Travel Deal of the Day (March 31, 2009)

I have seen many airline frequent flyer credit card offers recently. The amount of miles for these cards keeps going up, and I imagine the cards are attracting new customers. These cards usually offer a point per dollar purchased on the credit card (sometimes offering bonus points for certain purchases) and have $75-$100 in annual fees (sometimes waived for the first year). Given the recent cash-back card offers, I cannot imagine a situation when I would pay for such a card.

Here is my "travel" deal today - my best advice regarding airline, hotel or other affinity credit cards is to use a cash back card. Right now, you can obtain 2% cash back on every purchase (see this link for an example of a card with 2% cash back on all purchases and no annual fee). If you instead obtain an affinity credit card, you may obtain a great sign-up bonus/prize, but for each subsequent year, you will pay a $75-$100 annual fee and will likely struggle to use the points you are accruing. Some will argue that there are ways to use points to maximize their value. My belief is that the value of such point systems is decreasing rapidly, and you will have a hard time consistently obtaining a value of 2 cents/point (which is what you would need to obtain to beat a 2% cash back card).