I receive compensation for content and 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).
Airline credit cards generally have annual fees, though sometimes those are waived the first year. There have been no annual fee airline cards for many years, sometimes offered as a downgrade (product change) card and sometimes available for application. It used to be that those no annual fee cards earned 1 mile per $2 spent.
That’s changed with issuers getting aggressive in competing for cardmember business. Airlines have been rolling out no annual fee products with stronger earn, and as these things usually progress it starts with Delta and then others follow. American Airlines and Citibank have announced their own follow-on product today.
- American Express launched a no annual fee Delta card earning 2 miles per dollar at US restaurants and on purchases made directly with Delta. It has a 10,000 mile initial bonus after $500 in purchases on the card in the first 3 months from approval, and comes with a 20% statement credit based on spend with the card on eligible Delta in-flight purchases of food, beverages, and audio headsets.
The card earns faster than the basic annual fee Delta co-brand, but doesn’t include travel benefits on Delta.
- Then about a year ago Chase launched the no annual fee United TravelBank Card which is essentially a 1.5% rebate card with rewards spending limited to United, with a 2% return for United spent. It comes with $150 in United TravelBank cash after $1,000 spend on purchases in the first 3 months from account opening and generates 25% back as a statement credit on purchases of food and beverages onboard United-operated flights when paying with the card.
Like the Delta product, it doesn’t include travel benefits on the airline.
Citibank will offer the new no annual fee AAdvantage MileUp℠ card starting July 22. Like United’s and Delta’s offerings it will not include travel benefits like early boarding or free checked bags. However it will offer full mileage earning:
- 2 miles per dollar on American Airlines purchases and at grocery stores
- 1 full mile per dollar everywhere else.
Interestingly this card bonuses grocery spend, which is something American’s premium credit cards don’t do. The existing no annual fee Citi / AAdvantage Bronze card will have its earning upgraded to match.
The new no annual fee MileUp product will offer 10,000 AAdvantage bonus miles and a $50 statement credit after spending $500 in purchases within the first three months after account opening. The 10,000 mile offer is similar to Delta’s, but adds a statement credit as well so you do make money on the card the first year.
American is promoting the card to their own employees as well,
It’s not surprising to see an American entry into the no annual fee space. What the annual fee seems to buy, then, regardless of which of the 3 largest legacy airlines we’re talking about, is a stronger acquisition bonus and travel benefits.
I still think strong cash back cards rule the no annual fee space.
The reason to get an airline card is for the travel benefits flying the airline. They’re rarely the best for spend. American is unique here in that they don’t currently participate in the major transferable currencies so if you specifically want their miles from your credit card spend you need to use one of their co-brands.