|by Jason Steele|
Reward Cards are fantastic, with millions of users receiving a reward for their purchases that they would not have otherwise received if they were paying with cash or a non-reward credit card.
Overvaluing Airline Rewards
For years you save up for frequent flyer program reward with your reward credit card. When it comes time to redeem the reward for a flight, the airline tells you there are no seats available to your destination, or that you cannot fly on your schedule. Essentially they are only letting you redeem your award for an extremely off-peak itinerary that might not cost that much if you just purchased it with cash. Worse, you are now spending your leisure time on the airline’s schedule, not your own. In the end, you might realize that your reward was not as valuable as you had anticipated when you channeled your spending to that card. Even if the ticket was slightly more valuable than a cash return, perhaps the difference was not worth the aggravation of trying to find an available flight or even rearranging your whole vacation.
Historically, the airline industry has not been the most stable. For more information, ask the former employees of Pan Am, Eastern Airlines, or one of the dozens that have gone out of business this year alone. Even when airlines remain in business, they are constantly devaluing their loyalty programs by requiring more miles for a reward, and by reducing reward availability. To hedge against this, look for flexible reward card programs such as American Express Membership Rewards or Capitol One No Hassle Rewards. The programs protect you from the devaluation of an airline loyalty program by offering rewards on many different carriers. Finally, never hoard you miles. Airline program points and miles are completely unregulated, and can be devalued almost as fast as the Zimbabwean Dollar. By not using your miles for an available flight you would have paid for, you are taking the risk that the reward, the flight, or even the entire airline will exist at a later date.
What consumers must keep in mind is that rewards always come with some risk. By staying flexible, properly valuing your reward, and seizing availible flights you can minimize your risks, and enjoy airline reward credit cards.