Credit card Guides

Airmile credit cards - a comprehensive guide

Updated: Tuesday 29 November, 2011

By Martin Fagan

If you're a big spender with a passion for travel, you could use an Airmiles credit card to build up points and bag yourself some free flights.

NB: As of November 2011, Airmiles were renamed Avios.

But before you rush out to spend all your cash on the latest airmiles credit card, you need to know how the cards work so that you can get best possible deal.

• How do Airmiles cards work?
• Spending your points
• Are there any drawbacks?
• Special offers

How do airmiles cards work?

Airmiles credit cards work in the same way as any reward card, letting you build up points as you spend. Once you've collected enough points you will be able to exchange them for free flights to a variety of destinations. The more points you have, the further you can fly - and you can even use your points to bump yourself up from economy class.

While you can’t exchange your points for cash, some providers and airlines will let you add cash to your points so that you can travel even further afield.

Different Airmiles cards offer a wildly differing number of points depending on the amounts of money you spend, ranging from just one point for every £50 you spend to a far more generous point per £1.

You also need to think about how many points you need to get to your destination of choice. If you get one point for every £50 you spend, and need 750 points just to get to Paris, you would need to spend a massive £37,500 just to cross the channel.

Shop around and compare deals to maximise your points, but make sure that you always pay your balance off in full every month. Otherwise, any interest you end up paying will simply cancel out the cash value of the points you've earned.

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Spending your points

You'll get the best value from your Airmiles by spending them on flights, but there’s a huge range of things that they can be spent on. From hotel bookings and car hire to theme park tickets and even cases of wine or spa treatments.

If you don’t have enough to buy the tickets you want, you can also usually add cash to your points.

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Are there any drawbacks?

Of course, credit card issuers want to make a profit and the biggest disadvantage of these Airmiles cards is the fact that many people fail to clear their debt each month and so end up paying out more in interest than they’ve saved on “free flights”.

If you think you might end up paying interest on your card, make sure you take the annual percentage rate (APR) into account, just as you would with any other credit card - some Airmiles cards carry huge interest rates of as much as 50%.

Rather than spending extra on your card in a bid to build up points faster, just use your credit card to pay for as many essentials as possible. That way you won’t be spending any extra money and might really be able to get something for free.

The best way to avoid this is to set up a direct debit to completely clear your credit card balance each month.

But even if you manage never to pay any interest on your credit card, your “free flight” might not end up being as free as you thought. Some suppliers make you pay the airport taxes such as air passenger duty (APD) and the aviation insurance levy on your flight, which can add up to more than the flight would have cost if you’d shopped around and bought one yourself.

Other cards - often the ones that offer the best returns on points - might apply an annual fee, which can be as much as £150 a year.

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Special offers

Many airmiles cards offer special deals to new customers, either giving you bonus points once you’ve spent a certain amount or a free European flight when you book one of their partner hotels.

Shop around and find out what’s on offer - but don’t rush out and apply for a raft of cards at the same time. This will adversely affect your credit rating and you could find yourself being turned down on any application for credit - a card, a loan, even a mortgage - in the future.

Also bear in mind that it is very difficult to compare one points scheme against another. If you're just looking at special offers, then look at where in the world your bonus points will take you and whether or not you'll have to spend extra cash to get there, rather than the number of points you're accumulating.

Compare Airmiles credit cards to get a deal that suits your circumstances.

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