With airline-affiliated cards, you rack up "miles" through spending. You get one mile for every dollar you spend. You can also earn extra miles for spending on travel with airlines and companies associated with your card's program.
Generic cards are issued by banks and work on a similar "one dollar equals one point" model. Both offer free tickets when you earn enough points through spending. It typically takes 25,000 points to get a free ticket for travel in the United States.
When it comes to fees and rates, airline-affiliated cards may give you sticker shock. All airline-linked cards carry annual fees and they range from $50 to $150 per year. APRs can run as high as 15 to 18 percent.
Some generic cards don't carry annual fees but others do. These fees are generally under $50. As with any credit card, APRs also vary. The MBNA WorldPoints Card is one of the better deals, carrying an APR of 11.99 percent with no annual fee.
2. Don't get sucked in
Who doesn't want free travel? Travel card offers come with attractive packaging but they're not always what they seem. Like everything in life, the devil is in the details. Even if you head right to the mall with your new card in hand, your dream vacation may be a long way off.
Here's why: The average person spends about $5,000 a year on credit. At that rate, it could take five years to get a free ticket anywhere.
According to Robert McKinley of CardWeb.com, generic cards are a poor value for the average $5,000-a-year spenders. Not only are rewards a long time coming, in most cases, they're small.
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The value of your free ticket is capped at $400. You may see pictures of exotic locales on the pamphlets, but your $400 ticket (five years in the making) may only get you to Cleveland.
Also, McKinley says reward programs attached to these generic cards can change at any time -- or even go away. The bottom line: you'll be no closer to Tahiti. One good rule of thumb for consumers: Only plan about two years out for rewards.
Another important detail is that 60 percent of cardholders carry over balances. That means more money for credit card companies. Carrying balances can eat up the reward value of any card.
McKinley's advises that if you spend under $10,000 a year, you're better off with a cash back or other type of reward card.
Airline-affiliated cards have long been a favorite of big spenders and frequent travelers, but these cards aren't for everyone. McKinley says if you fly a lot, charge a lot and pay off your balance every month, these are a great deal for you.
If you're an average spender, these may sound great but they're not for you. The miles you earn with your credit card are automatically added to your "frequent-flier" account with the airline associated with your card.
More and more, airlines are teaming up, which gives cardholders more flexibility. (American, Continental and U.S. Airways work together; and have international partnerships with airlines like Qantas and British Airways.) These cards also allow you to get sweet upgrades if you have enough points.
3. Put your points to use
If you've already taken the plunge and signed on the dotted line for an airline-affiliated card, you know there are restrictions and red tape.
Many people give up in frustration. In fact, travelers enrolled in frequent travel programs rack up 650 billion points and miles per year, yet 75 percent of those are never redeemed, according to FrequentFlier.com.
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But don't give up. If you've got them, use them. You can do a lot with your miles. At www.points.com you can exchange your miles in a variety of ways.
If you don't have enough miles to fly, you can swap them for gift certificates or use them at participating retailers such as Starbucks and even eBay. A points.com membership is free, but exchanges aren't. They will cost you additional miles or money -- sometimes at a very steep charge.
At www.frequentflier.com you can see a list of options for using your miles, and the Web site lists partners with different programs. So even if you don't have enough miles to fly to Tahiti, you may have enough for a free hotel stay.
If you're not going to use your miles, there's no reason your rewards should go to waste. Why not donate them? At www.miledonor.com you can see which charities are affiliated with your given mileage program. Donating is free, but your miles are not tax deductible.
These miles are also a currency of sorts. You can use them at participating hotels and even at some retailers. For more information on frequent flier benefits with different airlines, go to frequentflier.com.
Also be sure to shop around. Web sites like BankRate.com, Cardweb.com and cardratings.com allow you to compare interest rates and fees on various travel cards -- or any kind of card for that matter -- to see which ones might be right for you.
4. Be a joiner
Credit cards aren't the only cards that give you perks. Joining groups and travel clubs is a great way to get perks and sometimes it makes sense to pay for the privilege. Among them:
Triple A (AAA): According to AAA, basic individual membership costs vary by state. For instance, in Connecticut it costs $70. But the savings you rack up can more than make up for the membership fee. A AAA card entitles to you to discounts at Hertz, assorted theme parks, Hilton & Hyatt hotels as well as Econolodge, LaQuinta, Days Inn, Marriott and more. The Web site lists toll free numbers for offices throughout the U.S. For more info go to www.aaa.com.
AARP: A membership only costs $12.50 a year and the savings are tremendous. You can save up to 50 percent at more than 400 Sheraton hotels in over 70 countries. Other discounts include 10 percent at over 100 Crown Plaza locations. There are also discounts available nationwide at Avis rental cars and more. For more info go to www.aarp.org.
An International Student Identity Card (www.isic.org) gets you 32,000 different discounts in 106 countries. The cost is $22. There is also a version of this card for teachers & professors.
Encore Travel Discount Card (www.virtual-encore.com). This card costs $59.95 a year. It offers savings of 50 percent at over 6,000 hotels worldwide. Participating hotels include Best Western, Holiday Inn, Sheraton, Wyndam and more.
A www.Moments-Notice.com membership costs $25 a year (does not include some processing fees). Membership extends to your spouse, children and other family members. The Web site offers advance booking and last minute deals on cruises, vacation packages, hotels and car rentals. For a seven-day eastern Caribbean cruise in November, it offers rates as low as $528.
A membership at American Historic Inns (www.bnbinns.com) costs $49.95 per year and offers you savings of savings of 25 to 50 percent off every night's stay. Members also receive a guide with more than 1,000 Bed & Breakfasts and Country Inns to choose from. You also get a free night's stay certificate good at any of their 1,600 participating properties.
5. Free is for me
Some of the best things in life are free. Here are some free services that can save you money: A Starwood Preferred Guest Card is free. Frequent stays get you points that can earn you free nights at Starwood hotels. For more information check out www.spg.com.
On www.HotelClub.net you can find discounts of 20 to 60 percent on reservations at participating hotels worldwide.
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Consider a travel buddies membership. If you're looking to meet new people and see the world this club might be for you. This is a group travel service for singles. Members get discounts on their group trips. For more information check out www.TravelBuddiesworldwide.com.
And finally, a Deal Advisor membership is also free. Each week this service scours the Internet's largest online travel sites looking for the best travel deals. Then they package the best offerings, along with ratings and user reviews, and e-mail it to subscribers. Sign up at www.tripadvisor.com/DealAdvisor.
Gerri Willis is a personal finance editor for CNN Business News. Willis also is co-host of CNNfn's The FlipSide, weekdays from 11 a.m. to 12:30 p.m. (ET). E-mail comments to firstname.lastname@example.org.