Let your holiday savings take wing

Chiara Cavaglieri reports on the credit cards that offer free air miles to hard-pressed Britons

(DAVID SANDISON)

Belt tightening may be the order of the day, but Britons will find it hard to sacrifice their holidays this summer. By taking out a reward credit card that offers free air miles, they may have a gateway to a getaway.

How useful these deals are, though, depends on individual circumstances and the discipline of the cardholder in paying off any debt they may build up. “If you’re confident you will be able to clear your balance each month, and you are a frequent flyer, they can be great for getting something back from your card and making it pay for you,” says Michelle Slade at financial information service Moneyfacts.

Anyone who uses a reward card should set up a direct debit and pay off the balance in full each month to avoid inflated interest rates. Some of the schemes also charge a substantial annual fee, so check before applying.

Most of the big airlines – including BA, Virgin Atlantic, easyJet and Ryanair – offer the cards, and the vast majority offer bonuses to entice customers. For example, the BA American Express card offers one BA air mile per pound spent, with an introductory bonus of 1,000 miles and a typical rate of 19.9 per cent. Its Premium Plus offers 1.5 miles for every pound spent and a 6,000-mile introductory bonus, but there is an annual fee of £150 and a colossal 46 per cent rate.

For budget flyers, the easyJet MasterCard offers one mile per pound spent in the UK, two miles per pound spent abroad and three miles per pound spent with easyJet. And there is no annual fee. But all is not what it seems at first. The air miles earned can only be redeemed for cash, which then has to be used against the cost of a flight. With easyJet every mile is worth one penny, so you will need to build up 2,000 points for a £20 flight. If you spend £250 within 90 days of receiving your card, you will automatically get 4,000 miles (worth £40) credited to your account.

This card offers 0 per cent on balance transfers for 12 months and a typical rate of 16.9 per cent, which is considerably more expensive than the “best buy” Barclaycard Simplicity Visa, currently charging 6.8 per cent.

However, savvy bargain hunters are free to work the system by redeeming the points for free flights, then paying off the card in full and cancelling it before any interest kicks in.

It’s important, though, to check out the small print. For instance, some cards offer impressive bonuses but stipulate that you must spend a high minimum amount within a limited period to claim the bonus miles. You are also likely to have to pay airport taxes and baggage allowance costs yourself. Air miles can have an expiry date too, often of 12 or 24 months.

Another risk for consumers is that they will miss out on more competitive deals when booking their flights by being forced to redeem air miles through just one airline.

An alternative is to become a member of the Airmiles scheme (Airmiles .co.uk). It’s free to join and you can earn miles by shopping at Tesco, filling up at Shell or using the Lloyds TSB Airmiles Duo credit card. “What makes our scheme different is that members collecting Airmiles use them for completely free flights, including all airline taxes, fees and surcharges,” says spokeswoman Andrea Burchett.

There is also plenty of flexibility in how the Airmiles are redeemed. Members can choose to exchange them for cruises, spa and golf breaks and even a trip to Alton Towers, as well as flights from BA, Lufthansa, Emirates and Air France.