I receive compensation for many links on this blog. You don’t have to use these links, but I am grateful to you if you do. American Express, Citibank, Chase, Capital One and other banks are advertising partners of this site. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same).
I have the premium American Airlines co-brand credit card from Citibank. I even put $40,000 of spend a year on the card, because as an American AAdvantage Executive Platinum member I want the 10,000 elite qualifying miles that provides.
Earning those miles helps me be less loyal to American. Whenever I needed to travel domestically I used to just go to aa.com and buy a ticket. I’m no longer loyal. Last month I had a few Southwest and United segments. Next month I have a few Delta segments and I have some Virgin America booked next month too.
Since American is the largest legacy airline at my airport I’ll still wind up earning 100,000 mile status — but qualifying miles from spending makes that easier.
And since I do fly American a lot I want club lounge access. The card comes with an Admirals Club membership, and up to 10 no annual fee authorized cardmembers on the account get club lounge access as well. That’s no additional cost to give lounge access to a spouse, parents, in-laws, siblings, anyone you trust with the card.
Entrance to American Airlines Admirals Club Austin
I got a direct mail piece from Citibank, though, encouraging me to use the card for spending on vacation. Here’s the case they made:
If I spend $2350, I’ll earn 2350 miles!
Let’s say I took a family of four from my home in Austin to Maui this summer in first class. Since American naturally does not have even a single day with on premium cabin saver award seat open for the month, I’d have to pay 67,500 to 125,000 miles per person each way. That’s 540,000 to 1 million miles roundtrip.
Those 2350 miles are sure going to help!
Advertising that you earn 1 AAdvantage mile per dollar spent just isn’t a compelling value proposition. The card has a strong signup bonus offer, it can earn elite qualifying miles, and it is the best way into American’s lounges. But it’s not a good card for ongoing spend otherwise.
I frequently talk with loyalty programs and their co-brand card partners and it’s surprising how they haven’t always thought through this.
- A card company may offer a great signup bonus, and that can be extremely useful to focus consumers on the value of the card offer and get signups. But it doesn’t ensure the consumer will keep using the card going forward.
- There may be great benefits like lounge access, but then the card is just a lounge access card not something cardholders need to throw down for their spending.
- If you want to incentivize spend with a card, which is exactly what cobrand issuers, their partners, and payment networks are looking for then a valuable points currency coupled with fast earning align with that goal.
You can rely on brand affinity and habit, but only so far. And if you’re going to rely on habit you need to actually incentivize creation of the habit or reduce transaction costs for customers to use the card. Auto-populate a cardholder’s mobile wallet. Bonus them for making 3 transactions with Amazon in a month, once the median member adds a card to their Amazon account they aren’t going to swap it easily. The same goes for Uber or Seamless.
You don’t incentivize behavioral change by telling something they earn one AAdvantage mile per dollar with their credit card.