Guide to travel rewards schemes
By Benjamin Salisbury
If you are a frequent traveler and are able to pay off your credit card balance every month, a card that offers travel rewards may be a good option. These cards let you earn points or miles that can be redeemed for travel, and often come with perks, such as airport lounge access or free companion tickets.
The key to using travel cards effectively is the same as with any rewards or cashback card: don't go crazy with spending just to earn the points, and find a card that fits well with your life and travel styles.
The basics of travel rewards
You earn points or air miles as you spend on a travel card (usually a point per pound spent or something similar). You can then redeem the points for discounted or even free flights. Keep in mind, however, that you may have to pay local taxes or surcharges on the so-called free flights.
Travel card reward programmes vary. Some are linked with one airline group, others allow you to earn points that can be used on a range of travel partners. For example, American Express' Membership Rewards programme allows you to spend points on more than a dozen separate airline partners.
Many travel-related credit cards now include other benefits, such as free travel insurance, global assistance (which provides help when you travel outside the UK), complimentary airport VIP lounge visits, and discounted car hire and hotels.
"American Express offers a variety of Cards designed for regular travelers," a spokeswoman for American Express' public relations department said in an emailed response to questions. "Two examples are the British Airways American Express Premium Plus Credit Card and American Express Preferred Rewards Gold Charge Card. These cards come with a range of travel benefits including travel inconvenience insurance, travel accident insurance and a Global Assist service. They also offer rewards such as Avios or Membership Rewards points that can be exchanged for a range of travel-related benefits."
Choosing a programme
The British Airways Avios point system is the most popular frequent flier programme in the UK. The BA AmEx card (£150 annual fee) comes with a sign-up bonus and a companion voucher each year that you spend £10,000. Besides that, you earn three Avios for every £1 you spend on BA, and 1.5 Avios per £1 spent on all other purchases.
Lloyds and TSB also offer credit cards that earn Avios points. If you sign up for an account with either issuer, you will receive a MasterCard and an American Express card (in other words, one account comes with two cards). Annual fees range from zero to £140, with the high-end card offering up to 1.5 Avios for every £1 of eligible spend, plus free vouchers for airline upgrades and companion tickets after you meet certain spending requirements within one year.
If you use Virgin Atlantic regularly, the most rewarding card is the Virgin Black credit card (£140 annual fee). You can get a Visa or American Express -- both offer 18,500 free points if you make a purchase in the first 90 days of opening the account, plus another 6,500 if you spend a total of £2,000 pounds in the first 90 days. For money you spend on Virgin, the AmEx gives you 4 miles per £1 spent; the Visa gives you 2 miles. Both give you 1 mile per £1 of other spending.
If you travel abroad regularly to a variety of destinations, using different airlines, you should use a travel rewards credit card that offers flexible points that can be transferred to a number of different rewards programmes.
For instance, American Express Membership Rewards points, which you earn through the Preferred Rewards Gold card, can be swapped for rewards with 12 major carriers including British Airways, Virgin Atlantic and Emirates airlines.
Finally, if you are a heavy credit card spender and a heavy traveler, you might consider using more than one travel rewards card. For example, you may choose one that earns you miles when you fly on your favourite airline and another that you can use in more places. Just remember to only spend as normal and clear your balance every month. Any interest costs far outweigh the value of rewards points earned.
Published: 10 February 2015
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