The Extra Mile

Frequent Flyer Credit Cards Ratchet Up Rewards

Cards lure customers with free flights, nights

July 16, 2007 - Never before have so many travel rewards credit cards competed so fiercely for a place in consumers' wallets.

As a result of that intense competition, the bonuses for establishing new credit card accounts are at all-time highs, in some cases amounting to enough miles or points for a free airline ticket or hotel room night. And while rewards cards still tend to come bundled with higher annual fees and annual percentage rates than non-rewards cards, the fees have come down and are sometimes waived for the first year.

Following is a sampling of the more lucrative offers currently available. (Full details of these promotions, plus links to online application forms, can be found on the websites of the airline and hotel programs with which the cards are affiliated.)

American AAdvantage

Members of American Airlines' AAdvantage program who sign up for a new Citibank AAdvantage credit card by November 30 can earn up to 40,000 bonus miles.

First, members earn 20,000 bonus miles by charging at least $750 to the new card within the first four months.

Then they can earn an additional 10,000 bonus miles by charging at least $10,000 during the first year.

And finally, there are 10,000 more miles to be earned by charging $10,000 or more during the second year.

Annual fees for the three bonus-eligible cards range from $75 to $85, but are waived for the first year.

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Southwest Rapid Rewards Visa

The Southwest Airlines Visa Signature credit card offers new customers up to 16 Rapid Rewards credits, enough for a free roundtrip ticket.

First, there's a bonus of eight credits awarded after the first purchase charged to the card.

And second, cardholders can earn an additional eight credits for transferring $9,600 or more from another card account.

Unlike some of the offers reviewed here, the $59 annual fee is not waived the first year; it takes effect immediately.

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US Airways Dividend Miles Visa

The incentives to pocket a US Airways Dividend Miles Signature Visa card include a 20,000-mile bonus after the first purchase, two $99 companion certificates, a one-time airport lounge pass, and preferred check-in and boarding privileges.

Those benefits don't come cheap: the annual fee for the card is $90.

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Choice Privileges Visa

Members of the Choice Privileges program who sign up for an affiliated Visa card by August 16 will earn 16,000 bonus points after using the card to charge $150 or more in purchases. That's enough points for two free nights at over 1,000 Choice Privileges hotels. (Choice Privileges is the frequent-stay program for Comfort Inn, Comfort Suites, Quality Inn, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, and Suburban Extended Stay hotels.)

There's no annual fee for this card.

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Marriott Rewards Visa

New Marriott Rewards Signature Visa cardholders will receive a certificate good for a free night at selected hotels (Categories 1 - 4 in the program's award catalog) when their account is activated, plus 20,000 bonus points after the first purchase charged to the card.

The card is free the first year but carries a $30 annual fee thereafter.

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Priority Club Rewards Visa

Priority Club Signature Visa cardholders receive 15,000 bonus points after using the card the first time, enough for a free night at many Holiday Inn hotels. There's also a 10,000-point bonus that kicks in after charges reach $15,000 within a year. And cardholders receive gold elite status in the Priority Club Rewards program.

The $29 annual fee is waived for the first year.

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Credit Card Caveats

Because these promotions are designed to stimulate additional demand -- not reward existing cardholders -- they are only available to consumers setting up new accounts. Current cardholders can only wish they'd waited to sign up.

As with any credit cards, prudence is the watchword. Any interest payments on outstanding balances or late fees can quickly offset the value these promotional offers may have.

And while promotional offers for rewards cards may be seductive -- as they are, by design -- it should be remembered that choosing the best program takes precedence over choosing the best credit card. In the long run, focusing on participation in the appropriate program will be more rewarding than chasing the promotion-du-jour.

Still, with free tickets and hotel stays dangled as bait, the temptation to sign up just long enough to reap the short-term rewards will prove overwhelming to many. Marketers refer disparagingly to such opportunistic consumers as "flippers," contrasting them unfavorably with truly loyal customers. But if the promotions they've created foster flipping, they have only themselves to blame for diverting focus away from long-term loyalty.

Consumers, for their part, have much to gain from marketers' efforts to keep their credit cards on the competitive edge. The current bonus offers are all carrot and no stick.