As I discussed yesterday, this is the 1st of my series of posts looking at the major UK loyalty credit cards and discussing whether of not they are worth applying for. These posts will be linked to the relevant sections of the ‘Credit Cards Update‘ page.
About the card
The American Airlines AAdvantage cards are issued by MBNA as a double-pack, with recipients receiving an American Express card and a Visa card. This has become a common trend in recent years, with card issuers wanting to benefit from Amex’s higher merchant fees whilst at the same time not wanting to put off anyone who is concerned about limited Amex acceptance.
MBNA also issues the United and Virgin credit cards, amongst others. If you already hold one of these cards and are refused for the AA card, they will usually change their mind if you ring up and offer to reduce the credit limit on your existing card.
What is the sign-up bonus?
Currently 5,000 AAdvantage miles, triggered as soon as you make your first purchase. This offer has been the normal one for most of the last 18 months, although it has been as high as 35,000 miles in the past.
On its own, 5,000 American Airlines miles are not going to get you very far if you live in the UK. I discuss some possible redemption ideas below, but basically if you do not already collect AA miles then 5,000 miles should not be enough to convince you to start.
Any other benefits?
12 months interest-free credit on all American Airlines purchases charged to the card!
What is the annual fee?
There is no annual fee.
What do I earn per £1 spent on the card?
Cardholders earn 1.5 AA miles per £1 spent on the Amex and 0.75 miles per £1 on the Visa. MBNA has a good reputation in my experience for posting points punctually.
What is an AAdvantage mile worth?
This is a tricky one, especialy from the perspective of someone living in the UK. Let’s consider a few variables.
Firstly, AA is a member of OneWorld, as is BA. This means that AA miles can be redeemed for BA flights, although you will be using AA’s partner award chart which is here. You can quickly see that using them for BA European flights is poor value – 10,000 AA miles is enough an Economy one-way inside Europe in Economy, for eg, but you will still pay BA’s taxes and fuel surcharges.
(Redeeming with Avios instead would let you do a Reward Saver redemption which caps the taxes on a one-way in Europe at £15, possibly £100 cheaper.) It only becomes interesting if you go to the far reaches of Europe, since AA charges the same for London to Paris as it does for London to Moscow.
Long-haul from London, using BA planes, AA is a relative bargain on India and the Middle East, since Business is 60,000 vs 80,000 (Middle East) or 100,000 (India) for BA, and First is 80,000 vs 120,000 (Middle East) or 150,000 (India) with Avios points (all return prices). AA is also a partner with Etihad which lets you fly to Abu Dhabi in their impressive J and F cabins.
Asia routes are also attractive, with Japan and Hong Kong costing 105,000 miles return in J compared with 120,000 Avios. Cape Town is also a decent deal – BA charges additional Avios miles if you change planes in Johannesburg, which is necessary in most cases given poor availability on the direct flights, whilst AA does not.
AA miles come into their own when redeeming on AA planes, especially across the Atlantic, where you will not pay a fuel surcharge. When using Avios, BA charges a fuel surcharge whether you use AA or BA planes, even when AA does not charge a fuel surcharge itself.
However, BA has moved New York, Boston and Washington into a cheaper band since November 2011 (Club World is 80k return) whilst AA still charges 100k from London for J to all points in America. This offsets much of the difference when going to the East Coast. AA’s J product is also behind BA’s in terms of food and comfort, although the new seat being rolled out is a major improvement.
Since a UK-based AA collector is likely to redeem on BA flights, I use the same valuation as I do for Avios – 0.75p per mile. On this basis, the 1.5 miles per £1 on the Amex is equivalent to a 1.1% rebate on your spend. The Visa returns just 0.55%.
How does this compare to a cashback credit card?
There are currently no cashback cards on the market which offer a) a MasterCard or Visa, b) no annual fee and c) unlimited cashback. The best ‘pseudo cashback’ card is probably the House of Fraser MasterCard, which offers 1% of your spend in House of Fraser gift vouchers
In some ways this debate is academic, though. Because European rewards are a poor deal because of the fuel surcharges, you are likely to be redeeming for a more expensive long-haul flight. This means that, since earning miles purely from credit card spend is likely to take a long time, especially with such a poor sign-up bonus, this card will only be of interest to an existing AAdvantage collector.
Other points to note
AA is not an Amex Membership Rewards partner, so you cannot collect AA miles via that route as an alternative to this card. That said, if you did need to top-off an AA account to reach a specific target, you could transfer miles from a hotel programme or do a miles purchase – AA runs regular promotions where it sells miles at a discount to the regular rate.
The Head for Points Verdict:
Score for the sign-up bonus – 4/10. 5,000 miles is always worth having if you are an existing AA member, but remember that it has been as high as 35,000 miles. There are also far more interesting deals out there at the moment with other cards. The lack of an annual fee is a positive sign, especially if you intend to cancel after banking the bonus.
Score for on-going earning – 7/10 (Amex) and 5/10 (Visa). 1.5 miles per £1 on the Amex is as good as it gets at the moment. The same goes for the Visa at 0.75 miles per £1, although this is still not a great return on your spending.