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

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.

If you want to check your credit record before applying for a new card, click here to get your free Equifax credit report and score.  Your first 30 days are free then it’s £14.95 per month.  You can cancel at anytime.

As with all rewards cards, this is not a suitable product for you if you do not clear your balance in full every month.  You should focus on a credit card with a low interest rate such as the AA Low Rate Card. This has a very attractive representative APR of 6.4% variable on purchases and balance transfers.

Key link:  American Airlines AAdvantage credit card application page

Key facts:  No annual fee

The representative APR is 22.9% 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 often 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?

The sign-up bonus is 5,000 miles, triggered with your first purchase.

During special promotions, this can increase to 15,000 miles.  The last offer ended in early January 2016.

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 – 42,500 miles is probably the most interesting ‘cheap’ redemption, which would get you a one-way in the A380 Business Class Studio on AA’s partner Etihad to the Middle East.

Any other benefits?

For the first year of card ownership you benefit from 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 3% 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 for posting points punctually.

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

American Airlines UK credit card review

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 British Airways European flights is not great value – 12,500 AA miles is enough an Economy one-way inside Europe in Economy, for example, but the taxes will be higher than using Avios as you don’t benefit from the £35 Reward Flight Saver tax cap.  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 85,000 vs 120,000 (Middle East) or 150,000 (India) for BA, and First is 125,000 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 equal, with Japan and Hong Kong costing 150,000 miles return in business class compared with 150,000 Avios.  Cape Town is a decent deal – British Airways 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 a great deal using American Airlines miles.  A First Class ticket costs just 230,000 AA miles return from London compared with 400,000 Avios 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 although this is only on a small number of aircraft to date.

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?

My default comparison card is the AA FuelSave Credit Card.  This card is free in the first year and offers 0.5% cashback on all spending, 2%-4% cashback on fuel purchases and – in year one – free AA breakdown cover.  The representative APR is 22.4% variable.

Both the American Express and Visa cards compare OK with this, even at my 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 which 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 an FX 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.  I recommend the Lloyds Avios Rewards card which also earns Avios points – even on your 0% FX transactions!  It comes with a 4,500 Avios sign-up bonus if I refer you.  My review of the Lloyds Avios Rewards card is here.  Alternatively, you could use a free Curve Card or a Travel Supercard to avoid or reduce FX fees.

Conclusion

The current sign-up bonus of 5,000 miles is OK for a free airline card.  That said, 5,000 AA miles have little value on their own and the card is best suited to someone with existing AA miles or heavy card spending.

The earning rates are 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.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

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.

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Comments

  1. OT
    On my Iberia booking, I have BAEC number for miles credit. Tried to change it to AAdvantage but do not know how I can make that change.
    Any pointers?

  2. “12 months interest-free credit on all American Airlines purchases charged to the card.”

    This isn’t accurate. The website states “Get 0% interest on card purchases on all American Airlines flight bookings for up to 12 months from the date your account is opened”

    So you only get the 0% for the first year, not on a recurring basis.

  3. Has anyone ever produced a table which shows to £ spend needed to generate the required points to redeem a certain ticket and factored in the taxes ?

    Say BA is 180k points and £515 taxes on LHR-BKK and Etihad is 200k points and £250 taxes, Lufthansa is 165k points and £xxx taxes etc ?

    I find it difficult to compare (no time to produce table myself truthfully) all the options, such as being able to accrue AA miles which seem of no value to me as I don’t go to the USA but then the ability to redeem them on my most often used Etihad LHR-BKK route is hugely interesting.

    • I don’t think anyone has the time to compile information about thousands of possible routes, not to mention that taxes and fees vary with currencies and can change at any time anyway.

      I don’t know about you but I get avios from many sources so knowing how much spend on a CC is required is not useful, as it would take me years to earn enough for a long haul flight if I had to earn them all at 1-2 avios per £ (everyone is in a different place with regards to sign up bonuses so impossible to have a general calculation either)

  4. If you’re going to Hawaii, 5,000 AA Miles will get you an island transfer for 5,000 miles + $5.60 tax on Hawaiian Airlines. And if you join their loyalty program, you’ll pay less in baggage fees as well.

    • I’m saving up for this but I thought it was 7500 miles for an island hop! Saving up for 2 tickets by doing ereward surveys!

  5. I have been interested in these two cards for a while but keep missing the sign up bonus offers! I have an SPG Amex card which I use as much as possible when paying in sterling but the Visa Mbna card would help where I cannot use the Amex card.

    My only dilemma is as I live in Qatar I transfer my SPG miles to either Qatar Airways or AA.
    The Mbna Amex is more attractive with the 1.5 miles per £1 spent as opposed to the 1 miles per £1 with SPG but can only then transfer miles to AA. Maybe its time I completely ditch Qatar Airways and put all my miles into AA and redeem Qatar Airways flights that way?!

  6. If a reward flight is available with Etihad does that mean it is also available to book through AA?

    If so, why would you collect Etihad miles if it is significantly cheaper to use AA miles?

    • Yes it is that easy, and the taxes are cheaper than what you see on the Etihad Site.

      You are better collecting AA miles for flights on Etihad (as long as the partnership lasts)

  7. Does using this card stop AA miles from expiring?