Have a travel related question? Post it here, and I’ll do my best to answer it as quickly as possible.
While anyone can comment on regular blog post, registration is required in order to post a question in this space. Creating your account is free, and you'll be able to see when your question is answered, as well as like comments from other users. And of course, you'll earn status points for offering helpful answers!
This space is intended to be more of a community as well, so please jump in and share tips!
How Travel Cards Work
Dear Lucky and everyone,
I need to understand how banks and credit card companies make their money by giving airline miles. And how the airlines determine how much miles to give out.
I don’t know how this sound absurd but I will be deeply appreciative of a candid explanatory answer.
Thanks everyone,
Kenn
Airlines get money by selling miles to banks. They also hope that holding their card makes you a more loyal customer and may provide more data about your habits depending on their relationship with the issuing bank.
Banks make money when you use your card through interchange fees to facilitate the transaction. They also make money if you carry a balance or miss a payment (most award cards carry very high interest rates). Banks make the determination of how many miles to give you based on their projected margins.
Your feedback is important in helping us keep our community safe.