Should I Get an Airline Credit Card?

If you spend even a little time in airports or on planes, you'll undoubtedly come across advertisements for airline credit cards. The idea of using a credit card to unlock free travel and enjoy VIP perks has tremendous allure, but should you jump at the offer?

The answer hangs on how frequently you fly the airline and, related, whether the value you'd derive from using the card would outweigh the annual fee you'll likely pay. In a nutshell:

• If you just don't travel that much, you may be better off with a general-purpose travel credit card — one with flexible rewards that can be redeemed for travel with any airline or hotel brand. Or consider getting a cash back credit card and just using its rewards to pay for travel.

• On the other hand, if you already travel multiple times a year with one airline — or you could do so — then carrying one of that airline's cards quickly makes a lot of sense.

• And if you're somewhere in between, you might be surprised at how quickly an airline card can justify its annual fee.

Below, we'll walk you through how airline credit cards work and how to decide whether an airline credit card is right for you. (If you already know how airline credit cards work, you can also skip ahead to the making the decision.)

» MORE: NerdWallet's best airline credit cards

How an airline credit card works

For the most part, an airline credit card works just like any other credit card. You use the card to buy things. You get a bill every month showing your charges, and then you pay that bill. But an airline card is also a rewards card, meaning you get a little something for every dollar you spend — in this case, you earn points or miles in the airline's frequent flyer program.

Rewards

In most cases, you earn 1 mile for every dollar you spend with the card, but you earn additional miles for spending done with the airline itself. Depending on the card, you may also earn extra miles for certain non-travel purchases.

For example, let's look at the United℠ Explorer Card. This card earns 1 United mile per dollar on most purchases, but you get 2 miles per dollar spent with United, a well as at restaurants and on hotel stays booked directly with the hotel. Another example: the Southwest Rapid Rewards® Priority Credit Card. For most purchases, every dollar spent with this card earns 1 point in the Southwest Rapid Rewards program, but spending with the airline itself earns 3 points per dollar. Purchases with Southwest's hotel and rental car partners earn 2 points per dollar, as does spending on local transit and commuting: Internet, cable and phone service; and select streaming.

Just about every airline credit card comes with a "sign-up bonus" or "welcome offer." Spend a certain amount of money in the first few months you have the card, and you'll be rewarded with tens of thousands of miles. The bonus alone might be enough to finance a free roundtrip ticket.

Redemptions

The miles you earn with an airline credit card get deposited into your account with the airline's loyalty program — United MileagePlus, Delta SkyMiles, American AAdvantage, and so on. From there, you can use them to book travel, pay for upgrades and whatever else the program allows.

The value of an airline mile depends on how you redeem it. The industry standard is about 1 cent per mile, but you can get substantially more than that. See NerdWallet's calculation of airline mile values here.

Cardholder perks

Credit card rewards are what you earn by using the card to make purchases. Credit card perks are benefits you receive simply for being a cardholder. With airline credit cards, a significant portion of the value — if not most of it — is tied up in these perks. That's why an airline credit card can be well worth the annual fee even if you don't consider yourself a "frequent" flyer. Common perks of airline cards include free checked bags, early boarding, lounge access and more.

Annual fees

Here's the part where we tell you there's no free lunch. Several airlines have a credit card option with no annual fee, but those cards typically offer no perks, outside of maybe in-flight discounts. So you get no free bags, no priority boarding, certainly no lounge access. Fees for airline credit cards that do have perks start at around $95 and can top $500. In general, the more you pay, the more you get. Top-of-the-line "club" cards can offer generous checked-bag allowances and VIP treatment and get you into airport lounges.

» MORE: Travel credit cards with no annual fee

When an airline card is worth it

As mentioned, an airline credit card makes sense when the value you get from the card outweighs the fee you have to pay to get the card. And the more you fly, the more likely it is that you'll come out on the plus side of that equation.

Take a close look at an airline credit card if ...

You fly a single airline often

Bona fide frequent flyers have more opportunities to pull value from their cards. That starts with earning bonus rewards on more spending. Say you spend $3,500 a year on airfare. If your airline credit card earns 2 miles per dollar with the airline and those miles have an average value of 1.4 cents (a reasonable assumption on many airlines). Then the extra miles you get just by using the card are worth $98, which is enough to cover the fee on many cards.

This, of course, assumes that all your airfare spending is with only one airline. To get maximum value out of an airline credit card, it pays to do as much business as possible with the airline whose logo is on the card. Depending on where you live, this can be easy. If you're living in Dallas, you can get American flights to anywhere; the same is true in Atlanta with Delta or in Denver with United. But in markets served by multiple airlines, each of which has only a few flights a day to select hub cities, loyalty can be a little harder to maintain and you may have to spread your business around. Then again, if you fly often enough, you might easily be able to justify carrying cards from more than one airline.

The more you fly a particular airline, the more opportunities you have to cash in on card perks tied to that airline.

You always check bags

Nowadays, the standard fee to check your first bag is $35 to $40 each way, and it can cost more for additional bags. A $95 airline card that gives you your first checked bag free can essentially pay for itself with two roundtrips a year, or just one with a companion if you both check a bag.

Airline credit cards vary in how many people get a free checked bag. With the United℠ Explorer Card, for example, the benefit extends to the cardholder and one other person traveling on their reservation. With several of Delta's branded cards from American Express, the benefit applies to the cardholder and up to eight others. The Citi® / AAdvantage® Platinum Select® World Elite Mastercard® gives a free checked bag to the cardholder and up to four companions. The United Club℠ Infinite Card gives the cardholder and one other person their first and second checked bags free. Meanwhile, Southwest Airlines doesn't usually charge for checked bags, so its credit cards don't offer the perk at all.

The perks are worth it to you

Because airlines typically charge for checked bags, its easy to put a dollar value on that benefit and calculate how much it offsets the annual fee. Other benefits have a similarly evident cash value, but some don't. In the end, it comes down to how much you think a perk will enhance your travel experience, either by saving you money or reducing hassle. Other common perks to take into consideration:

• Priority boarding. This allows you to get on the plane earlier, which gives you dibs on overhead bin space. You won't be the very first one on, mind you, but you will get a jump on the crowd.

• In-flight discounts. You might get, say, 25% off on food and drink or entertainment purchases.

• Airport lounge access. Higher-priced airline credit cards often give you access to the carrier's network of airport lounges, where you can escape the hubbub of the terminal.

• Credits. A card might automatically reimburse you for, say, the first $100 spent with the airline each year. It's also become more common (although not universal) for cards to reimburse you for the application fee for TSA PreCheck.

• Companion fares. A few cards give you (or allow you to earn) a pass that lets someone else fly with you for a reduced rate or just for the cost of taxes and fees.

When a general-purpose card is a better fit

General-purpose travel credit cards don't offer airline-specific perks like free checked bags or upgrades, but they give you a great deal of flexibility in redeeming rewards. You earn rewards points with every purchase. You can then use those rewards to book travel, or redeem them for credit on your statement against travel purchases. You also aren’t limited to one airline, hotel chain or rental car agency, so you can travel to more places in more way.

Consider a general travel card if:

You are a budget-conscious traveler

A general travel credit card is for you if you want the cheapest fare, regardless of airline. Book however you want, then redeem your points to pay for it. Or use your accumulated points to book through the issuer's travel portal. For example, the Capital One Venture Rewards Credit Card (annual fee: $95) earns a flat 2 miles per dollar on most purchases, and the miles are worth 1 cent apiece when redeemed. The Bank of America® Travel Rewards credit card works similarly, offering 1.5 points per dollar on purchases and a 1-cent-per-point redemption, but with an annual fee of $0.

You prize flexibility and/or simplicity

Although they can provide outsize value, airline credit cards are hardly flexible. Their value lies almost entirely within the ecosystem of the airline brand. They aren't exactly simple, either. How much are the miles in your account worth? It all depends on what you plan to do with them, and it can take work and experience to find the redemption option that maximizes your value. There usually isn't a clear link between the number of miles you need to redeem for a given flight and how much you'd pay for that flight in cash.

For flexibility and transparency, consider an option like the Chase Sapphire Preferred® Card. This card earns 5 points per dollar on travel booked through Chase; 3 points per dollar on dining, select streaming and online grocery purchases (not including Walmart or Target); 2 points per dollar on other travel; and 1 point per dollar elsewhere. You can redeem those points for travel booked through Chase at a value of 1.25 cents apiece, or you can transfer them to about a dozen airline and hotel partners. A passel of other benefits (and a big sign-up bonus) can easily offset the annual fee of $95.

» MORE: NerdWallet's best general-purpose travel cards

Know your options

You don’t have to settle on one card. Perhaps you favor one airline, but you want a variety of options for hotels or transportation. If you travel often, you can get an airline credit card and a no-fee general travel card for all other travel-related expenses.