The Airline Miles Card vs. the Travel Credit Card

NEW YORK (Credit-Land.com) -- Is a credit card co-branded with an airline a better deal than one that isn't associated with a specific brand?

Here is a primer on understanding how travel credit cards work, and finding the right one for you.

Airline Credit Cards

The value of an airline reward points or miles card is good if you usually fly on same airline and spend most of your travel dollars there. Members earn one point or mile per dollar spent on everyday purchases, but they can earn many more points for spending money on airline tickets.

A caveat with these rewards is that you don't mind booking well in advance, and you travel itinerary is often flexible. This goes beyond the restrictions and blackout dates on reward travel: You may rack up 100,000 miles on American, but when you want to go to France, be told the next available rewards ticket is in 2014, or requires 12 connections. A good rule of thumb is to be prepared to book a rewards ticket six to nine months before the travel dates (and blame all those Baby Boomer retirees making their leisure plans 12-months out and hogging the miles tickets).

It's also important to know that many airline cards charge an annual fee. It's often waived during the first year but will automatically be assessed without any additional communication once a year has passed. If you slack on using your miles, within a few years of annual membership fees you could end up defeating the purpose of the card. In addition, if you sign up for a card primarily to take advantage of a new card user promotion -- some cards offer a large number of bonus miles just for signing up and spending a certain amount in the first few months -- keep in mind that many of these cards require you to remain a card member for the miles to be good indefinitely. If you cancel the card, there will be a date at which the miles earned by the card expire.

Travel Credit Cards

Travel credit cards that are not co-branded with an airline work very differently than an airline credit card. While it is a travel rewards card, it isn't tied to a specific airline. In fact, travel rewards with this card can be used for any travel purchase - not just airline tickets. You can use them for hotels, cruises, and car rentals as well as plane tickets.

When you make purchases, you'll earn "miles" -- basically points, but called miles because this is marketed as a travel card. Once you have these miles, they can be redeemed for lots of things, but the best redemption value is a statement credit for travel spending. Just request it online within 90 days of making your travel purchase (again, this can be on car rentals, cruises, hotels or airfare) and the issuing bank will automatically convert miles to cash and credit the amount to your statement. This works for any brand or company, no blackout dates or restrictions. First you spend the money, and then you request the statement credit.

A miles card that isn't co-branded with an airline might be your best option if:

You want flexibility to redeem your reward with any airline, anytime

You want the freedom to use your reward for things other than airfare

So, which one is the best?

That depends what you're looking for. Both types of cards offer travel rewards and can be used to get great savings, but each has a different way for customers to redeem those rewards.

Some redemption options offer only half as much value -- for example, with a travel credit card you can redeem miles for cash, but 40,000 miles may only garner a $200 reward. The same amount of miles on an airline credit card can deliver a free first class airline ticket -- a value that is often well above $1000. However, the energy and time to book an award travel ticket, while navigating through blackout dates, may be exhaustive and take some energy.

--By Michael Germanovsky

Germanovksy is editor-in-chief of Credit-Land.com

This commentary comes from an independent contributor as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Michael Germanovsky is an expert in personal finance with in-depth knowledge of credit cards, charge cards, and pre-paid cards. He began his writing career at the Novoye Russkoye Slovo, a partner of the New York Times International Weekly; and later authored a personal finance column at The Epoch Times. In 2011, Germanovsky created the Student Credit Card Education Initiative, designed to promote financial literacy and smart credit card use by young people. He is editor-in-chief at Credit-Land.com.