Credit Cards

Do Credit Card Bonuses Really Give “Free” Tickets?

If you have worked through an airport at any point in the last number of years, you have been probably had someone standing near a credit card company kiosk ask you if you would like to earn a free flight. A free flight? That would be great, right? But is it really free?

This blog is all about bringing information, mainly to the runner, to allow them to go places at greatly discounted prices – in large part due to credit card offers. However, I do not want to hide from you the fees and such that may be involved in your selecting a credit card offer and thinking you will get a free ticket. We will be covering the different credit cards, but I wanted to bring you a basis with which to understand the system before recommending different cards.

To begin with, one of the offers I hear as I walk through airports is Delta’s American Express Gold Skymiles card – 30,000 miles after spending $500 in the first 3 months ($95 annual fee waived for the first year). They market it as a “Free Roundtrip Ticket in the US” after meeting the spending requirements. That is true – in the strictest of terms. All you need on Delta is 25,000 miles for a round trip award ticket in the US. But, that is at low availability. If you sign-up for the card thinking that you will get to go visit your relatives in Portland, Oregon, you may find that the dates you are looking to avail your newly found “free” ticket are only showing 40,000 miles. That means you either need to spend another $10,000 or buy miles from Delta at the cost of $350 for 10,000 miles. All of a sudden, that “Free” ticket isn’t really free anymore.

Plus, for domestic tickets, you pay a typical $10 fee in taxes for an award ticket. For an international ticket, the taxes and fees could be as high as $800. When that is coupled with any annual fee you may have to pay, that makes your “free” ticket quite expensive.

All of that being said, no, these credit card bonus tickets are not “free”. But they are a lot cheaper than what you would pay otherwise. I am not in the various programs I am in expecting to get tickets for nothing. I encourage people to not just sign up for a particular card because it sounds good. Sit down and do your research. If it costs $200 to go someplace and you sign-up for a credit card that has a $99 fee, you are probably not the right candidate for the card at that time. Ask yourself the following questions before applying for a card:

  • Where do you want to go?
  • What does it cost to get there if you purchase a ticket?
  • How many miles does it require to go to your destination on the dates that you are planning on going?
  • How much is the annual fee?
  • What is the spending requirement to get the bonus (ie. would you have to step out further on your normal spending to meet the requirement? If so, you are probably overextending yourself to the point that it is costing you)?
  • Does the card offer free luggage (most do, but some of the airline cards do not)?

After you have answered those questions, you are now in a more informed position to make your decision.  This little guide is just to help you set realistic expectations when you look for a card and to understand what to look for. I am a big advocate of taking advantage of the bonuses that these companies offer. In the case example above of Delta’s card, that is still a great deal even if you can’t get a “free” ticket because Delta has a great program in place with which you can use your miles to pay down the cost of a ticket at a rate of 1 cent per mile (with a minimum purchase of 10,000 miles to deduct $100 from the ticket). This can be even more helpful than just a free ticket as you can use this to pay down for more than one ticket. It is not the best of redemption rates, but it still allows you to travel at a very small cost.

If you realize what type of awards you can get based on what you are spending for the card, you may be more than satisfied. Many people would be totally against paying an annual fee of $450 for a credit card. That is just what I paid last year for the American Express Platinum charge card, though. I did it because I received 150,000 award miles with Delta and 25,000 elite qualifying miles with them as well. That is 6 tickets (at low availability) anywhere in the US or 2 tickets to Europe. At its worst redemption rate, that is still $1500 off of airfare at Delta. After deducting the annual fee, my actual bonus was a minimum of $1050. For what I was using it for, it was more of a $1700 bonus. So, not everyone’s needs are the same, but if you go at the credit card application process with a plan in mind, you will be able to find what you are looking for.

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