Airline credit cards are some of the most profitable products in consumer finance. Banks issue them. Airlines license their branding and frequent flyer programs. The two parties share revenue from the resulting card portfolio, and the numbers are enormous. Delta's 2023 agreement with American Express was valued at $7 billion per year. American's deal with Citi and Barclays is similar in scale.

For consumers, airline cards can produce genuine value. They can also be overpriced products that people hold for years without using effectively.

This is what is actually inside an airline credit card and how to decide if it makes sense for you.

What the card typically earns

A mid-tier airline card earns between two and three miles per dollar spent on airline purchases, and one mile per dollar on most other spending. Bonus categories often include dining, groceries, or gas, depending on the specific card.

The annual fee is typically $95 to $150 for mid-tier cards and $450 to $650 for premium cards. Premium cards come with additional benefits like airport lounge access, free checked bags, priority boarding, and statement credits for specific spending categories.

Sign-up bonuses are the single largest source of miles for most card holders. A typical sign-up bonus is 50,000 to 100,000 miles after spending $3,000 to $5,000 in the first three months. This bonus alone is often worth $500 to $1,200 in redeemed travel.

The benefits that actually matter

Certain airline card benefits produce consistent dollar-for-dollar value:

Free checked bags. If you check a bag on each trip, the bag fee saved is $30 to $50 per flight. Two round trips per year with a checked bag pay for the card's annual fee.

Priority boarding. Early boarding means overhead bin space for your carry-on, which saves you from the gate-check that basic economy passengers often face.

Annual travel credit. Premium cards often include $100 to $200 in travel credits that you can redeem against airline purchases. If you would have spent that anyway, the credit is effectively a fee offset.

Lounge access. Access to airline-run lounges can be worth $50 to $100 per visit if you use the food, drinks, Wi-Fi, and quiet space during long layovers.

Foreign transaction fee waiver. Most airline cards have no foreign transaction fees, which saves 3 percent on overseas purchases.

The benefits that do not matter as much

Some heavily marketed benefits are less valuable than they seem:

Mile earning on regular spending. If you earn 1 mile per dollar on non-airline purchases, you are effectively getting about 1.2 cents back per dollar. A 2 percent cashback card gives you more for spending that is not on airlines.

Companion certificates. The annual companion ticket offered by some cards has specific restrictions, limited availability on good flights, and taxes/fees that often make them less valuable than they appear.

Status boosts. Some cards give a modest push toward elite status. This matters only if you would have been close to elite status anyway.

How to decide which card is right

The right airline card depends on three things:

Which airline you fly most. There is limited value in a Delta card if you mostly fly on United, because the benefits are airline-specific.

How often you check bags. If you always travel carry-on only, the checked bag benefit does not apply to you.

How much you would spend in the bonus categories. Cards with bonus categories are only valuable if you actually spend in those categories.

For frequent travelers on one primary airline who check bags, a mid-tier co-branded card at $95 a year is typically a good deal. For occasional travelers, the annual fee probably exceeds the benefits used.

Why the transferable-points alternative is often better

For many travelers, a transferable-points credit card is actually a better choice than any specific airline card. Chase Sapphire Reserve, American Express Platinum, Capital One Venture X, and similar cards earn points that can be transferred to multiple airlines and hotel programs.

The advantage is flexibility. If Delta has a great award on the specific route you want, you can transfer to Delta. If United has better availability, you transfer to United. You are not locked into one airline's ecosystem.

The transferable-points cards often have higher annual fees but produce more total value for travelers who can use the flexibility. For travelers with a single airline loyalty, the co-branded card is often simpler and produces comparable value.

The real cost of not using the benefits

An airline credit card with a $95 annual fee that you never actually use is a $95-per-year bad purchase. This sounds obvious but is extremely common. Card holders forget they have the card, do not use the benefits, and pay the fee year after year because they vaguely feel the card is "for when I travel."

If you have an airline card, make a habit of using the specific benefits. Check the bag. Use the priority boarding. Spend the travel credit before it expires. Redeem miles within a year or two of earning them so they do not lose value to devaluations.

If you have an airline card that you have not used in the last year, cancel it before the next annual fee hits. Most banks will not prorate the fee once you are charged for the year.

The bottom line

Airline credit cards are financial products with real value and real costs. The people who benefit most are frequent travelers who use the specific benefits regularly and who earn the sign-up bonus, book a meaningful trip with it, and then evaluate whether the ongoing benefits justify the annual fee.

The card is a tool. Using it effectively requires understanding what it actually does, matching it to your actual travel patterns, and replacing it when your needs change. The people who lose money on airline cards are not the people who apply for them. They are the people who keep paying annual fees for cards they do not use.