Attractive Airline Rewards Cards Are Plentiful


NEW YORK ( -- Issuers have dramatically enhanced credit card rewards throughout the first quarter, competing to sign up cardholders with excellent credit scores. That strategy is a boost for the top tier of cardholders, and it looks like issuers will continue this during the second quarter.

This week, Chase (Stock Quote: JPM) unveiled a monthlong incentive in which new cardholders can earn 100,000 miles with the British Airways Visa Signature Card. They get 50,000 bonus British Airways Miles after their first purchase and another 50,000 bonus miles after spending $2,500 with the card in the first three months.

If used properly, these 100,000 miles can be used for four round-trip domestic flights within the continental United States on American Airlines (Stock Quote: AMR), or two round-trips from certain cities in North America to London on British Airways. The card has two other attractive features: no foreign transaction fees and 1.25 miles on British Airways for every dollar spent on the card (2.5 miles for every dollar spent on British Airways). But the card does have a $95 annual fee, which is not waived during the first year as with so many other reward cards.

The airline rewards category has seen some attractive offers this year, including:

  • Capital One (Stock Quote: COF) just ended its heavily promoted "Match My Miles Challenge" on the Venture Card. When credit card consumers opened accounts, the issuer matched up to 100,000 miles they had in any airline credit card rewards program; all they had to do was spend $1,000 with the card in the first three months. Capital One ended the program last week, quickly reaching the program's limit of one billion miles.
  • Chase has attractive offers on the Continental Airlines One Pass Plus Card and United Mileage Plus Card. Consumers get $50 cash back and 25,000 bonus miles after the first purchase on either card. Cardholders can also earn 5,000 bonus miles for adding an authorized user to an account. Both cards waive the annual fee during the first year ($85 for Continental; $50 for United).
  • The Citi (Stock Quote: C) Gold/AAdvantage World MasterCard (Stock Quote: MA) gives a new cardholder 30,000 miles on American Airlines after the consumer makes $750 in purchases during the first four months. The $50 annual fee is waived for the first year.

There are some great airline offers on the market, but consumers need to be aware that many of these cards come with a higher interest rate. If you carry a balance on your credit card account, these cards can cost more in the long run, despite the attractive rewards.

Competition among issuers is extremely high as credit card companies try to attract the consumers with the lowest risk: those with high credit scores. According to Mintel Compermedia, credit card offers have more than doubled from 551 million at the end of 2009 to 1.4 billion at the end of last year. Consumers with good or excellent credit scores are getting the majority of these solicitations, and rewards seem to be the bait being used to attract new customers. Eight in 10 offers are for rewards cards promoting points, miles or cash rebates, up from six in 10 offers in 2008.

Issuers offer reward cards expecting an increase in spending. They also want consumers to use that card for all purchases instead of using cash, check, debit cards or other credit cards. Issuers make money from the interchange fees as well as the finance charges that grow when cardholders carry debt.

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