By Catey Hill, MarketWatch
As airlines continue to devalue their frequent-flier programs, travelers may want to consider switching to a new rewards credit card.
Southwest Airlines. Photo from MarketWatch.
Last week, Delta DAL +0.02% announced that in 2015 it will begin rewarding consumers based on how much they pay for tickets rather than how many miles they travel. This could hurt passengers who fly longer distances for lower fares and could make round-trip tickets less rewarding, reports MarketWatch’s Kaitlyn Wells. Delta is not the only airline making changes to its miles program: At the end of March, Southwest LUV +2.56% frequent fliers will see their points devalued by roughly 14%, and United’s new miles program went into effect last month. “Miles are being devalued across the board,” says Anisha Sekar, an analyst with credit card comparison site NerdWallet.com .
It’s a trend that’s likely to continue, says Odysseas Papadimitriou, the CEO and founder of CardHub.com . Among the reasons for this, Sekar says, is that flights are already a low margin product, and there are a lot of unused points in circulation. “It would be like if the Federal Reserve dumped a ton of money into the economy — that would make every dollar worth less,” she says.
Experts say these kinds of devaluations may mean that it makes sense for some consumers to replace their airline-specific card with a general travel card. “If you’re not loyal to a specific airline, then it’s worth considering ditching your branded airline frequent flier cards,” says Charles Tran, the founder of credit card comparison site CreditDonkey.com . And if you don’t use the ancillary perks like free checked bags, airport lounge access or elite status, you may also want to ditch these cards, says Sekar. She recommends doing a cost-benefit analysis: Look at the annual fee on the card and compare that to what you’d spend if you had to pay out of pocket for checked bags, airline lounge use or other perks that you typically use. In general, people who use these perks frequently will benefit from keeping their cards.
Read the full article by Catey Hill from MarketWatch.
