The Travel Credit Card Part – 2 Types of Cards

 

Your first card can be a “Branded card” or a non-branded credit card.

Branded cards such as the American Airlines AAdvantage cards and the Barclay Choice hotel card are designed to foster brand loyalty. These cards will almost always have loyalty tiers that offer greater benefits to customers that use their brand frequently. If you use these brands frequently a Branded card is great for you.

For example when Charlene and I lived in the U.S. Virgin Islands our primary airline was always American Airlines so the advantages of fee checked bags, American Airline lounge passes and possible upgrades based on our card membership made the AAdvantage card an excellent choice for us.

The basic concept of most Branded credit cards is almost always the same. First, you build points in their system and then you can use those points on the Branded companies website to redeem your travel. For Delta, United and American you go directly to their reservation web sites and fill in their standard reservation form with your desired flight and date. In all these sites they offer the option of paying with rewards, money or a combination of both. If you click the rewards option your flights will be priced in rewards points or miles instead of dollars. When you get your flight your rewards account will be debited.

One important difference you will find between branded cards are the use fees over and above your rewards redemption. On a recent flight to Europe I could get a British Airways flight from Miami to London for 25,000 Avios reward points plus $180 surcharge. The same flight with my American airlines cost 25,000 American Airlines points with no surcharge.

You will find that between Branded cards the miles are accrued differently. Some airline Brands calculate their reward cost by segment. An American Airline segment to the Caribbean to Miami is 12,500 per leg. Some Branded airlines like British Airways calculate their reward cost by distance flown. So on short hops like Miami to St. Croix American wants 12,500 points. Because, British points are calculated by distance flown on some flights you can get a ticket from Miami to St. Croix for 4200 points. In a later Blog I will discuss airline alliances and how you can use this difference in how rewards are charged to your advantage.

The disadvantage of many of the Branded cards is they want to channel you to use their brand so they may lack the flexibility of a non-branded card.

Examples of non-branded cards would be the American Express Platinum card or the Chase Sapphire Reserve card. These cards can offer amazing flexibility allowing you to shop between multiple brands. For example the American Express Platinum card partners with airlines from the three major airline alliances so you can shop most major airlines for the best mileage point deals. With most non-branded credit cards the same card can be used to transfer points to travel vendors such as hotels and car rental partners or even cruise line making it possible to use one card for all your travel needs. When looking at a non-branded card it is wise to consider what partnership the non-branded card has negotiated. An example of this would be that American Express has failed to negotiate a point transfer agreement with American Airlines. Because no transfer was possible directly into American Airlines from American Express when we lived in the Caribbean we had to be a little more creative when we wanted to use American Express points to fly.

As I mentioned in my first blog on travel credit cards it is a good idea to find the card that is best tailored to your specific needs.

The American Express card allows it’s customers to either book flight on their mileage site or to transfer their points to partners and then book your flight with the partner.

If you choose to book your flight on the American Express web site your reward cost will be based on the dollar value of the flight and paid in rewards at rate of one point per penny. In my experience this is a very expensive use of points but if you have to fly the no-blackout feature of this American Express option makes it a viable option some times. Recently I was checking on a round trip flight from Miami to Denver if I used the American Express website to book the flight the best point cost was 56,000 points. If I transferred my points to United my point cost for the same flight was only 25,000 points. As you can see you need to shop for your ticket to get the best deal.

There are three basic redemption schemes used by non-branded credit cards.

The first scheme is for the credit card company to partner with various brands and then allow their members to transfer their rewards to the branded rewards programs. An example would be the American Express Platinum card allowing a transfer of points to one of it’s partners such as Jet Blue or Air France. Once you have transferred the points you go into the travel vendors travel rewards site such as Jet Blues web site where you will be given the option of paying for a booked flight with rewards.  Since your American Express points have been transferred into the airlines reward points bank you can now book your travel as you normally would and pay with the points you transferred.

 

The second scheme would involve going on the non-branded cards reservation site pick a flight and the dollar cost of the flight is converted in to a payment by points. This method of redeeming your points is nice because you don’t have the black out dates that you my experience on the actual travel vendors reward sites. Also you will be able to shop for the deal that is best for you and your payment of points will be based on the flights actual dollar value.

The final scheme is where you actually buy the ticket with your non-branded card and then take the purchase off your card statement I think of this as a “statement credit” system of redemption . This scheme allows the most flexibility because you are actually buying the ticket with cash.

So in closing you have branded and non-branded cards.

Branded cards card can calculate the rewards they charge by segments or actual distance. Whether the branded card uses the segment calculation or the distance calculation method can affect the bottom line amount of rewards you might need for a flight.

Non-branded credit cards have three basic redemption schemes; point transfers to partners, point for penny internal site redemptions and statement credit redemptions.

Often a combination of these five basic types of cards can give a traveler the best bang for his buck because each type of card has advantages in certain circumstances.

I’m kind of a Geezer so I tend to be willing to travel anywhere if the price is right. I’m retired so I keep my bags packed and when a good last minute deal pops up I snag it. My, I don’t care where I go as long as it’s cheap, attitude works well with a non-branded card that uses a statement credit system of redemption because I can fly discount carriers at the last minute and get the most bang for my buck.