? and for those who choose to be rewarded with free airline travel; the choices are even greater, the detail more confusing and the stakes significantly higher. Getting it wrong could end up costing hundreds of dollars in unnecessary fees and lost benefits.



The purpose of this guide is to assist ?frequent flyers? in the selection of the most suitable credit (or charge) card for their unique circumstances by presenting a clear, comprehensive and objective analysis.

Taking into account your own circumstances, we will provide a framework and key decision points for you to answer the following questions:

* Do you really need a reward program?

* What type of reward: Frequent Flyer points or Travel Vouchers?

* Which ?Frequent Flyer? card?

DO YOU REALLY NEED A REWARD PROGRAM?

There are 2 broad categories of credit cards available

1)credit cards with associated reward programs

2)?no frills? cards which don't have programs or have very basic ones)

Cards with associated reward programs always come at an additional cost - usually higher annual fees and higher interest rates. Before choosing one of these more expensive cards, you should establish whether the benefit to you outweighs the additional cost.

To assist you in making this decision, we offer the following guidelines:

* If your average monthly credit card spend is less than about $500, its probably not worth your while paying the extra annual fee, as the maximum number of frequent flyer points you'll earn is a measly 6,000 points. At that rate it will take you over 3 years to acquire sufficient points for a single short-hop domestic flight worth maybe $200!

* If you aren't in the habit of paying the card's full balance each month, the more expensive card is definitely not for you. The extra interest you will pay to cover the outstanding balance is significantly more than any benefit you will get.

If any of these guidelines apply to you, we recommend you select a basic ?no frills? card. Don't bother about trying to accumulate frequent flyer points with your credit card - if you do need a ?top-up?, there are better and more cost-effective options.

Which basic card?

There are hundreds basic credit cards available. For convenience, you may want to use your regular bank's basic card. The annual fee shouldn't be more than $30. If you pay the full amount each month, go for the maximum number of ?interest free days?; otherwise go for the lowest interest rate.

If your credit card spend is more than $500 per month and you pay the full balance each month ? read on.

WHAT TYPE OF REWARD: FREQUENT FLYER POINTS OR TRAVEL VOUCHERS?

We need to distinguish between reward programs which allow for the conversion of reward points to frequent flyer points, and those programs which don't.

Most reward programs are in the first category but there are an increasing number of new programs as well as the traditional Credit Union/ Building Society cards that don't allow for the conversion of reward points to frequent flyer points. If you choose to travel you can usually convert your reward points to Travel Vouchers that can then be used to ?purchase? travel at affiliated travel agents or airlines.

As most of the fully featured programs give you the option of converting reward points to either frequent flyer points or Travel Vouchers, the only advantage of a ?Voucher only? program is that it usually has a lower annual fee.

The only logical reason why anyone would deliberately choose a ?Voucher only? program is either that they don't plan on travelling or that they are very price sensitive. If you are not planning on travelling, you shouldn't be reading this guide as it is directed at frequent flyers. If you are price sensitive, it is probably more sensible to choose either a ?no frills? card (as described in an earlier section) or bite the bullet and pay the few extra dollars to get a card linked to a fully featured reward program.

WHICH ?FREQUENT FLYER? CARD?

So, you have established that you don't want a ?no frills? card and are indeed after a fully featured program that allows for the conversion of reward points to airline frequent flyer points. This narrows the choices somewhat, but there is still a large choice of cards.

We suggest you don't make your decision based on cost considerations (if you are after a cheap card, go for a ?no frills? card) but rather consider the following 5 key decision points:

Key Decision 1: How much do you usually charge to your card each month?

This could be a major factor in selecting your card as some cards limit the number of frequent flyer points you can earn. If you have a high monthly card spend, you should consider cards which don't impose these limitations.

Key Decision 2: Which airlines do you use most frequently?

You should use the frequent flyer program of the airline you are travelling with. You get more flexibility, especially when it comes to upgrades and other perks. Get a card linked to that program.

Key Decision 3: Where do you usually use your card?

Most programs offer bonus points for expenditure with their program partners. These ?bonuses? can be quite generous and shouldn't be underestimated.

Key Decision 4: How flexible are you when it comes to award travel?

The big draw back with frequent flyer programs is that the availability of award seats is always limited and it's often difficult to secure seats during peak periods - usually the very time you want to travel!

This shouldn't be of concern if you have some flexibility. But if you are limited to travelling during peak periods such as school holidays, this could pose a major problem. In this case, consider using your reward points to ?purchase? travel directly rather than first converting them to frequent flyer points. The only disadvantage of this tactic is that it's usually more expensive, but you do get the advantage of increased availability.

Key Decision 5: Do you require free international travel insurance?

Most of the more expensive ?Gold? cards and charge cards offer free comprehensive travel insurance if the ticket is purchased with the card.

If used correctly, this could amount to a saving of many hundreds of dollars. Be sure to read the policy details and Terms and Conditions to ensure that you are adequately covered.

RECOMMENDATION

It's impossible for us to make a specific recommendation. You will need to consider each of the 5 key decision points we have described above and come to your own conclusion.

Some final points to consider:

* card issuers are continually changing their products and often follow their competitors. Reacting to each change (such as a fee increase) puts you in a never-ending spiral of chopping and changing cards for very little real benefit. Rather, make an informed decision once and then monitor the situation. Make another move only when there is a major structural change in the market

* in terms or reward programs, there is very little difference between credit and charge cards. In fact, with Amex you can link any of their popular reward programs to either the charge card or credit card and get identical frequent flyer benefits

* don't be swayed by promotional gimmicks such as discounted initial rates and these offer no long term benefit