Starting today, I am running updated versions of our ‘Credit Card Reviews’ series. They will drip out over the next couple of months, since there are 25 articles in all!
This is my review of the American Airlines AAdvantage credit card issued in the UK by MBNA.
It is part of my series of articles looking at the major UK loyalty credit cards and discussing whether or not they are worth applying for. These articles 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.
Key facts: No annual fee
The representative APR is 17.9% variable.
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 or cancel it entirely.
What is the sign-up bonus?
Currently 5,000 AAdvantage miles, credited with your first purchase within 90 days.
Occasional special offers throughout the year see this bonus raised to 10,000 or 15,000 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 pay 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 120,000 (Middle East) or 150,000 (India) for BA, and First is 80,000 vs 180,000 (Middle East) or 200,000 (India) with Avios points (all return prices, BA prices are based on peak dates). 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 400,000 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. The new AA business class seat is also seen as superior to the British Airways Club World seat
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 AA brand was the one that survived. 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. The American Airlines and US Airways frequent flyer schemes were merged in early 2015 and the reward chart is likely to be devalued soon.
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 credit card, which pays 0.5%.
Both the American Express and Visa cards compare OK with this, even at my (very conservative) 0.75p per mile valuation.
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 only alternative credit card sign-up for collecting 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). 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.
Remember that the American Airlines cards have a fee of almost 3% for foreign currency transactions. You may want to consider getting a separate card to use abroad which charges no foreign exchange fees, such as the Post Office Money Platinum card (free, no rewards) or the Lloyds Avios Rewards card (£24 fee, earns Avios).
The current sign-up bonus of 5,000 miles is slightly above average for a free airline card. If you are willing to wait a few months, you might find a 10,000 or 15,000 mile offer returning.
The earning rates are more impressive. 1.5 miles per £1 on the Amex is as good as it gets at the moment on a free mileage card. The same goes for the Visa at 0.75 miles per £1.
The application form can be found here.
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. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.