American Airlines' credit card perks are not as good as they look
If you’ve booked a flight through the American Airlines website recently, you might have seen something like this just before checkout:
Earn 30,000 bonus miles*, up to $100 in statement credits*, your first checked bag free*, and more*!
Your Total Price: $469.60 USD Card Statement Credit*: -$100.00 USD ------------------------------------------ $369.60 USD
Not only are you presented with the new Citi Platinum AAdvantage credit card at the moment when it makes the most sense to sign up for it, you're also offered a significant incentive: $100 off the price of your plane ticket when you charge it to the new card.
That kind of discount is hard to turn down.
American isn't the first company to offer a carrot to sign up for a new card, but this discount is larger than most offers, and the additional perks are potentially worth hundreds of dollars more.
The card looks great at first glance, and I almost signed up on the spot. But there are some things in the fine print that should give you pause.
The card’s advertised perks include:
- 30,000 American Airlines AAdvantage bonus miles after you make $1,000 in purchases within the first 3 months.
- A free checked bag on each flight for you and up to four traveling companions.
- Priority boarding.
- 25% savings on eligible in-flight purchases.
- An annual $100 American Airlines flight discount.
- A 10% bonus on your redeemed AAdvantage miles.
- Double AAdvantage miles on eligible American Airlines purchases.
- No annual fee during the first year (regularly $95).
What are these perks actually worth?
It costs 25,000 miles for one round-trip MileSAAver AAnytime ticket in economy class for travel within the continental U.S., Alaska and Canada. Miles also can be redeemed for hotels, rental cars and vacation packages.
The first checked bag free is worth $50 for you and up to $250 per round trip if you have four traveling companions.
But the fine print says your account must have been open at least seven days at the time of booking for the benefit to apply. So if you sign up for the card at the time of booking, you’ll still pay baggage fees for that flight.
Priority boarding has no monetary value, and it also carries the seven-day restriction.
The discount on in-flight purchases will save you 50 cents if you need to buy a headset to enjoy in-flight movies and TV shows. It will also save you $2.50 on a sandwich and chips, or $1.75 on a mixed drink.
But you’ll have to wait 6-8 weeks to get your 25% discount in the form of a statement credit — there's no instant discount at the time of purchase. You’re better off bringing your own headphones and food.
The $100 annual flight discount only applies if you spend $30,000 a year on your credit card, which probably won't help most people.
It’s also a terrible deal because it essentially only covers the $95 annual fee. If you spent $30,000 on a cash-back card with no annual fee, you’d probably earn at least $300 back annually.
The only good news here is that you don’t have to spend $30,000 to get the initial $100 statement credit.
Earning 10% of your redeemed miles back would net you an additional 2,500 miles if you booked the typical least expensive round-trip flight. Combine that with the 5,000 miles you didn’t redeem from the 30,000 bonus miles, and you’re about one-third of the way toward your next free round-trip ticket.
But it takes forever to earn miles the traditional way.
Double miles on eligible American Airlines purchases doesn’t have much value unless you buy lots of expensive plane tickets.
Getting 600 miles instead of 300 when you book a $300 flight gives you 300 additional miles, which are worth about $3 if you assume that one frequent-flyer mile is worth one penny.
With no annual fee the first year, this card’s signup bonus is worth about $400: $100 off your first flight and roughly $300 worth of free travel.
But the high annual fee and lack of ongoing perks mean the card is unlikely to be worth holding onto after the first year.
It doesn’t even offer the one mile per $1 spent on everyday purchases that’s so common with frequent-flyer cards.
One area where it might pay off in subsequent years is if you have a large family, take lots of flights on American and always check bags. The baggage fee savings could easily outweigh the annual fee.
For most consumers, however, the card is only a great deal if you take the offer and run after the first year.