Credit Card Reviews 2014 (1): American Airlines AAdvantage American Express & Visa

(EDIT:  This review was updated in July 2014 to reflect the current bonus offer)

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.  My other UK airline and hotel credit card reviews can be found here.

Link:  American Airlines AAdvantage cards official 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, Etihad, Emirates, Miles & More 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.

The representative APR is 17.9% variable.

What is the sign-up bonus?

Currently 5,000 AAdvantage miles, which is the usual offer.  MBNA runs a promotional offer once every 12-18 months – in 2014 it was 15,000 miles and in 2013 it was an amazing 35,000 miles.

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 – 30,000 miles is probably the most interesting ‘cheap’ redemption, which would get you a one-way in Business Class on AA’s partner Etihad to the Middle East.

Any other benefits?

12 months interest-free credit on all American Airlines purchases charged to the card.  You will receive 0% interest for six months on any balance transfers you arrange within the first 90 days.  These are subject to a 2% fee.

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.

This is a very impressive earnings rate for a free card.

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 British Airways 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 £17.50, 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 business class 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.

Australia is also an exceptional deal using American Airlines miles.  A First Class ticket costs just 160,000 miles return from London, compared with 300,000 miles using British Airways.

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 business class to all points in America.  This offsets much of the difference when going to the East Coast.  AA’s business product is also behind BA’s in terms of food and comfort, although the new seat being rolled out is a major improvement.

You should be wary about putting your faith in any of the redemptions above, however.  American was taken over by US Airways in 2012 – although the brand will remain – and many changes are on the way.  A raft of ‘no notice’ changes to the American Airlines scheme in April 2014 should make you wary of investing too much effort in their programme, especially as I would expect more changes to come.

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?

The best cashback card on the market which offers a) a MasterCard or Visa, b) no annual fee and c) unlimited cashback is the Asda card, which pays 0.5%.  The best ‘pseudo cashback’ cards are the House of Fraser MasterCard, which offers 1% of your spend in House of Fraser gift vouchers, and the Amazon MasterCard, which offers 1% back in the form of Amazon vouchers.

The American Express card competes well with this, even at my (very conservative) 0.75p per mile valuation.  You may want to think about whether the Visa card (at 0.75 miles per £1) represents good value or not compared to the Amazon card.

Other points to note

American Airlines is not an Amex Membership Rewards partner, so you cannot collect AA miles via that route as an alternative to this card.  (One option is to transfer to Starwood Preferred Guest and then to American, but the rate is only 1 : 0.625, even assuming you transfer in chunks of 20,000 SPG points.)

The best alternative credit card sign-up for American Airlines miles is the Starwood Preferred Guest American Express card.  This has a sign-up bonus of 10,000 SPG points (converts to 10,000 AA miles), but runs occasional promotions with 20,000 points as a bonus.  This would convert to 25,000 AA miles.  My review of the Starwood Amex is here.

If you did need to top-off an AA account to reach a specific target, you could also 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 – 6/10.  5,000 miles for a free card is OK but nothing more.

Score for on-going earning – 9/10 (Amex) and 7/10 (Visa).   1.5 miles per £1 on the Amex is as good as it gets at the moment on a free card.  The same goes for the Visa at 0.75 miles per £1, although this is still not a great return on your spending.

(Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.)

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Comments

  1. As you’ve pointed out in the past, MBNA tightly control the sign-ups and limit the bonus so you can’t ‘churn’ and get in multiple times. For me, that’s a consideration now.

    I’m less sure whether you can get the interest-free period more than once though.

  2. darrenf says:

    Note that if you click on the FAQ link on the application page for this card, it says this:

    “You can also earn double miles for any spend on fuel, supermarket shopping and American Airlines purchases when using your AAdvantage® Credit Card Account. “

    • Charlie says:

      Hmm I didn’t notice the double miles benefit before, I actually bought an AA flight last month on the Amex and it rewarded 1.5x only. I will chase with MBNA!

      • Let’s us know the result, ESP about supermarket , petrol spend etc! Would be a great bonus….

    • That’s a new one on me! Are they seriously doing double points on petrol and supermarkets but not actually bothering to tell people?!

      I assume there are some AA cardholders who can tell us if this is a typo or a real benefit.

      • If that’s true i am going to laugh! I can not confirm because i only use it as a Visa in small shops at the moment but if that’s for all (new and old holders) it will be more than fun! ;-)

        • I have just checked two statements. No extra miles. This is for the card taken last year in May.

          • Nothing here either, I also took the card out in May last year.

            Checked my last statement, £228 spent on the Amex, all except £8 for the Amazon Local RSH deal was spent at Tesco and 342 miles earned.

  3. If I buy AAdvantage miles with this card, do the points still credit or is it treated as cash?

    • It won’t be treated as cash (it goes through as a purchase under the name points.com) but neither will it be treated as an AA purchase, so you don’t get the 0% interest on it.

  4. Raffles, two more points. The second being critical for me.

    1. Holders is this card do not pay credit card surcharge when booking AA flights.

    2. American does not have premium economy as a separate cabin, this means you can do a deep discount to business copay upgrade. This is currently $350 and 25k miles. Especially good if you are heading to the west coast.

    • Is the 25k +$350 the return cost or one way and is this something you can do online? Planning to burn some miles to SFO this summer and would like to fly business :-)

      Mikee

      • Brian Peers says:

        @ Mikee

        No you have to call up to do it. I’ve always done it after making the booking.

        Note you are NOT guaranteed an upgrade it is if availability allowed. That said I have done about 10 times and never failed..

        Clearence occurs by status, I think EXP clears a week before, PLAT 72 hrs, GOLD 48hrs blah blah… don’t quote me on those times. Loads of detail about it on flyertalk.

        • Ok thanks, will check FT. I have no AA status so might struggle to get the upgrade and would prefer to have a firm business class booking. However, it could still be an option if I hold both an AA and BA booking and cancel the BA if AA business availability opens up at H24.

          -Mikee-

          • Brian Peers says:

            @ Mikee

            Are you travelling solo?

            If so I think you stand pretty good chances as log as you avoid pinch points like xmas, thanksgiving, easter.. etc..

            • Yep, solo traveller and avoiding the peak periods. At 6ft 3, the thought of 11hrs+ down the back drives my need for a business class seat :-)
              However, sounds like it’s worth the risk as it’s such a good deal to upgrade.

            • Brian Peers says:

              Sorry missed part of your question. It is only one way.
              I tend to do it coming back for the nigh flight as you have to pay loads of UK taxes for the way out.
              Check out paying for MCE (main cabin extra) its like premium economy in terms of leg room but a lot cheaper…

          • Brian Peers says:

            @Mikee

            oh, one more thing to add I’m fairly sure a non-status member co-pay upgrade gets priority over an operational upgrade by status.

            Given I have had 3 op-ups over the past 2 years they can’t be running business class too full!

            * note my experience is mainly LHR-ORD

        • If you have an Expert Flyer account you can see what dates in the future upgrades are available (look for ‘C’). If you’re flexible, pick that date book that date and be upgraded at that point. Otherwise, you are wait-listed.

  5. You mention the amazon.co.uk MasterCard as a possible alternative.

    It seems the card is being ‘enhanced’ and is not currently offered at amazon.co.uk. Another forum (moneysavingexpert.com) suggests rewards are being halved, i.e. 0.5% general, 1% for Amazon purchases.

    • Yes, I noticed this had gone but could not tell if temporary or not. 1 per cent is generous for a non Amex.

      In other news, Kens & Chelsea council took a Visa for my council tax again! 3rd year running. Told website it was Visa Debit and it went thro with no surcharge!

  6. ankomonkey says:

    “Asia routes are also attractive, with Japan and Hong Kong costing 105,000 miles return in business class compared with 120,000 Avios.”

    What flights would these be for Japan? Anything with OneWorld? So BA, JAL or Finnair UKJapan?

  7. OT: Did anyone who upgraded amex gold to platinum receive a mystery 5000 MR points on their statement? I should be getting 15,000 after completing £1000 of spend but I’m only £800 through that. Looks like the 5000 might have triggered after £500 spend.

  8. Hi just applied for the MBNA AAdvantage credit card and did not see anywhere to put my AAdvantage number is this normal and do I need to call MBNA?

    • Yes it was the same last year. They created one for me, i had one already and they merged them afterwards.

  9. pazza2000 says:

    I had an 18 month gap between cancelling and a second application (the 35k was worth the shot), pleased to confirm that the sign up bonus was awarded twice, although I had the same problems as others whereby a new AA account was opened for me which had to be later merged.

  10. Aeroflott says:

    I’m a fan of AA. If you’re prepared to travel in standard class and stick to AA operated flights, you can get an off peak return ticket to the US for 40,000 Aadvantage points plus AA taxes, which are a lot less than BA fees for similar flights.