Credit card Guides

Airmile credit cards - A comprehensive guide

By Emma Lunn editorial@consumerchoices.co.uk

This guide explores the advantages and disadvantages of Airmiles credit cards and assesses the different schemes available (Updated 4/12/09).

If you’re a globe trotter who spends a lot on their credit card you could cut the cost of your travels by using a credit card that allows you to earn points that you exchange for flights.

But before you rush out and sign up for an Airmiles credit card, there are a few things that you should take into account, such as the different schemes available, how they work, and how much you will have to spend in order to actually get anywhere.

Advertisment

The different schemes

There are three air miles schemes:

• Airmiles run by Lloyds TSB
• Virgin Atlantic Flying Club
• British Airways American Express

Airmiles

The most well-known air miles scheme is Airmiles which is run by Lloyds TSB. If you apply for Lloyds Airmiles Duo you’ll get two pieces of plastic, an Amex and a Mastercard.

The Amex card gives you 1 Airmile for every £10 you spend while the Mastercard gives you 1 Airmile for every £50 spent on the card.

If you sign up for the card before 31 October 2009 and spend £10 on the Amex card by 31 December 2009 you’ll also get 1,500 free Airmiles – enough for two flights to a “zone 1” destination such as Paris or Amsterdam.

Under the Airmiles scheme there are seven zones and the more miles you collect the further away you’ll be able to fly.

You can also exchange Tesco Clubcard vouchers for Airmiles - £2.50 in Clubcard vouchers gives you 60 Airmiles. Other ways to earn Airmiles include shopping online with eStore, recycling your mobile phone, filling up with petrol at a Shell service station and shopping at selected car hire and holiday parking firms.

Virgin Atlantic Flying Club

Virgin Atlantic credit cards (www.virginmoney.com) offer Flying Club miles for every £1 you spend. How many miles you get depends on the card you hold – the Virgin Atlantic White Card gives you 1 Flying Club mile for every £1 you spend while the Black Card gives you 2 Flying Club miles for every £1 you spend. However the Black Card comes with an annual fee of £115 and an APR of 37.1% compared to the fee-free White Card which has an APR of 17.9%.

Flying Club miles can be spent on Virgin Atlantic and bmi flights, Eurostar and Virgin Holidays.

British Airways American Express Card

If you have a BA AMEX Credit Card (www.americanexpress.com) or Platinum card you can earn BA Miles every time you spend on the card. The Credit Card rewards you with 1 BA Mile for every £1 you spend and you get 1.5 BA Miles for every £1 you spend on the Platinum card. However the Platinum card has an annual fee of £150 and an APR of 46% compared to the fee-free Credit Card which has a lower APR of 19.9%.

You can redeem BA Miles on BA flights. 9,000 BA Miles will get you to Europe “zone 1” (Belgium, France, Germany, Ireland, Luxembourg, Netherlands, Switzerland, UK) but you’ll need 15,000 BA Miles plus to get further afield in Europe or 40,000 miles or more to get to Asia or Africa.

What are the benefits of Airmiles cards?

• The more you use your card the more Airmiles you’ll earn. The best way to profit from frequent-flyer and Airmile reward schemes is to use your credit card for as many transactions as possible each month, while having a direct debit set up to pay the balance in full.
• Free flights. You have to be very disciplined and responsible with your finances, but provided that you don’t slip up, or incur any hidden charges, you will essentially get flights for free.
• The possibility to redeem and pay. You should also check out whether or not you can pay cash to go further than your accrued points allow. Most schemes allow this, but some, like British Airways, apply restrictions, such as where you can fly to.
• Some cards also offer discounts at partner stores.

What are the disadvantages?

• Hidden charges. A survey conducted by consumer watchdog Which? in October 2006 showed that many people have had difficulties with these schemes. One of the main customer complaints was the fact that there are often hidden costs when claiming “free” flights. This occurs when the flight itself is free, but any applicable taxes, fees and surcharges are on top.
• Cost of accrual. Which? also found that many people had never claimed a flight because of the sheer amount of money they would have to spend to do so.
• Not all spending on the card will earn you Airmiles. For example, BA doesn’t allow balance transfers and cash advances to accrue points.
• Fees. The cards offering the most Airmiles tend to have an annual fee.
• Being loyal. You should also look into their loyalty system. Some cards give you more points if you spend your money in certain shops, encouraging you to spend with them. For example, the Airmiles Mastercard gives one Airmile for every £10 spent in their partner stores, but you have to spend twice that elsewhere to earn the same one point. So think about where you’re most likely to spend when choosing your card.

A Word of Caution

It should be noted that no reward scheme is worthwhile unless you can pay your balance off in full each month, otherwise the interest will always outweigh the reward. But if you do manage to avoid the interest, then you will essentially earn by spending – just be careful not to use it as an excuse to buy a few more pairs of shoes or a new iPod.

Compare Airmiles credit cards

Advertisment

Bookmark with:

What's this?