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

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.

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.

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.

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.

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.

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Want to earn more points from credit cards? – April 2024 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.