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American Airlines has co-brand credit card agreements with both Barclays and Citi, which is good for consumers, since it means we have access to all kinds of different products.
Today American Airlines and Citi have revealed a new no annual fee credit card, which will be open to new applicants starting July 22, 2018. The new AAdvantage MileUp Card will offer the following:
- Welcome bonus: 10,000 AAdvantage miles and a $50 statement credit after spending $500 in purchases within the first three months of account opening (limited time)
- Return on spend: 2 miles per dollar spent on American Airlines and grocery store purchases, one mile per dollar spent on everything else
Previously American’s no annual fee credit card was the AAdvantage Bronze Card, which offered one mile for every two dollars spent. Bronze cardmembers will automatically be upgraded to the new card, which is great news because they’ll be earning double as many miles on everyday purchases, and four times as many miles on American Airlines and grocery store purchases.
Those with the AAdvantage MileUp Card will receive 25% off inflight purchases of food and beverages, as is the case with all co-branded American Airlines cards.
Does it ever make sense to get a no annual fee airline credit card?
It depends on how you look at it. Sure, I suppose there’s limited downside to having a no annual fee card for the modest welcome bonus, the 25% savings on inflight purchases, etc.
However, in general it just doesn’t make sense to use an airline credit card that awards only a mile per dollar spent on a bulk of purchases. I value American miles at 1.3 cents each, so you’re much better off using something like the no annual fee Citi® Double Cash Card, which offers 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. Or the Capital One® Savor® Cash Rewards Credit Card, also offers 2% cash back on groceries, along with 3% on dining and 1% on everything else. I think most (reasonable) people value American miles at less than two cents each, in which case the math just doesn’t add up.
If you’re someone who spends a lot at grocery stores I guess this isn’t a bad no annual fee option. I’d still much rather get the no annual fee Amex EveryDay® Credit Card from American Express, which offers 2x Membership Rewards points on the first $6,000 spent per year at US supermarkets, plus a 20% points bonus when you make at least 20 transactions per billing cycle.
American’s premium credit cards are also worth considering
While it will be nice to have a no annual fee option, I do think American’s premium credit cards are potentially worth paying annual fees on. Both the personal and business Citi AAdvantage Platinum cards are offering increased welcome bonuses of 60,000-70,000 miles each, with the first year annual fee waived. The details are as follows:
- The Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard® is offering a welcome bonus of 60,000 AAdvantage miles after making $3,000 of purchases within the first three months; $99 annual fee, waived for the first 12 months
- The CitiBusiness® / AAdvantage® Platinum Select® World Mastercard® is offering a welcome bonus of 70,000 AAdvantage miles after making $4,000 of purchases within the first four months; $95 annual fee, waived for the first 12 months
Since I value American miles at almost 1.3 cents each, I value those bonuses at $780-910, so that will cover a lot of annual fees.
These cards also offer perks that make them worth holding onto long term, including:
- Preferred boarding on domestic American flights
- First checked bag free on domestic itineraries for you and up to four companions on the same reservation
- The Personal Platinum Citi AAdvantage Card offers a 10% refund on miles redeemed, for a total of up to 10,000 miles per year (assuming you redeem at least 100,000 miles per year, this means you’re getting 10,000 American miles with the card annually, which makes the card a keeper, in my opinion)
We’ve seen both Delta and United recently introduce no annual fee cards, so it’s only reasonable that American would introduce an updated one as well. On the plus side, the new card is a huge improvement over the old card, which only offered one mile for every two dollars spent.
However, I generally don’t recommend using a card that offers only one mile per dollar spent, given all the other great cards out there. However, I get why they offer a card like this. There are lots of brand loyal people out there who like using a credit card from a certain company, even if the value isn’t amazing.
The value from an airline credit card comes mostly from the perks the card offers, and that’s why I think a card like the Platinum Citi AAdvantage Card could make more sense, since the free checked bags and preferred boarding benefits add up quickly.
What do you make of the new AAdvantage MileUp Card?