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

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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. 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

  2. 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.

  3. 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.

  4. 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 ?

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