Credit & Charge Card Reviews (1): American Airlines AAdvantage 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 most 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 Tesco Clubcard MasterCard Low Rate card. This has a very attractive representative APR of 5.9% variable – and you can transfer your Clubcard points into Avios or Virgin Flying Club miles.

Key link: American Airlines AAdvantage credit card application page

Key facts: £70

The representative APR is 38.4% variable including the fee based on a notional credit limit of £1,200.

About the card

The American Airlines AAdvantage card is issued by MBNA. Following a relaunch in June 2017, you will now only receive a Visa card. There is no longer an accompanying American Express card.

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.

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.

Under the rules, you will not receive the bonus if you have previously held any version of the MBNA American Airlines card. In practice MBNA tends not to be this strict but I would not take the risk as the £70 fee must be paid regardless.

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?

£70.

This is not partially refundable if you choose to cancel the card during the year.

What do I earn per £1 spent on the card?

Cardholders earn 1.25 AA miles per £1 spent. MBNA has a good reputation for posting points punctually.

This is an unbeatable earnings rate for a Visa or MasterCard, although you need to factor in the £70 annual fee.

MBNA American Airlines visa 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 1.25 miles per £1 you earn is equivalent to a 0.94% rebate on your spend. This is fantastic for a Visa / MasterCard.

How does this compare to a cashback credit card?

My default comparison card is the ASDA Cashback Credit Card which is free for life and offers 0.5% cashback. The representative APR is 19.9% variable.

The American Airlines Visa card is substantially better than this, even at my conservative 0.75p per mile valuation, although you need to be a high spender to also offset the impact of the £70 fee.

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.

Conclusion

The current sign-up bonus of 5,000 miles is weak given the £70 fee. In any event, 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 rate is very impressive. 1.25 miles per £1 on the Visa is unbeatable. If you have substantial credit card expenditure, this could be an excellent card for you despite the fee.

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.

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Comments

  1. Rob,

    You could have mentioned that waiting may yield higher sign up bonus like it was 15000 AA miles at launch time and I hope it will return before next summer.

    I have this card and can highly recommend if you are in AA miles collection.
    Now with HMRC card acceptance it is not going to be very easy to generate stack of miles very frequently for tax payments though!

    • any feel for when is the most likely time to see an increased sign up bonus?

    • There is no pattern yet. You would expect a bonus when a new card is launched, which is what we had earlier in the year. Since then, nothing. It’s not as if there is an established pattern of enhanced bonuses on this new card.

  2. Smellyden says:

    Rob,

    Why do you always default to the Asda Credit Card for comparing? I only ask as I applied for the card but cancelled after I found out that the cash back is paid in a voucher to be only used in Asda. Surely the better card to compare it to is the Aqua reward card. This offers the same level of cash back but you get it in cold hard cash. As a bonus this card also does not charge a foreign currency charge so great for buying extra AA miles with no charge to buying them in Dollars

    • Roger I* says:

      +1 for the Aqua card.

      If you don’t qualify for the Aqua card, the Nationwide Select Visa card offers 0.5% rebate. If you want shopping vouchers, the John Lewis Partnership MC offers 0.5% rebate in vouchers (1% at JL/Waitrose).

      • And nationwide select is commission free abroad, too. Though I prefer to use curve linked to IHG Black.

  3. Andrew Nicholas-Wynne says:

    I took out the new AA card despite already having an AA Visa and Amex combined card. Surprisingly, I got 15,000 credited to my account straight away? I think I applied early!!!

  4. Does anyone know if American Airlines ever offer a transfer bonus from hotel programmes? Like the current BA 35% bonus?

    • Yes.

      I used that with Marriott travel package when there was 25% bonus for hotels to AA miles. That was earlier in spring/summer. I am sure such offers return from time to time.

    • Did one very recently – I think we covered it.

  5. Given, this has “moved” to a Visa-only version, How soon is the 15K offer likely to recur ? Last ran in Aug.

    • MBNA has got very mean on bonuses since the interchange fee cap came in. 2 years ago it was normal to see big bonuses running at the same time across all of their airline cards.

  6. This card was born out of MBNA having to stop using the Amex version of the card, and is fairly reasonable in terms of rewards, given the cap on interchange fees for visa.

    I wonder what will happen with the virgin card, which I understand might be making a similar change in the near future. Any clues?

    • It is off to Virgin Money, and we have no idea what their appetite is in terms of paying for rewards.

      More interesting is how the United, Emirates, Etihad and Lufty cards change, which seem to be staying with MBNA (unless they are dropped entirely).

  7. OT re Marriott Travel Packages

    Did I recall talk of some bonus in terms of the Avios or miles received ?

    We are looking at a redemption now and obviously, anything for “free” is welcome given that it takes a while to accumulate 350k to 500k of points !

    Also, any real good redemption places for parents and a 10 year old ? (not Europe, not Americas).

  8. flyforfun says:

    Did anyone take advantage of the recent sign up bonus?

    I got my partner to join to help keep his AA miles alive. We reached the spending target (and then couldn’t buy anything else as we’d shortly after hit the card limit!!) and the 5000 point normal joining bonus posted, but it’s now 3 weeks later and the bonus bonus points have yet to post. What’s been other people’s experiences?

  9. DAVID GIBSON says:

    Anyone know if you cancel the card…do you loose the points in your AA account?

  10. What happens with people who have the Amex / Visa already, do they still carry on earning miles at the same rate?