Co-Branded Credit Cards Vs. Generic Miles: Which Type of Credit Card Should You Choose?
Choose the travel credit card that will reward you most.
- December 19, 2019
- Credit Cards
- 5 min read
You're our first priority. Every time.
We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Bottom line? We’re on your side, even if it means we don’t make a cent.
Airline credit cards have been around for decades, but more have flooded the market in recent years. These cards are attractive to anyone who travels, offering rewards programs in the form of bonus miles that can lead to free flights, discounts on purchases and lucrative upgrades to make your travel accommodations that much more enjoyable.
But when you start looking into the different options, you might hit a stumbling block. Several travel credit cards seem to be the same yet are clearly different once you look at the benefits and terms and conditions. Once you dig deeper, it becomes clear that most airline miles credit cards fall into one of two categories:
- Co-branded cards
- Generic miles credit cards
Read on to find out the difference and benefits of co-branded credit cards compared with generic miles credit card to determine which option is best for you.
Co-Branded Credit Cards Vs. Generic Miles Credit Cards
Both co-branded credit cards and generic miles cards allow you to build up a balance of airline miles when you make purchases, though the categories and rewards rates will vary from card to card. These miles can be exchanged for flights and sometimes, hotel reservations. So, you’re paying for airline tickets with rewards miles that you earned for purchases you were making anyway. In effect, you get to fly for free. However, since both co-branded credit cards and generic airline miles cards can award you with free flights, you might wonder how they differ. Read on to find out the primary differences so you can choose the right type of card for your lifestyle.
Co-Branded Credit Cards Overview
Co-branded credit cards are the result of a contract between two companies. Basically, an airline carrier and a financial institution team up to give you the convenience of a credit card along with the unique perks of a specific airline. These have often been referred to in the past as frequent flyer programs.
These co-branded airline credit cards can be used like any other credit card to make all types of purchases on credit. What’s different about airline cards is that they offer rewards programs in the form of miles rather than generic rewards points or cash that a typical rewards credit card would offer. Co-branded credit cards also tend to award you more points for purchases with the card’s co-branded airline and a better redemption rate as well when you convert those to airline miles with that specific airline, therefore it’s important to choose a card that’s associated with your preferred airline.
Related: The Best Hotel Rewards Credit Cards
Generic Airline Miles Credit Card
Generic or universal miles credit cards work very much the same as co-branded cards. You can use generic miles credit cards to make purchases and get rewarded with miles according to the rewards program of that card. The principal difference between these two types of cards is that with a co-branded airline credit card, the miles that you rack up can only be used on a specific airline carrier or its partner companies.
Universal miles cards, on the other hand, can be used for a much broader range of things including more airlines, more travel expenses and fewer restrictions.
When a Co-Branded Credit Card Is a Better Choice
If you use a co-branded card from an airline like Southwest, you may earn more points, but you have to use them on Southwest. That being said, there is still value to a co-branded miles credit card, particularly if you typically travel with the same airline. You’ll get a ton of value out of a co-branded card because you’ll be able to trade in all the miles you rack up for free flights, upgrades and other airline-specific perks. In fact, the real value of miles depends on how much the flight costs more than anything else.
Airline Miles Credit Card Features to Consider
No matter what kind of card you opt for, there are a few key factors to consider when comparing one miles credit card against another. Here are seem important features to assess when shopping for an airline miles credit card.
The good news about airline cards is that you can usually get a great one for less than $100 in annual fees a year. Many of the top co-branded credit cards all come with annual fees ranging from $95 to $99. What’s more, there are also great airline credit cards that come with $0 annual fees. These credit cards are a solid deal, but be on the lookout for premium cards that can charge much more, as much as $500 or even close to $1,000 a year. If you’re looking to rack up rewards points without spending more, avoid the top-of-the-line co-branded cards and go for ones that charged less than $100 a year.
The sign-up bonuses that come with these cards are usually pretty generous, but you can’t just compare numbers to get the best deal. In fact, this is one case where size doesn’t necessarily matter. Earning 30,000 bonus miles from is great, but if you can’t use it for anything other than a trip to Alaska, your miles are going to lose value fast.
Make sure the sign-up bonus is worth it by calculating the amount of spending per day you’ll need to do to hit the bonus requirement. Many credit cards have a timeframe of 90 days during which you must spend a certain amount to earn a bonus, so calculate how much you need to spend per day in order to hit the bonus limit. You can then compare this daily spending to the bonus figure to assess how much the sign-up bonus is worth. If you have to go into debt or make unnecessary purchases just to earn the bonus, it’s not worth it. But if you’re already planning on making a major purchase, the sign-up bonus really is a bonus.
How many miles you earn per dollar in specific categories is important to consider. It’s common practice to earn a higher earn rate for spending with the brand associated with the card. However, most of these co-branded cards offer a pretty low rate of one mile per dollar spent on all other categories. Thus, finding a credit card that offers a bigger earn rate on the categories you spend in more frequently means you’ve got a good deal.
Look at what else you get from the card such as perks and benefits. Many times, these perks can seem impressive, but upon actually using them, they might not live up to expectations. Other benefits can absolutely be worth it. Read through the credit card rewards agreement plus the section on additional benefits and perks. By doing so, you can evaluate if these benefits will really make a positive impact on your travel experience.
Companion tickets are one of the biggest perks available, and it’s also one of the rarest. Companion tickets are certificates for cardholders that enables them to fly a friend at a discount or even for free. Many of the major airlines do offer some sort of companion ticket perk, but offerings from co-branded credit cards can be limited or infrequent. If in your research you come across a credit card that offers companion tickets, give that card higher preference.
The Bottom Line
Both types of cards, co-branded and generic airline miles cards, can get you perks like priority check-in, free checked bags, lounge access, discounts and upgrades. You need to decide what type of traveler you are before choosing between these two types of credit cards. Either way, with smart planning and strategic spending, you can rack up big rewards miles for free flights fast.
More From Seek
- Signs It’s Time to Get a New Credit Card
- How to Maximize Rewards Credit Cards
- Will Banks Give Me a Second Credit Card?
Business Loan Resources
Photo credit: Artem Oleshko/Shutterstock.com
Best Startup Loans of 2020 - Get Between $5,000 and $500,000
Get more great articles straight to your inbox!
Let us make it up to you with better articles straight to your inbox.
Recommended For You
Every business needs additional funding from time-to-time, but it may be difficult to qualify for a business loan if you haven’t established good credit history. Where do you begin? A good option to help build your business credit is taking... Read More
- March 24, 2021
- Credit Cards
- 6 min read
Any business that wants to accept credit card payments needs the right processing equipment and software. It’s often worthwhile to accept credit card payments from your customers – it opens up another line of revenue and makes your customers feel... Read More
- January 20, 2021
- Credit Cards
- 6 min read
Many of us use credit cards either to manage our debts or to pay for expensive items over time rather than have to save up money over many months. But if you aren’t careful, you could end up saddled with... Read More
- January 19, 2021
- Credit Cards
- 5 min read