Is it better to have a travel credit card or an airline credit card?
Published Mon, Jan 9, 2012 Updated Tue, Feb 16, 2021
You’ve probably noticed the insane amount of TV adverts lately for travel credit cards. You have the airlines, hotels and banks all peddling their card as the best thing since sliced bread – but which type truly is the best? Here are some useful pros and cons to each (many of which people are not aware of) so let’s take a look a closer look at them.
These are the cards which are branded/affiliated with a specific airline, such as British Airways, Virgin Atlantic and so on.
The most attractive feature when it comes to airline cards is that you usually (but not always) earn more on your regular spending. Because even best cash back cards typically only give you 1% outside of category spending. On the other hand, the value of frequent flyer miles you earn with airline cards may be significantly higher, sometimes worth up to 1.5% to 3% on the pound!
For example, the Virgin Atlantic card may only give 1 mile per pound spent but what you have to realise is that the pound value of that mile is more than 1 pence. In fact, for that particular card each mile is worth about 2.2 pence. So when you think about it, you are actually earning 2.2% rewards and even higher on Virgin Atlantic purchases.
Some airline credit cards may even give you the first piece of luggage checked for free – this can save you up to £30 – £40 per passenger, per roundtrip flight.
Without a doubt, the biggest drawback with airline cards is that most of them charge an annual fee, usually ranging from £40 to £100+. So depending on the scheme, that will mean the rewards you earn on the first couple of thousand per year will basically be redundant, since they will just be offsetting the cost of the annual fee. For this reason, it rarely makes sense for low/moderate spenders to have one of these cards unless they are really milking the other benefits, such as the free checked luggage perk.
The other common complaint is the fact that these cards basically confine you to one airline (at least if you want to enjoy the extra rewards and perks). For some people this isn’t a problem if they always fly the same route with the same carrier – especially if they’re traveling for business. However, you don’t have any “regular” destination to go to and in turn, you don’t have an airline preference – instead you just want the airline with the best price!
General travel cards
These are the credit cards that are geared towards travelers but not really affiliated with any specific airline or hotel.
The biggest benefit these cards offer is the freedom to use your rewards on almost any travel purchase you wish, regardless of the airline or hotel. The same holds true for earning rewards. If they give extra points for travel spending, every airline, hotel, and so on, usually qualifies for it.
Another advantage is that often times, these cards don’t charge an annual fee. Sure, there are some that have “Premier” or “Platinum” versions which cost money, but usually the basic versions cost nothing.
Generally speaking, the pound value of your points are going to be worth less than the value of a true frequent flyer mile. With most of the general travel cards, the points (sometimes called “miles”) are equal to 1 pence, however there are a couple of cards where each point is actually worth more.
The other drawback, of course, is that you don’t get all the perks that airline cards give like free checked luggage and seat-class upgrades.
Ultimately there is no one-size-fits-all answer when it comes to airline vs travel cards. It totally depends on your travel habits and spending. However, typically we would say that most people who rarely travel would be better off with a universal travel card.