This week we’ve learned about how American is radically transforming the AAdvantage program, with the introduction of Loyalty Points. One of the interesting new opportunities here is to earn AAdvantage elite status exclusively through credit card spending. In this post I wanted to do some number crunching on the value proposition of that.
Credit card spending counts towards AAdvantage elite status
Starting in 2022, American AAdvantage will be introducing the concept of Loyalty Points, which will be the sole metric by which you can earn AAdvantage elite status. Specifically:
- AAdvantage Gold status will require 30,000 Loyalty Points
- AAdvantage Platinum status will require 75,000 Loyalty Points
- AAdvantage Platinum Pro status will require 125,000 Loyalty Points
- AAdvantage Executive Platinum status will require 200,000 Loyalty Points
Long story short, you’ll earn one Loyalty Point per dollar spent on an eligible co-branded Barclays or Citi American Airlines credit card. Welcome bonuses, spending bonuses, and other promotional bonuses, don’t count as Loyalty Points, for these purposes.
This means you could earn Gold status by spending $30,000 on a credit card, or you could earn Executive Platinum status by spending $200,000 on a credit card.
It’s also worth noting that in 2022, there will be some opportunities to earn Loyalty Points at an accelerated rate with credit cards (we don’t know if these opportunities will exist beyond that):
- For the Citi AAdvantage Executive Mastercard, you can earn 10,000 bonus Loyalty Points when you spend $40,000 in eligible purchases between January 1, 2022, and February 28, 2023
- For the AAdvantage Aviator Silver Mastercard, you can earn up to 15,000 bonus Loyalty Points based on eligible purchases between January 1, 2022, and February 28, 2023 — earn 5,000 Loyalty Points if you spend $20,000, earn an additional 5,000 Loyalty Points if you spend a total of $40,000, earn an additional 5,000 Loyalty Points if you spend a total of $50,000
Which American Airlines credit cards earn Loyalty Points?
The following co-branded Barclays and Citi American Airlines credit cards earn one Loyalty Point per dollar spent:
- Citi® / AAdvantage® Executive World Elite Mastercard® (review)
- Citi® / AAdvantage® Platinum Select® World Elite Mastercard® (review)
- American Airlines AAdvantage MileUp℠ Card (review)
- CitiBusiness® / AAdvantage® Platinum Select® Mastercard® (review)
- Citi AAdvantage Gold Card
- AAdvantage Aviator Silver Mastercard
- AAdvantage Aviator Red Mastercard
- AAdvantage Aviator Blue Mastercard
- AAdvantage Aviator Business Mastercard
On top of that, the following card earns one Loyalty Point for every two dollars spent:
- AAdvantage Aviator Mastercard
Note that cardmembers will start earning Loyalty Points for statements that close as of January 1, 2022 (meaning that spending in late 2021 could qualify, if the timing of the statement closing date works out).
The opportunity cost of American Airlines credit card spending
Some people are saying “well now a bunch of people are just going to spend $200,000 on their credit card to earn Executive Platinum status.” Perhaps that’s true, but I also don’t think the math checks out on that, at least on an ongoing basis. Based on my valuation of points:
- American AAdvantage miles are worth 1.5 cents each
- Points with the major transferable currencies are worth 1.7 cents each
Assuming you’re spending in a non-bonused category (which would generally have the lowest opportunity cost):
- You could be earning 1x AAdvantage miles per dollar spent, which I value at a 1.5% return
- You could be earning up to 2x transferable points on some other cards, which I value at a 3.4% return
Specifically, you could earn 2x transferable points with the following cards:
- The Capital One Venture Rewards Credit Card (review) offers 2x Venture miles per dollar spent, with no caps
- The Citi® Double Cash Card (review) offers up to 2x ThankYou points per dollar spent, in conjunction with the Citi Premier® Card (review)
- The Blue Business Plus Credit Card from American Express (review) offers 2x Membership Rewards points on the first $50,000 spent every calendar year
Now, people may have different valuations of points currencies, and that’s fine, as you can adjust the math accordingly. But by my math, the opportunity cost of using a co-branded American Airlines credit card is ~1.9%.
In other words:
- Spending $200,000 on an American Airlines credit card would “cost” me $3,800
- Is Executive Platinum status (and 200,000 Loyalty Points) worth $3,800?
- Keep in mind that you only receive Loyalty Choice Rewards (which include bonus redeemable miles, systemwide upgrades, etc.) if you also fly at least 30 segments on American Airlines
A hybrid qualification approach could make sense
Like I said, on an ongoing basis I couldn’t imagine earning Executive Platinum status primarily through credit card spending:
- For the $3,800 opportunity cost, you could just outright pay the fare difference for first class on so many flights, rather than gambling with upgrades (and upgrades for Executive Platinum members are far from a sure bet)
- If you’re earning status entirely through credit card spending, one has to wonder how much value you’d actually get out of the status; it’s not worth inefficiently spending $200,000 on a credit card so that you can get better treatment on a few trips per year
That being said, at the margins I think there could be value in spending money on an American Airlines credit card. For example, say you fly 30 segments per year with American Airlines anyway (which is probably the lower limit of where it’s even worth going out of your way to earn top tier status).
If you usually book fairly inexpensive fares, you might otherwise earn 100,000 Loyalty Points. At that point I think it could be worth putting some spending on credit cards to earn (or maintain) Executive Platinum status. If you’d otherwise fly 30 segments, at that point you also want to consider the value of Loyalty Choice Rewards, like getting up to five systemwide upgrades, which could have a significant value.
My plan with the new Loyalty Points system
I’ve been an Executive Platinum member with American for years, and one way or another I intend to keep my status with the new program, because I actually view the concept behind the changes as being positive.
I’m still deciding on my strategy as of now:
- We don’t yet know if AAdvantage miles earned with Bask Bank, Hyatt, and Rocketmiles will count towards Loyalty Points, as this is still being worked out
- If those partners do count, that could be awesome; if you had a lot of cash sitting around, you could park $200K with Bask Bank, and you’d earn 200,000 AAdvantage miles plus 200,000 Loyalty Points annually (I don’t consider there to be any opportunity cost to that for those with the cash who want to keep money liquid, since you’re not going to find a higher return on a flexible savings account)
- If Bask Bank and some other partners don’t count, then I might have to turn to credit cards to top off my Loyalty Points balance annually
For now I’m taking a “wait and see” approach, since in some ways the announcement of the new program seems a bit premature, as details haven’t fully been ironed out yet.
Is earning elite status with credit card spending unfair?
I’ve seen comments from some along the lines of “not fair, now I’m going to be competing for upgrades with people who never fly American Airlines.” I have to strongly disagree with this logic, and I say that as someone who intends to maintain Executive Platinum status (most likely) without credit card spending:
- If someone doesn’t actually fly American Airlines often but earns the same elite tier as you, they won’t pose much competition for upgrades
- For example, say someone earns Executive Platinum status with credit card spending, and flies just 20,000 miles per year on the airline; it would take 10 of these kinds of travelers to pose the same level of competition for upgrades as a single Executive Platinum member who earns the status by flying 200,000 miles per year
- So even if elite ranks were swelled significantly (which I personally don’t think will happen, especially for the higher tiers), the risk to upgrades clearing should be minimal if people aren’t traveling that much
Bigger picture, while I know there’s some contention between those earning status through flying vs. credit card spending, it’s important to acknowledge that credit card agreements are where major US airlines make much of their profits. Even pre-coronavirus, American largely lost money actually flying planes, and made billions in profits from credit card agreements.
Therefore it’s reasonable, if you ask me, that American would want to further incentivize this profitable behavior. And again, I say this as someone who doesn’t plan on earning airline status through credit card spending.
American Airlines credit card spending FAQs
Since there have been lots of questions about the details of the new system for credit card spending, I figured I’d address some of the most common questions below. In no particular order…
Will American Airlines credit card spending count towards million miler lifetime status? Nope. Lifetime status continues to be calculated based on the distance flown for American marketed flights, or base miles earned for travel on eligible partner marketed flights. Credit card spending doesn’t count towards that.
Won’t you also need 30 flight segments to earn elite status with American? Not quite. You can qualify for any published American Airlines elite tier exclusively through credit card spending. However, if you want to qualify for Loyalty Choice Rewards (offered to Platinum Pro and Executive Platinum members), which includes perks like systemwide upgrades, you’d need to also complete 30 qualifying segments.
Will American Airlines credit card spending help upgrade odds? Yes it will. Not only will you earn AAdvantage elite status with credit card spending, but within each elite tier, upgrades will be prioritized based on your rolling 12 month total of Loyalty Points. You’ll earn one Loyalty Point per dollar spent on an eligible co-brand card, so the more you spend, the higher your upgrade priority will be within your elite tier.
Will you need to use an American Airlines credit card to earn Loyalty Points for a flight? You don’t, and this seems to cause some confusion. Regardless of which credit card you use, you can earn five Loyalty Points per dollar spent on American Airlines flights. If you have elite status, you can earn anywhere from 40-120% bonus Loyalty Points, for a total of up to 11 Loyalty Points per dollar spent on American Airlines flights. If you pay with an eligible American Airlines credit card, you can earn one additional Loyalty Point per dollar spent on American Airlines flights.
Starting in 2022, you’ll be able to earn all published AAdvantage elite tiers exclusively through credit card spending. The catch is, if you’re a savvy credit card user, there’s a significant opportunity cost to spending money on American Airlines’ co-branded credit cards.
I calculate the opportunity cost of American Airlines credit card spending as being somewhere around 1.9%, though others may have different valuations. That means spending $200,000 on an American credit card would “cost” me $3,800, compared to the best options out there.
Personally I couldn’t imagine earning AAdvantage status exclusively — or even primarily — through credit card spending, as I just can’t make sense of the math. Status isn’t that valuable, especially if you’re not flying all that much (which would presumably be the case if you’re earning status through spending).
I’m sure my thoughts will evolve on this over time as we learn more about which partners qualify for Loyalty Points earning (in particular Bask Bank). But that’s where I stand as of now…
Do you plan on earning American AAdvantage Loyalty Points through credit card spending? If so, what’s your logic?