More than 45 million frequent-flier credit cards have been in circulation for the last three years, according to the Nilson Report, a payments systems newsletter.The problem is that the frequent flier miles consumers rack up each time they use their credit card aren't worth nearly what they were a few years ago, and the airlines' financial problems are making them worth even less. While people are sure to bemoan the losses and new hassles that come with redeeming their accumulated frequent flier miles, what they really should be doing is looking for a new credit card. Credit cards offer a number of advantages and disadvantages, depending on how you use them. (Don't miss " 10 Reasons You Need a Credit Card" and " 10 Reasons to Avoid Credit Cards") If you have learned to pay off your credit card balance in full each month, taking advantage of the perks that credit cards offer is a great way to do your shopping. Airline frequent flier miles reward cards have been a favorite for many years with people earning a mile for each dollar they spend. When you look at what you get these days, however, it's likely that you could do better by switching to another type of reward credit card that more closely matches your spending habits. Here are some of the reasons why. 1. Fewer Seats Available As airline fuel prices have increased, airlines have been looking for any way possible to cut expenses. One of the ways they have done this is by cancelling flights. The result is fewer flights that are more crowded and have fewer seats available for those trying to use their accumulated frequent flier miles. All those miles are not worth anything if you are not able to redeem them for the airline ticket you want because there are no seats available.
2. New Fees Airlines are struggling to make money anyway they can, and this has lead them to place new fees on redeeming frequent flier miles. American Airlines ( AMR), US Airways ( LCC) and Continental Airlines ( CAL) have all added a processing fee when redeeming frequent flier miles. American has added upgrade fees. Delta ( DAL) and Northwest ( NWA) have added fuel surcharges. What this all means is that the "free" airline ticket the frequent flier miles are supposed to secure is no longer free in many cases. 3. Annual Fee Many airline frequent flier credit cards still come with a yearly fee. Although you can often get this fee waived with a call to the credit card company, it's dependant on your initiative and negotiating skills. Many other reward credit cards don't come with an annual fee. Adding the cost of the yearly fee to the "free" ticket often results in the ticket not being such a great deal. 4. Most Frequent Flier Tickets Cost More Miles While most airlines have kept the cost for a free ticket at 25,000 miles, the truth is that most tickets cost a lot more miles. Airlines have been decreasing the number of frequent flier seats that are available at the 25,000-mile mark, making it much harder to find a ticket available for that amount of miles. As a consumer, you must then decide between not getting a ticket or using more miles to secure a ticket when you need it. Since consumers are usually not able to secure a ticket for the lowest number of miles, the value of each mile earned is less than many consumers calculate.
5. Bonus Miles Are Becoming More Scarce As the prices for securing a free frequent flier ticket rise, consumers have been depending more on "bonus miles" to get them to the free ticket level. Now the number of bonus miles that you can get from some airlines has started to decline. While these may not directly affect the number of miles that you can earn from your credit card, it means that you need to spend more money to earn miles to get that free flight. If all the miles that you accumulate are not enough to redeem for a free ticket, then the credit card is not giving you any bonus at all for your spending. What this all boils down to is that the value of the miles you earn today on your frequent flier credit card is a lot less than it was in the past. But with the large number of new reward cards available these days, there is a good chance you can find one that gives you more for each dollar you spend. Research time required: Most reward cards offer different percentages back for different types of spending to find the best one for your spending habits (especially with the gas reward credit cards), but with a bit of work, chances are that you can find one that will give you a better return on your spending than the airline credit card you currently have in your pocket.