Best Credit Cards for Earning Frequent Flyer Miles

via Flickr: Andres Rueda

Earning frequent flyer miles is one of the perks of traveling regularly.  However, the effort spent to get those miles, through an airline’s loyalty program or by using a credit card with a miles rewards program, is often disproportionate to the reward.  Average airline credit cards give you one mile (sometimes known as a point) per dollar.  You’d have to spend $25,000 in order to earn a free domestic flight.  That is beyond what the casual consumer is wiling to put on their charge card at any one time.

But not all miles-earning credit cards are equal.  Some award multiple miles per dollar, but are restrictive about when the miles can be used.  Others have high annual fees, but offer a higher miles-per-dollar-spent ratio and other perks like airport lounge access and travel insurance.

Which card is the most useful?  It depends on the kind of travel that a person plans to do and on their spending habits.  With that in mind, here are some of the best credit cards for earning airline miles in 2010.

Basic Credit Cards with No Annual Fees

Miles by Discover Card matches the industry standard of 1 mile for every $1 spent.  But the extra perks offered by Discover, especially during the first year of use, make it a worthwhile choice for casual miles-collectors.  By making a purchase at least once during the month, users qualify to receive an additional 1,000 miles.  That’s a total of 12,000 additional miles during the first year (you are about half-way to a free round-trip flight).  Like many other Discover Cards, qualified cardholders get a 0% APR for the first six months that their account is open.

Blue Sky from American Express is another basic credit card with no annual fee.  New Blue Sky cardholders will enjoy six months of 0% interest.  The AmEx points system works slightly differently than Discover’s, with the first 7,500 points qualifying card-holders for $100 in credit with an airline, hotel, resort, or car rental agency.  Features like ATM access, a global customer service hotline and hotel room guarantees give the Blue Sky an impressive list of extras, especially considering that it is a no-fee card.

Premium Frequent Flyer Cards – These cards have high annual fees but also high dollars-to-miles ratios and extra perks like airport club access.

The American Express Platinum Charge Card is the most heavily promoted card in this market.  Its $450 annual fee seems quite steep, but for card-holders who actually take advantage of all the perks and miles earning potential, it can still be considered a good deal.  The card has a standard $1 for 1 point ratio, but that climbs to 4 points-per-dollar when shopping with American Express “Bonus Points Mall” affiliates.  Industry-leading extras include access to select premium class airport lounges around the world (for the cardholder plus up to two guests).  This access is even available to cardholders who are flying economy class.  American Express also offers concierge service to Platinum members who need help with travel plans or reservations at hotels and restaurants.

The American Express Gold Card ($125 per year fee is waived for the first year) tones down the extras compared the Platinum option, but still offers double points for certain online purchases, a global customer service hotline and worldwide ATM access.

Visa’s exclusive Black Card is their answer AmEx’s high-end cards.  Black has a $495 annual fee and essentially offers the same perks as its platinum counterpart: lounge access (via Priority Pass) and great miles-earning potential.  The Black also offers travel accident insurance coverage up to $250,000, $1,500 for trip cancellation insurance and lost baggage insurance up to $300.

Miles Cards for Specific Airlines – These cards can be the most useful option, especially if you are already a member of a specific airline’s loyalty program.

Delta SkyMiles Credit Card by American Express comes in two varieties.  The Platinum SkyMiles card costs $150 per year, while its Gold counterpart is $95 (with the first year’s fee waived).  Users earn an impressive 20,000 miles with their first purchase using either card (that’s $200 off the price of a flight on Delta or on one of the allied airlines that accept Delta frequent flyer miles).  Card-holders also receive an annual certificate good towards a companion ticket on any flight they book using their SkyMiles card.  The Gold Card awards a $99 discount, while the Platinum bestows one free companion ticket.

The JetBlue American Express Card has the lowest fee of any airline miles credit card at only $40 per year.  Card holders earn the standard 1 point-per-dollar, but that is bumped up to 8 points per dollar when making purchases using the card on jetblue.com.  Also, the card allows members to take advantage of JetBlue’s low prices by trading in miles once they reach the 10,000 mile mark.  Most other cards require users to have at least 25,000 miles before redeeming.

The Virgin Atlantic Black Card stands out by offering 1.5 miles for every dollar spent, as opposed to the usual 1-to-1 ratio offered by other cards.  In addition, flyers are awarded 20,000 bonus points with their first purchase and 3 points per dollar spent on Virgin Atlantic flights, services or merchandise.

The Citi AAdvantage Card is a reasonable option for people who fly the large legacy carrier frequently.  Citi awards cardholders who spend $750 in their first four months of membership with 25,000 free miles (enough for a round-trip ticket).  Miles are always good on flights to anywhere that AA flies.  The annual membership fee is $85 per year, which is slightly lower than similar cards offered by other legacy carriers.

The Chase Southwest Airlines Rapid Rewards Card is priced even lower than the AAdvanatge, with an annual fee of $59.  Chase offers double miles (2 miles per dollar) for all Southwest purchases.

It is imperative that cardholders read the fine print of both the frequent flyer program of their favorite airline and their miles-earning credit cards.  Also, the miles are not really a money-saver if you carry a balance from month to month on a card that does not offer a 0% introductory APR.  The money paid to interest will far exceed the money saved by earning frequent flyer miles since cards general have at least a 9% APR, with most around 13%-19%.  However, for frequent flyers who are disciplined enough and also belong to a specific airline’s frequent flyer (or loyalty) program, an airline credit card can lead to significant savings.