Airline Credit Cards

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If there was ever a time to consider airline credit cards, now might be it, as rewards have soared and perks are freely flowing, credit card experts say. Other than frequent-flier deals, bonuses include free checked bags, priority boarding and access to flight lounges

Not only can cardholders rack up frequent-flier miles to book free flights, but they can reap such goodies as free checked bags, priority boarding and access to flight lounges. And sign-up bonuses of frequent-flier miles have become so generous — up nearly 20 percent over last year — that new cardholders could have enough miles to take a free flight right away. So a new rewards card could factor into summer vacation plans immediately.

Airline credit cards continue to have drawbacks, such as annual fees and high interest rates. But for consumers who have good credit and pay balances in full every month, the current lineup of airline reward credit cards features a bumper crop of good deals, experts say.

And good news for Chicagoans: Some of the best cards are offered by such carriers as United Airlines, American Airlines and Southwest Airlines, the dominant ones at O'Hare and Midway airports.

Why such good deals now?

In the wake of the 2008 recession, card issuers gained new appreciation for customers who don't default on payments. Now, after the stingy credit environment has loosened, banks are back to offering credit cards. But this time they're ratcheting up rewards as they vie for the same pool of low-risk customers, said Odysseas Papadimitriou, CEO of CardHub.com, a comparison website. And airline card customers, in particular, tend to be good spenders.

For the hypercompetitive airline business, mileage reward credit cards represent an effective boost to their loyalty programs — giving fliers more reason to book with them over a competitor.

"There's a very rich value exchange that happens between the airlines and the credit card companies," said Bryan Pearson, president of LoyaltyOne, a loyalty program market research company. "It's a very healthy ecosystem."

For consumers, credit cards have the inherent danger of overspending and incurring interest charges on unpaid balances, but they allow people in frequent-flier programs to get free flights faster.

Curtis Arnold, founder of CardRatings.com and author of "How You Can Profit from Credit Cards," said the rewards card market in general — for cash back, points and airlines miles — has heated up over the past year or so. "Airline rewards offering very generous sign-up bonuses have been sort of a byproduct of the overall market upswing," he said.

However, initial bonuses right now are so generous that the trend will probably be short-lived, and card issuers are likely to reduce them, Pearson said. "That will shake out of the system pretty quickly," he said. "If you're spending too much money to bring the customer in at the beginning, it's not a sustainable value proposition. It won't take long for somebody in the organization to cut that off at the knees."

So, if you were going to capitalize on airline card offers, now is a good time.

Here are some things to consider.

Who should get an airline rewards credit card? If you typically carry a balance on credit cards, you'll be better off searching for a card with a low interest rate and no annual fee, experts say. Airline cards typically charge higher-than-average interest.

"It makes no sense to get a rewards card if you're carrying a balance, just because the higher interest rate will more than eat up your rewards," said Bill Hardekopf, CEO of LowCards.com and co-author of "The Credit Card Guidebook."

And if you're not a big flier, a cash-back card might be better, especially because the rewards currency — cash — is far more flexible than points or miles because you can spend it on anything. Also, initial bonuses on cash-back rewards cards have grown even faster than airline bonuses. Cash-back bonuses are up 90 percent over last year, according to CardHub.com.

But if you're a frequent flier, an airline card has many perks beyond occasional free flights. You can get free checked bags, which can save you $25 each way if you were traveling domestically with United Airlines, for example.

"Free checked bags should not be overlooked," Hardekopf said. "That is a feature that is extremely valuable."

In United's case, two round trips per year with a single checked bag would save $100 in baggage fees, essentially paying for the $95 annual fee for the United MileagePlus Explorer card, which includes one free checked bag for the cardholder and companion. The Delta Skymiles cards — gold, platinum or reserve — allow the cardholder plus eight companions on the reservation to check the first bag free.

Some cards include priority boarding, a perk usually reserved for travelers with an elevated frequent-flier status or for those who paid extra to board early.