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Credit cards co-branded with airlines can offer lucrative deals like 2,000 miles for every 100 points. Before you are attracted to these cards, you should know how to evaluate them. Read on:

A report released by the International Air Transport Association (IATA) showed how, till September 2016, India’s domestic air traffic continued its 2-year run of double-digit growth. To cash in on this demand, many card issuers and airlines have come out with co-branded cards. In place of offering reward points for rupees spent, they let the customers redeem these points while booking airline tickets.

Airlines have been offering such incentives in the form of frequent flyer programmes. These cards let you accumulate these benefits while going about your regular shopping. With these co-branded cards, the more you spend, the more discounts, or miles, you can accumulate on your next flight ticket.

Apart from miles and discounts on tickets, such cards also offer complimentary access to airport lounges . However, there are several non-airline cards that offer you such benefits as well.

How does it work

There are two ways in which you can earn these miles. A bank or an issuer usually signs up with a particular airline and offers you a co-branded card. You earn reward points based on your spends, which can then be converted into miles in a pre-defined ratio. For instance, an Air India SBI Signature Card will give you 20 reward points for Rs100 spent on an Air India flight. These points can be converted to miles by the card issuer. Some cards also offer direct miles instead of points. For instance, Jet Airways American Express Platinum Credit Card offers 8 miles (of Jet Airways) for every Rs150 spent.

With these cards, the card issuer enrols you to the airline’s frequent-flyer programme. If you are already enrolled in it, you can provide the details of the account to the issuer and rewards from the card will get added to this account. “Typically, at the end of every billing cycle, you can see these points added to the account,” said Navin Chandani, chief business development officer, Bankbazaar.com.

Apart from a co-branded cards, there are cards like HDFC Bank’s Superia Credit Card, which are not tied down to any particular airline, and you can redeem these points at over 20 airlines.

However, the ratio in which cards like these convert points to miles, could be less than what you may have got with a co-branded card. For instance, you may get 1 mile for every 6 reward points in this case, whereas with co-branded cards, you could get 1 mile for 2 or even 1 reward point.

Choosing the right card

“Customers should first look at the value of a mile,” said Naveen Kukreja, co-founder and chief executive officer, Paisabazaar.com. Remember that the amount against an air mile could be in the range of 25 paise to 80 paise. So, 8,000 miles with an airline are not worth a discount of Rs8,000. If you get 50 paise for a mile, your discount would be Rs4,000.

Besides the value of miles, also look at the joining and annual fees. Among co-branded cards, joining fees can range between Rs750 and Rs10,000. So, choose wisely.

Redemptions

Remember that your points can only be redeemed against the base fare. Taxes and government charges still have to be paid.

To use these points, contact the airline to before booking a ticket. “In certain cases you may also have to call the bank’s travel desk,” Chandani added.

You should check for the minimum limit too. Some airlines have require you to accumulate at least 20,000 points before you can redeem them.

Typically, the points are converted to miles and then redeemed.

“First you earn rewards through the card. These then will be converted to frequent flyer miles,” Jasuja chief executive officer, SBI Card, explained.

Also remember, that unlike regular airline bookings, you may not receive a confirmation right away.

There could be a lag between when you book a flight and receive a confirmation of the booking.

These tickets can be bought for someone else too . However, while booking such a ticket, you need to clarify this while booking the ticket, so the ticket may be made in the name of the intended person.

Keep in mind

With co-branded cards, ensure that you pay your credit card bills regularly. Any default may lead to permanent of temporary suspension of the miles and rewards.

Most importantly, know your travel profile. What kind of frequent traveller are you?

“It also depends on your job, the profile and your lifestyle. These cards are... lifestyle cards,” said Rajiv Raj, co-founder and director, Creditvidya.

However, you should not modify your spending habits to suit the card’s reward points. “If you are a person who spends more on retail, you may prefer a retail co-branded card.... Key thing is that the person should not change their normal spending habit just to earn points,” Chandani advised.