass, one of the most lucrative (and popular) benefits in the frequent traveler world. This includes not only the points from spending but also the points from the sign-up bonus. If you plan your purchases carefully and have the bonus points post early in the year, you could get almost two years of Companion Pass use.
Current sign-up bonus: 50,000 bonus AAdvantage miles after spending $3,000 in purchases within the first three months of account opening (worth $850)
Earning rates: 2x miles on American Airlines purchases; 1x mile on all other purchases
Other benefits: First checked bag free; Group 1 priority boarding; 25% discount on eligible in-flight purchases; 10% of redeemed miles back (up to 10,000 miles per year); no foreign transaction fees
Annual fee: $95 (waived for the first year)
Analysis: This card is another lucrative product for American loyalists, as well as just about any award traveler. The benefits when traveling on American are quite nice, especially since the baggage fee waiver applies to you and up to four companions. However, my favorite benefit on the card is the rebate on redeemed miles each year. This lowers the effective cost of each award by 10% (so a 25,000-mile domestic economy ticket drops to 22,500). If you max out the benefit and redeem at least 100,000 miles over the course of the year, you’ll get 10,000 miles back into your AAdvantage account. This is worth $170 based on TPG’s most recent valuations, and it more than covers the annual fee.
Remember though that the AAdvantage program’s award charts are undergoing a big devaluation in March 2016, but you should still have time to get this card, earn the sign-up bonus and make your reservation before the new award levels kick in. Be sure to check out my list of 6 awards to book before the devaluation for some inspiration on where your miles can take you.
Current sign-up bonus: 25,000 bonus miles upon approval (worth $500)
Earning rates: 3 miles per dollar spent on Alaska Airlines; 1 mile per dollar everywhere else
Other benefits: First checked bag free; $50 discount on new Board Room membership; $121 coach companion fare every year ($99, plus taxes and fees from $22)
Annual fee: $75
Analysis: This card earned a spot in my wallet earlier this year. Sure, it’s nice to earn the sign-up bonus for a future Emirates first-class redemption, but the companion fare benefit is my favorite. Unlike other companion tickets, this one can be used on one-way, round-trip, open jaw or multi-stop itineraries. This gives me a great excuse to get out of Florida each year, with nonstop flights to both Seattle and San Diego. I originally booked a trip to both Seattle and San Diego and saved almost $500 using the companion fare.
However, when my family decided to take a cruise out of Seattle this summer, I decided to switch our trip up a bit. I called Alaska and modified the flight (for free thanks to the carrier’s generous change fee policy, which doesn’t require a fee if you’re more than 60 days from departure). We’re now flying to Hawaii through San Diego, and will spend four nights at the Andaz Maui before stopping for four nights at the Andaz San Diego en route back to Orlando, both of which were booked using the 4th Night Free benefit on the Citi Prestige and then upgraded using a couple of Diamond Suite Upgrade certificates.
The regular cost of the ticket was $934 per person, but I only had to pay $99 plus $66.18 in taxes for my wife’s companion ticket, saving me a whopping $768.82! I also recently status matched to Alaska’s top-tier MVP Gold 75K, giving me four guest upgrade certificates. Add in the other two offered as an end-of-year gift, and we’re already upgraded on three of the four flights. Less than $1,100 for (mostly) first-class flights from Orlando to Maui? Sounds like a deal to me!
Current sign-up bonus: 30,000 bonus miles after you spend $1,000 on purchases in the first three months your account is open plus 5,000 bonus miles when you add the first authorized user and make a purchase in the first three months (worth $525 total)
Earning rates: 2 miles per dollar spent on United; 1 mile per dollar spent everywhere else
Other benefits: First checked bag free (if you use your card for the ticket); priority boarding; no foreign transaction fees; two one-time-use United Club passes each year; 10,000 bonus miles when you spend $25,000 on the card each year; additional award inventory
Annual fee: $95 (waived for the first year)
Analysis: United definitely doesn’t have the most lucrative award chart since 2014’s massive devaluation, so some of you may be questioning why this card earns a spot on my list. Many of the benefits above are nice, but one of the most useful perks for United flyers is the additional award inventory this card unlocks.
If you’re struggling to find a saver level award (which is unfortunately all too common, especially domestically), holding a United card will open up the XN fare class and may have additional seats allocated to cardholders and elite flyers. This saved the day for TPG Contributor Richard Kerr over the holidays, and if you add the card to your wallet, you can reap the same benefits in 2016.
5. British Airways Visa Signature Card
Current sign-up bonus: 50,000 bonus Avios after you spend $2,000 on purchases within the first three months of account opening, plus earn an additional 25,000 bonus Avios when you spend $10,000 on purchases or 50,000 bonus Avios when you spend a total of $20,000 on purchases within your first year. The full bonus is worth $1,600 based on TPG’s valuations.
Earning rates: 3 Avios for every dollar spent on British Airways; 1 Avios for every dollar spent on all other purchases
Other benefits: No foreign transaction fees; Travel Together ticket
Annual fee: $95
Analysis: Like United’s MileagePlus, the British Airways Executive Club program has taken its lumps over the past few years. In 2015, there was a program-wide devaluation along with an announcement that the lucrative short-haul redemption (4,500 Avios for one-way economy flights less than 650 miles) would be going away in North America as of February 2, 2016. However, there are still some great ways to redeem Avios, and one such method is awarded to British Airways cardholders who spend $30,000 in a calendar year: the Travel Together ticket.
This benefit is essentially a Buy One, Get One Free award ticket on British Airways-operated flights out of North America, and TPG used his for flights to Paris last year. While you do still have to pay the carrier’s exorbitant taxes and fees and are restricted to British Airways metal (no partner or codeshare flights), it can still get you a lot of flights for a minimum number of points. In fact, it earned the top spot on my list of credit perks to work toward in 2016.
I’m a firm believer in diversification when it comes to your points and miles strategy, and while cards that earn transferable points are critical to have, so are airline- and hotel-specific cards. There are plenty of other options out there that may appeal more to you and your travel patterns, but I hope this list has given you some food for thought as you think about which cards you should add to your wallet in 2016.
What airline co-branded cards are you planning on opening this year?
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards