Travel Rewards Credit Cards Are Taking Off

These days, many consumers are looking for ways to increase the value of their credit card accounts in various ways, and one method that has grown increasingly popular is the use of these cards to rack up miles or points that can be used to make travel more affordable.

Credit cards that grant consumers airline miles or hotel rewards points are now playing a large part in a considerable boom for the lending industry, as more consumers turn to rewards credit cards as a means of incentivizing the purchases they would have made anyway, according to a report from the luxury travel company Alpha Flight Guru. In all, major airlines and hotel chains now issue some $50 billion in points or miles annually as consumers flock to this type of account.

As a result of this increased interest in travel or airline rewards credit cards, many lenders are now seeking to increase the values of their offers as a means of incentivizing consumers to start signing up, the report said. In some cases, this can result in borrowers having the ability to earn as much as 5 percent rewards, meaning that for every dollar they spend on the card – usually in certain categories – they earn 5 cents worth of miles or points.

But what can often differentiate one lender’s offer from another in a borrower’s mind is the perks they receive beyond the points or miles they rack up, the report said. In many cases, the rewards offers from one lender or another can be very similar, but things like the ability to have their baggage fees waived or bypass long lines at security can often sway a borrower’s opinion about which card works best for them and their unique situation.

Another important consideration many face is the ability to redeem their points or miles for the top possible value, the report said. In general, the greatest value for redeeming frequent flyer miles will be the less expensive business-class tickets that airlines typically make available.

[Credit Cards: Research and compare rewards credit cards at Credit.com.]

Rewards credit cards of all kinds usually come with higher interest rates and annual fees that can make account maintenance more expensive, and consumers who are accustomed only to cards with little or no frills may find these added considerations difficult to deal with at first.

Image: Rob!, via Flickr