Is it time to ditch your airline credit card?

Compared with airline credit cards that still charge a fee, many general travel credit cards charge smaller annual fees and offer more rewards. But airline credit cards offer one advantage. 

When airline credit cards came into being, the ability to earn rewards was novel enough that airlines could charge an annual fee. But now? You will be hard pressed to find a major credit card that does not earn rewards, often with no annual fee.

So does it make sense to hold onto that airline card, which charges more than $100 a year?

Depending on your circumstances, there may be a better strategy.

In defense of the airlines, frequent-flyer miles have the potential to be quite valuable. If you can score a roundtrip flight for 25,000 miles that would otherwise cost $500, you’re reaping 2 cents per mile. Even if your credit card only earned one mile per dollar, that’s like getting a 2 percent rebate.

But anyone who participates in a frequent-flyer program knows that redeeming miles is easier said than done. Blackout dates, seat restrictions, capacity controls, and other requirements can make it difficult to get the flight you want. Or you might be able to get it, but instead of being 25,000 miles, it could require 30,000 or more. The Delta SkyMiles program is a case in point. If the miles aren’t redeemed strategically, the value may not be there.

Some airlines offer a more predictable value. With Virgin America’s Elevate program, each point is worth approximately 2.2 cents, relative to the current cash price of a given ticket. This conversion holds true regardless of the specific flight. Since their credit card normally earns one point per dollar, the value is clear. You don’t have to be a frequent-flyer guru to get your money’s worth.

How other credit cards compare

During the past several years, as consumers have grown increasingly frustrated with frequent-flyer programs, general travel credit cards have begun to appear. Rather than limiting your rewards to a specific airline or hotel chain, these give you a fixed value per point when redeemed for travel purchases.

With the Chase Sapphire Preferred, each point is worth 1.25 cents when redeemed for travel through the Chase Ultimate Rewards website. After the first year, the card carries a $95 annual fee, which is the same cost as the Delta Gold American Express.

The Capital One Venture Rewards credit card is another popular choice. It gives two miles per dollar on every purchase. However unlike frequent-flyer miles, with this card each mile is worth exactly 1 cent when redeemed to offset a travel expense. With most airline-branded cards, it will be difficult to always achieve a 2 percent value like that. After the first year, the Venture Rewards has a $59 annual fee, which is lower than many airline cards.

What might be the best card in this category is also the least known: Barclaycard Arrival World MasterCard. It gives two points per dollar spent. Each is worth 1 cent when converted to statement credits to offset a travel purchase. That already yields 2 percent. But as a sweetener, Barclaycard gives back 10 percent of the redeemed miles to use again – i.e., after redeeming 25,000 miles for a $250 statement credit, 2,500 miles would be returned to use again. All together, that means you’re earning 2.2 percent on spending. After the first year, the Arrival World MasterCard charges an $89 annual fee.

It comes down to benefits

In short you have two options: 1) airline-branded cards, whose frequent-flyer miles can yield a good value but only when redeemed in the most opportune manner, and 2) general travel cards that can always yield a good value and for a comparable annual fee. So why should anyone choose the former?

Benefits.

Only airline cards can offer perks like free checked bags, priority boarding, and expedited check-in. The value of these benefits alone can easily exceed the annual fee.

Take Delta Airlines, which normally charges $50 per round trip for a passenger’s first checked bag. Since cardholders get it free of charge, even if they fly only twice per year they can save $100. That offsets the $95 annual fee on the Delta Gold card. More-frequent travelers will really come out ahead. Those who don't use these benefits are probably better off using a general travel card.

But this doesn't have to be an either/or choice. Consider carrying both cards. Use your airline card to get the benefits on the airline you use most frequently, but a general travel card for the bulk of your spending.??

– Michael Dolen reviews credit-card deals for the website he founded, CreditCardForum.