A sneaky way to hit the £5,000 spend target on the AA credit cards

I received some good news by email yesterday – I have been approved for the American Airlines credit cards with the fantastic 35,000 miles sign-up bonus!

I was a little worried, to be honest, since my BMI MasterCard has a substantial £20,000 credit limit, and I wasn’t sure that MBNA would want to extend me more credit.  However, I have been an excellent MBNA customer over the years and presumably come out quite highly on their ‘people we want to keep as customers’ scoring.  This clearly worked in my favour, and they have given me the card with a £10,000 credit limit.

The one downside of this card is the requirement to spend £5,000 within 180 days to trigger the full 35,000 mile bonus.  Because you get a Visa card as well as an Amex, this is less difficult than it could be, especially if you can pay the Inland Revenue, your council tax etc with it.  It is still not an easy target for many, though.

There is, however, a work-around.

AA cards

When I wrote about the card, I didn’t mention one additional benefit that comes with it:  you get 0% credit for 12 months (from account opening) on all flights bought from the American Airlines website.

You could, therefore, buy a £5,000 fully refundable flight on the AA website.

We don’t yet know how long it will take MBNA to send over the bonus miles.  However, because of the 12 months interest free credit, it doesn’t matter.  Wait as long as it takes, then cancel the flight and extinguish your card liability.

Note that, whilst the purchase will accumulate no interest, you still have to make the minimum 3% repayment each month.  MBNA will want £15 off you, which will of course in turn reduce your outstanding balance.

When you trigger the refund, MBNA will not reclaim the base miles from your AA account.  They will, however, send your internal MBNA account into negative territory, and you will not any further AA miles until you have earned enough to wipe out the deficit.  This deficit would be 7,500 miles if you used the Amex card or 3,750 miles if you spend the £5,000 on the Visa card.

To avoid MBNA putting a black mark against your name for future applications, I would strongly recommend wiping out this negative balance by putting £5,000 of fresh spend through the card before you cancel it.   Closing the account with a negative mileage balance is possible – and MBNA will not come after you for the value of the negative miles balance – but you shouldn’t be surprised if they don’t rush to offer you new cards in the future ….

Without stating the obvious, be sure that you are 110% certain that the flight you are booking on the AA website is fully refundable.  If you are not sure, do NOT go ahead!  Personally, I have a tax bill due at the end of July which I am going to pay early, so I will not be doing this myself.

(To see our complete list of all current credit card bonuses, click here to visit our ‘Credit Cards Update’ page or use the link in the menu bar at the top of the page.)

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Comments

  1. BritBronco says:

    Could you purchase currency from Amex to meet the minimum spend? I recall some discussion on FT about currency coming through as a purchase

    • There is plenty of discussion on here about it as well, click on ‘Amex Currency Exchange’ under the Categories menu on the side!

      However, this only works with Amex-issued Amex cards, not MBNA ones sadly.

  2. James67 says:

    Just a word of warning here. I think MBNA are now running a tighter ship than previously. In good old days multiple bonuses were possible for reapplying for same card. Last twice (BMi and United) this failed for me. On querying I was informed I previously received bonuses for these cards and would not be getting another. They even could inform me dates bonuses posted from few years ago. I dont know if this is general or just a mark against my account because I have had so many cards. Also my father called to cancel United card after receiving his bonus 15k and was inforned that just applying for the card to get the bonus would impact adversely on any future applications. Given that MBNA are one of two best loyalty card providers in UK I would now advise those taking these cards to follow Raffles advice carefully and avoid too many multiple applications for same card. AA often follows up there 30% buy miles promo with a 50% promo so this might be a chance to get 90k for 60k and put over £1.2k on card in May. This promo can let you buy miles to pay flight in full at substantial discount on published fares in many cases.

  3. question, once you earn these 35KMiles, are they transferrable as 35K avios to BAEC?

    • No – AA miles is a different currency to Avios, and you cannot transfer from one to the other. You can however, book Oneworld award seats, including BA, directly using your AA miles.

      • Thanks, and one last question, do they create an AA Advantage account for you once you have been approved for the card, or do you need to create one separately?

  4. AviosNewbie says:

    Raffles, is it possible to load an Oyster card and then claim a cash refund at the underground station by cancelling that Oyster card? £5k is still a huge amount to do this, but if one is short by a few hundred pounds to meet any spends requirement, can this be done?

    • You wouldn’t be able to claim a refund at an underground station. You’d have to fill in a claim form. But I think they would only refund if you already had the same travelcard on it. E.g if you had an annual tralvecard and you bought a monthly one again or something.

      I’ve just spoken to the agency I rent with and they said they accept Visa credit cards. So easy for me to do this.

    • You can put up to £90 on a card, any refund must be to a card, but they don’t record what card you use, so you could refund it to a debit card. The refund is quite a slow process though…

      The £5 card deposit is refundable as cash though.

      • If your balance is less than £5 (paid by card) you can get it refunded in cash – not sure how useful that is

    • Easier to buy a few hundred pounds of vouchers for your usual supermarket ….

  5. vindaloo says:

    I realise it’s different with the Amex-issued cards, but I was surprised recently when my wife’s Amex Plat bonus was snatched back because I returned something I’d bought and the refund took us back below the spending target. We had intended anyway to take the spend back over before we stopped using the card, for the reasons Raffles says (not wanting to annoy Amex unduly) but I was surprised that the points were actually deducted. Perhaps this is normal though, if you haven’t transferred them out. I guess they deduct the points for the purchase if you refund it, so it makes sense that they deduct the bonus also.

    • What seems to happen with amex issued cards is that your bonus is linked to the transaction that put you over the bonus. If you reverse that transaction, the bonus is lost. So the trick is to ensure that your artificial big spend is not the one that generates the bonus, e.g. if you need to spend 5K, do a big spend of 4.9K and then do another spend of £100 or whatever. As the 4.9K did not trigger the bonus, it will not cause it to be clawed back when you reverse the spend.

  6. Raffles, if I wanted to get an AA flight, can I combine avios and AA miles to pay for it or can I not combine because they’re different currencies?

    • No, can’t be merged. However, both allow one ways so the easiest thing to do is use AA miles to fly somewhere and Avios back.

      • Thanks. Do AA and BAEC usually charge the same no of airmiles/cash or do they tend to differ between schemes? So could you end up paying more or less with AA for example?

        • See my review of the AA card (link on Credit Cards Update page). AA is cheaper for Middle East and India and Cape Town if going via Jo’burg. BA cheaper for East Coast of the US.

          AA also has no fuel surcharges on its own planes which makes UK-US flights aggressively cheaper overall (BA does charge a fuel surcharge if you take an AA plane on Avios … and then keeps the money).

  7. Raffles – i just got approved too.

    Quick question – is there a referral bonus or something if i refer a friend. Just looking at ways to maximise this.

  8. I was also accepted for this MBNA card with a credit limit of nearly £11,000. Should I ask them to reduce this surplus limit?

    btw does anyone have a promotional code (for Bonus miles) to join the AAdvantage programme?

    • No code I know of.

      If you feel £11k is too high and may stop you getting other cards, a quick call will get it reduced.

  9. I’m fairly new to Avios, miles and points and have benefited greatly from the advice on your blog. Thx
    Wish I discovered these travel hacks when I was single and was travelling more often.

    I have earned 57K MR points with Amex Plat. and I’m planning a summer break this year, in economy, with a family of 4 to visit Asia e,g. India, Singapore, Malaysia, HK etc. I was wondering if you can advice me on the best CC(s) to apply for to get the maximum points to reduce the cost of return flights from LHR?

    Many Thanks,
    Max

    • As you’ve got Plat, you could refer your partner for a Plat or Gold. A Plat referral is worth 47,000 between the 2 bonuses, a Gold referral is worth 31,000.

      If you can spend the £5k, the AA cards are also worth a look especially as AA miles have lower requirements to India that Avios.

      Look at the new deal on the Lloyds cards as well, which is not bad.

      Redeeming for economy is never the best use of miles due to the high taxes, although at peak periods it can be a decent deal.

      • I recently got my AA card (as mentioned in the post above). Should I get one for the Mrs. too? This would also mean a 10K spend in 6 months (for both of us) to trigger the bonus. This could possibly be achieved with the sneaky trick you mentioned here (at least for one of the cards).

        Is this a better option than an Amex Plat referral for the Mrs. if we plan to holiday in Asia?

        • Here is the AA award chart: http://www.aa.com/i18n/disclaimers/aadvantageAllPartnerChart.jsp A one-way to Asia in Economy is 35,000, helpfully. Importantly, YOU WON’T PAY FUEL SURCHARGES WITH AA unless you use BA or Iberia, and there are plenty of other oneworld airlines to choose from. You could try some dummy bookings on the AA website to see exactly where the taxes come out.

          • Thanks Raffles.

            • James67 says:

              Max, if economy os a necessity your family might enjoy a380 with Malaysia airlines. Availability is great and there is 2 flights a day between KUl and LHR. Tax and fees are low on AA redemptions but you need to call as MH not available online. There are great priced hotels on KUL and good deals on beach and Cameron Highland breaks for dramatic contrasts. Recommend booking with local tour company for best deal. Other big plus for KUlis you get cheap fares to just abput any place in Asia with Air Asia if you want to add more destnations to your trip. Btw, Air Asia is fab.

            • Hi James67,
              I’m not sure how the passengers in F class will tolerate 2 hyperactive toddlers, hence the economy class
              Always wanted to try the A380 so thanks for the tip. Will definitely check out Malaysia as an option.

  10. Paying your tax on a credit card? I hadn’t realised that was possible! Good tip.

    However, is it worth the 1.4% fee that is charged by HMRC?

    http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm#6

    • Sir Stamford says:

      Assuming that you value each Avios at 1p apiece, the break-even point is whether your Visa or MasterCard earns you at least 1.4 Avios per £1. The same analysis applies for other frequent flyer programmes.

      For instance, with the MBNA BMI Mastercard, you earn 2.5 Avios per £1, meaning that you are getting each Avios for 0.56p, after incurring the 1.4% CC charge. So, this is good deal.

      Sir Stamford

    • If you have the old BMI Mastercard, currently 2.5 Avios per £1, then Yes!

      Even with this card, I think I would bite the bullet and pay the fee. I want to trigger the bonus points ASAP as I have a potential use for the AA miles in late July.

  11. For people who have had this or similar MBNA cards before, is there any way to view your current number of miles earned with the card? Obviously you can log into your AA account but how often do MBNA send the points across to AA? Is it once a month with your statement or just ad hoc?

    • tearsplash says:

      MBNA send the miles across quite quickly to AA – within a day of your statement being generated, sometimes the same day.

      • Yes, they are great. If you get your statement in the post, you should have already had the miles! If not, something is wrong, so call them.

        Compare and contrast with Barclays, who “lost” everyones Hilton and Priority Club points in March – which have still not turned up – and have admitted today they have “lost” April as well.

        If MBNA would give me a few affiliate links for their cards – hint, hint – then all would be perfect! (MBNA does not do affiliate links for its travel cards in general, unless your name is moneysupermarket or similar …. although I must send them more business on the travel cards than they do)

    • In my experience MBMA are excellent at sending the miles across every statement day.

      I’ve been with them for years and never had a problem.

      Another thing to consider here is AA’s merger with US Airways. There’ll be nowhere in North America or the Caribbean you won’t be able to get to!

    • You can view your transactions online, and at the end of the statement period it shows how many miles have gone across.

  12. FromTheRail says:

    This sounds like a good deal for me, will be having to pay a decent amount of money in tax soon and could get this easily in one go.

    For redemption can you use them on Qantas flight? I would be looking at SIN-PER either full redemption for Eco or use them for upgrade to business, does anyone know how many would be needed as I can’t seem to find the right bit.

    • Not sure what the rules are (or even if you can) for upgrading on Qantas with AA miles. For a full redemption, see the link to the chart I published in another reply. No problem using them on Qantas as they are a oneworld partner.

      • FromTheRail says:

        cheers, actually just found that, from what I can see it would pay for one business class flight from SIN-PER

  13. Completely unrelated but I thought posting this on an active thread would make it more likely that people will see! Tesco are running a short repeat of their 750 bonus CC points for £50 spend on wine (no restrictions for number of cases etc) until midnight tomorrow (Fri 26 April). Use code XX7TCK.

  14. Don’t suppose anyone knows if it’s acceptable to pay HMRC in multiple payments? Seems like I could hit a number of bonuses by paying by credit card in chunks over the course of the year (before payment is due at the end of Jan 14). Might make better value than trying to find the best card to pay it all on (or not getting anything and saving the 1.4%).

    • Multiple payments are fine, I do this all the time. As long as all the payments are made by the due date ….! Note that payments take about a week to show up online, so don’t panic if they don’t show immediately.

      If you are self-employed, the 1.4% can also (in my opinion) be written off as a business expense.

  15. Hi,
    I am planning to apply for this card because I want to use it to travel to New York, probably off season, this November or December. Do you think it is worth the miles to redeem this for a LON-JFK flight ? I see, I can get a return flight for 40K. What about taxes ?