What is the best replacement for the UK American Airlines AAdvantage credit card?

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As we wrote yesterday, MBNA has written to holders of the American Airlines UK credit cards this week to tell them that they are closing at the end of July.

Today I thought I would run through the options if you still want to collect American Airlines miles from a credit card, or want an interesting alternative from another airline.

Best replacement for UK American Airlines AAdvantage credit card

Why did this happen?

You should NOT assume that these cards will return under a new issuer.

Two linked events caused this.  The core driver was the European Union cap on interchange fees.  This restricted the fee that payment processors could charge retailers for accepting credit cards to 0.3%.   It is very difficult to run a successful mileage card on this basis.

The second driver was American Express being caught up in the 0.3% cap, even though it was originally expected to be exempt.  American Express decided to pull all of its licensed cards from the market, which means that MBNA, Lloyds, TSB and Barclays had to stop issuing Amex-branded products such as the American Airlines AAdvantage cards.

What is a little odd about MBNA’s decision is that it is also closing the Visa-only AA card pictured above.  With a £70 annual fee I thought this may be sustainable.  With 1.25 miles per £1 spent, it isn’t hugely different to the £160 fee / 1.5 miles per £1 spent deal on the new Virgin Atlantic Reward+ card.

Best American Airlines UK credit card replacement

What is your best alternative to the American Airlines AAdvantage UK credit card?

There are a number of ways of looking at this.  Let’s run through them.

Scenario 1:  You want a card which still lets you earn American Airlines miles

The good news is that there are still ways to earn American Airlines miles from a credit or charge card in the UK.  The earning rate is OK too.

The best option is the Starwood Preferred Guest American Express credit card.   You earn 3 points (in the new combined Marriott / Starwood scheme) per £1 spent, and these convert at 3:1 into American Airlines miles.  If you convert in chunks of 60,000 points you get a 5,000 mile bonus, meaning that you are actually getting 1.25 AA miles per £1 spent.

The annual fee is £75 and you get a sign-up bonus of 30,000 points (10,000 AA miles).  This makes the card well worth getting for the first year at least.

Your other option is one of the two Membership Rewards cards – either American Express Preferred Rewards Gold or American Express Platinum.

The snag here is that you cannot convert directly from American Express Membership Rewards to AA.  You need to route via Starwood Preferred Guest at the poor conversion rate of 2:3.  This means that 1,000 Amex Membership Rewards points gets you 1,500 Starwood / Marriott points which gets you 500 American Airlines miles (or 625 if you convert in chunks of 60,000).

At best, you are getting 0.625 American Airlines miles for every £1 spent on Amex Gold or Amex Platinum.

Best American Airlines UK credit card replacement

Scenario 2:  You specifically want a Visa or Mastercard to collect American Airlines miles

This is trickier and less lucrative.  You can’t get anywhere near the 1.25 miles per £1 that the £70 MBNA AA card offered.

The only half-decent Visa / Mastercard option is via the IHG Rewards Club Mastercard (0.2 miles per £1, assuming you convert 10,000 IHG points into 2,000 airline miles) or, with the £99 IHG Rewards Club Premium Mastercard, 0.4 miles per £1.

There is a sign-up bonus on these cards.  The free IHG Mastercard comes with 10,000 IHG points, worth 2,000 American Airlines miles.  The £99 Premium card comes with 20,000 IHG points, worth 4,000 AA miles.

Best American Airlines UK credit card replacement

Scenario 3:  You want a high-earning Visa or Mastercard and are willing to move away from American Airlines

Without a doubt, the two Virgin Atlantic Mastercards are the most generous Visa or Mastercard products available – either the Virgin Reward Mastercard (free, 5000 miles bonus) or Virgin Reward+ Mastercard (£160, 15000 miles bonus).

You get 0.75 miles per £1 on the free card and 1.5 miles per £1 on the paid card.  This is FAR better than any Avios or hotel card.  You also get a 2-4-1 or upgrade redemption voucher for hitting spending targets.  The only downside is that, with no short haul routes, you are unlikely to earn enough miles purely from the credit card to get a good redemption so the cards are best suited to regular Virgin flyers.

The best long-term card for an Avios / Etihad Guest / Asia Miles / Singapore Krisflyer collector (if you have a high income) is the HSBC Premier Mastercard or HSBC Premier World Elite Mastercard.  

You need to have a (free) HSBC Premier current account to get these cards but these come with high income or savings requirements.  If you’ve got the money behind you to get Premier, the cards are great.  The standard Mastercard is FREE, has no sign-up bonus and earns 0.5 airline miles per £1.    The World Elite card has a £195 annual fee but comes with a sign-up bonus of 40,000 miles for spending £12,000 in your first year, free airport lounge access and pays a generous 1 mile per £1 spent.

If you simply want a free Visa or Mastercard and collect Avios, the best option is the Tesco Clubcard Mastercard.  You get 1 Clubcard point per £8 spent which translates into 0.3 Avios per £1.  However Tesco rounds down each transaction to the nearest £8 which means your actual earning rate is lower.  You get extra value because Clubcard points have many uses – as well as Avios, you could send them to Virgin Flying Club or a totally different Clubcard partner altogether, such as Uber or hotels.com.

Reviews and to apply

Here are my reviews of the cards mentioned above, which also explain the sign-up bonuses available:

American Express Preferred Rewards Gold – review, apply 

American Express Platinum – review, apply 

Starwood Preferred Guest American Express – review, apply 

IHG Rewards Club Mastercard – review, apply 

IHG Rewards Club Premium Mastercard – review, apply 

Virgin Atlantic Reward Mastercard – review, apply 

Virgin Atlantic Reward+ Mastercard – review, apply 

HSBC Premier Mastercard – review, apply 

HSBC Premier World Elite Mastercard – review, apply 

Tesco Clubcard Mastercard – review, apply 

Please read this important interest rate information:

Starwood Preferred Guest American Express – representative APR 36.2% variable including fee based on a notional £1200 credit limit

American Express Preferred Rewards Gold – representative APR 57.6% variable including the annual fee (free in year 1) based on a notional £1,200 credit limit, interest rate on purchases 22.9% APR variable.

IHG Rewards Club Mastercard – representative APR 18.9% variable

IHG Rewards Club Premium Mastercard – representative APR 41.5% variable including fee based on a notional £1200 credit limit

Virgin Atlantic Reward Mastercard – representative APR 22.9% on purchases

Virgin Atlantic Reward+ Mastercard – representative APR of 63.9% including the fee, assuming a £1200 credit limit

HSBC Premier Mastercard – representative APR 18.9% variable

HSBC Premier World Elite Mastercard – representative APR 59.3% variable including fee based on a notional £1200 credit limit

Tesco Clubcard Mastercard – representative APR 18.9% variable

(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. I understand the adavntages of the Virgin cards are financed by Virgin Atlantic itself in a way that it is considered as a marketing tool and will funnel probably more customers using Virgin flights.

    Then does it mean, in a five years perspective, less rewarding credit cards in the UK market because it will be a not profitable business?

    • Frenske says:

      Besides being a market tool, these branded credit cards may increase loyalty to the brand. This can be very valuable for virgin or BA, etc.

      • Christian says:

        Totally. I don’t even like BA but I’m stuck in their web because I have the BA Amex.

  2. MissGeekChic says:

    Are the virgin cards offering referral bonusses?

  3. Andrew says:

    What I need now is a US issued card, with a decent reward rate, that’s available to UK residents with 0% FX fees…

    • Bagoly says:

      Is the need strictly for “US-issued” or just “USD”?
      If the former, then governments’ paranoia and more connected computer systems suggest it will be a long time coming.

      If the latter then the Amex ICC in USD gets you MR points and paying it off with CurrencyFair/Midpoint/Transferwise keeps the FX fee down to about 0.5%.

      • guesswho2000 says:

        US issued I suspect, since the interchange US card issuers can charge is much higher, hence rewards are greater.

    • mathzjl says:

      for 0% FX fee cards issued in the US, since they are using Visa/Mastercard FX rate, it’s in fact higher than the interbank FX rate. I think it’s 0.3-0.5% higher normally, but could be 0.8% sometimes.

  4. Some of those representative variable interest rates are scary for 2018, and that’s before you look at BA’s Premium. Paying in full monthly is everything in this game.

    • Callum says:

      Representative APRs are completely useless because they include the annual fee. The actual APR, the only rate relevant to how much interest you’ll be paying, is much lower.

      Not that it ever makes sense to use a rewards card to hold an interest-generating balance.

      • ‘Not that it ever makes sense to use a rewards card to hold an interest-generating balance’

        I agree.

  5. Scottydogg says:

    Any word when they are going to bring out a new Hilton credit card ? im kind of holding out for the Hilton card for my non Amex spending

  6. renwaldo says:

    What is the lowest cost investment product you can do with HSBC?

    • New Card says:

      £200 investment via Global Investment Centre does the trick.

      • jim c says:

        Do you mind expanding on that New Card?

        • Londonbus says:

          Not for Premier surely? I’m on a high income but have no desire to tie up money in HSBC Premier’s awful investment products.

  7. fashionqueen says:

    I think I’m going to go with the Starwood card. Seems like a fairly decent rate although I was getting 1.5 miles to £1 on my AA Amex MBNA card..

    We took out a Hilton card years ago but I’m wondering as they closed it to new applicants that will get shut soon, so I’m not putting any more money on that.

    • mark2 says:

      Remember that Starwood is Amex so not a direct substitute although my favourite card.

  8. Nick M says:

    With the Virgin cards, are you definitely allowed to hold both cards? – I can’t see the value for us at the moment in the paid card but would like the option to upgrade/take out the premium card in a year or so… Idealy would be opening the free card in the interim

  9. @Rob, it seems that your Ctrl+V function stopped working recently – there any quite a few references to “see here . (no link)” or “such as (no link) and (no link)” – FYA

    • No, it is perfectly fine. A recent Adblock update is messing up the text – you need to whitelist HFP.

  10. jim cleaver says:

    This’ll hurt me. My miles game was built around this card and redeeming on Qatar / Cathay to Asia. On average i’d generate 60k miles in spend so will need something good to replace it (visa or mastercard)

    I’m a little confused, you mentioned the £160 fee 1.5 miles per £ card, is that closing too?

    Jim

  11. Mikee says:

    Ref the Virgin MBNA Amex which looks like is closing in July, I’ll need to spend approx £3.5k between now and July to hit the £5k trigger for the Economy to Premium Economy upgrade voucher. With no large purchases due, any ideas how to generate the spend in terms of cash? Unfortunately I can’t top up my Revolut or Transferwise accounts as they don’t accept Amex. I’m wondering whether PayPal is an option to pay myself or Family.

    Mikee

    • Genghis says:

      I believe Paypal are very AML blocky happy. For that reason I’ve never tried.

    • Lumma says:

      Gift cards for somewhere you spend money regularly? Pay a large bill with billhop if the fee will be less than the value you’d get from the upgrade voucher

  12. AA forever says:

    I have a huge chunk of AA miles that I’ve kept “alive” by using the credit cards. I may have to do the IHG one in a years time when my miles still have 6 months left (18 month life on AA cards). Other than that credit card and crediting miles from eligible flights, are there any other ways to get AA miles in the UK?

    • Obviously you have the usual hotel and car partners but no other transfer options.

  13. Bigglesgirl says:

    The letter I’ve received states that the “relationship between MBNA and American Advantage will come to an end”. This doesn’t seem to indicate that it is necessarily MBNA we are pulling out of the deal, but that it is the natural end of their agreement, especially as it is a Visa card and not the other AMEX cards, which are currently suffering their demise. Maybe another provider might pop up?
    Big shame as it was good to keep my 380k miles ticking over…..oh well, guess I’ll just have to spend them now!

  14. Georges says:

    Rob, maybe you can answer this question then for me. If the likes of the SPG Amex was caught up in the interchange fee cap of 0.3%, why is Amex still charging their full commission to retailers who accept this card for payment. I have my own SPG Amex but I’m also a retailer that accepts Amex. So out of curiosity, I put through a charge of £100 last week using that card to see if the charge would be lower. And it’s not, they charged my merchant account my normal 2.85% commission. My business partner has a Miles and More MBNA Amex, I may try out that one and see what happens. So I don’t understand what the fuss is about if Amex can continue to charge their normal commissions on those cards that have been ruled as being subject to the cap. Or did they get a grace period until it takes effect for them? Thanks. (BTW. I called Amex this morning and complained about this extortionate 2.85% commission and they reduced it to 1.9%. So if anyone accepts Amex, it’s worth a quick call to Merchant Services).

    • There’s your answer. You never asked …

      To be fair, no-one actually knows how Amex is meant to interpret this. Since Amex is still allowed to charge for terminals etc, and as the fee is bundled, it is very hard to prove. If Amex does not reduce their fees to the same ‘bundled’ level as Visa / MC I assume they will face further complaints. Big retailers who effectively pay for their own merchant services equipment presumably now see a processing fee closer to 0.3%.

      • Georges says:

        Thanks Rob, all very strange. But for the terminal, we pay Worldpay (on top) for this, not Amex. So it is difficult to see what else Amex is bundling their fee with. Time will tell I guess. If anyone works for a large retailer, it would be interesting to get their angle on this (without disclosing the retailer of course).

  15. Marge says:

    Hi Rob
    I’m leaning towards the SPG American Express as I’m really just interested in the miles. This however still leaves the problem of finding the best Visa card as many merchants don’t take Amex.
    Any suggestions?
    I’d also consider a BA (Avios) Visa card if it offered a more generous rewards program.
    Thanks,
    Marge

  16. Caroline says:

    One thing that I don’t think has been taken into consideration is that with AAdvantage you earn miles on award flights (and you need less miles for a BA award flight through AA than you do from BA (for the Club World route I take anyway). I’ve been researching whether to switch to Avios but the max miles per pound seems to be 1 whereas I can get 1.25 with Starwood and still earn miles on my award flights.

    I’m going to hang on to see if AA launches a replacement to my MBNA card and if they don’t I think I’m going to get the Starwood one.

    I’ve considered the HSBC Premier card to switch to Avios as the sign up bonus is very tempting but long term I think I’m better off sticking with AA.

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