How do air miles credit cards work and are they worth it for only spending around $3,500 a year on it?
Me and my wife loved italy in 2009. Cost was 2,500 for flight + hotel. In 2010 we went to france. Cost was 2,600 for flight + hotel. I want to be able to take one of these trips at little to no cost every year or other year. Is it worth it?
Each $ you charge amount to $0.01 credit toward an airline ticket. So, spending $3,500 per year will save you about $35. Redemption rates are haigher for airline tickets than for other rewards. You might redeem 100,000 miles for something like an article of clothing, but it may cost your 150,000 to 200,000 miles to get an airline ticket or hotel room. If you screw up with a late payment or over limit charge, you will lose all you earned. There are many restrictions on the redemption and when you can use them. Most miles expire after 5 years (some don’t). So in 5 years you might accumulate 5 x $35 or $175 discount on your ticket. Also, some cards carry an annual fee. If that fee is $75 per year, then you’ll pay 5 x $75 or $375 to possess the card. There may also be a redemption fee. The redemption of miles may not be combined with discounted air fares – you may have to purchase a full fare ticket. The end result is that your earned rewards have a net value of $0.00 or even a negative value.. You have to read the card agreements AND the redemption agreement to see if they are cost effective for you.