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Credit card companies buy billions of airline miles

Some airlines make as much money selling miles to credit card companies as they do selling seats to passengers, according to Bloomberg. Big credit card companies buy miles by the billions, for 1.5 to 2.5 cents apiece, and then hand them out to their customers whenever they make purchases with an airline-branded card.

People who use airline cards typically have high incomes and high credit scores, which benefits the credit card companies. Meanwhile, major airlines can make significant amounts of profit by selling miles to big banks as well as car rental firms and hotels. At American Airlines, the largest carrier in the U.S., airline miles now account for more than half of all profits.