When You Should(n’t) Use Airline Co-Brand Credit Cards To Pay For Airfare

All of the larger airlines in the U.S. offer co-brand credit cards. These cards, which provide extra benefits to cardholders, range from ones with no annual fee to premium cards costing up to $450 per year. While you’d think that using a co-branded card would be the best choice for earning points with your flight purchase, that’s usually not the case. For most airlines, you don’t earn any extra points for airfare purchases for having a more expensive card either.

In most cases, instead of using a co-brand card, it’s better to use a card that earns flexible points like Membership Rewards, Thank You Points or Ultimate Rewards. These cards provide the opportunity to earn more points as well as the flexibility to use points on multiple airlines. You’re able to transfer points from these programs into your airline mileage account when you need them.

Here are the earnings multiples on airfare for the main flexible points cards from each bank:

American Express (Membership Rewards)

  • Platinum card ($550 annual fee) – 5x points on flights booked directly with airlines or with American Express Travel
  • Gold card ($250 annual fee) – 3x points on flights booked directly with airlines or with American Express Travel

Chase (Ultimate Rewards)

  • Sapphire Reserve ($450 annual fee) – 3x points on travel worldwide (including airfares purchased from airlines or travel agencies/websites)
  • Sapphire Preferred ($95 annual fee) – 2x points on travel worldwide (including airfares purchased from airlines or travel agencies/websites)

Citi (Thank You Points)

  • Citi Prestige ($495 annual fee) – 5x points on purchases at airlines and travel agencies
  • Citi Premier ($95 annual fee) – 3x points on purchases at airlines and travel agencies

The AMEX Platinum and Citi Prestige both offer 5x on airfare but the AMEX card only counts purchases direct from the airline or their website. When I had both cards, I used the Citi Prestige because I valued the additional travel insurance coverage but I know people would rather earn Membership Rewards than Thank You points. Of the $95 cards, the Citi Premier earns the most points on airline purchases at 3x.

So how many miles will you earn by using an airline co-brand card to purchase airfare and when does it make sense to do so? I’ve indicated which airlines are partners of one (or all) of the flexible currency cards so you can compare earnings potential between cards.

Continue reading “When You Should(n’t) Use Airline Co-Brand Credit Cards To Pay For Airfare”

I Hate To Say It, But I Warned You About AMEX Statement Credits

One of the reasons I cancelled my AMEX Platinum card was the ever increasingly difficulty in recovering the cost of the card through the various statement credits. When the annual fee was $450, I was reading posts claiming it actually only cost $250 because of the airline fee credit. When the annual fee went to $550, the card supposedly got even cheaper because AMEX added a $200 Uber credit (in monthly installments). You were led to believe that you could almost break even with the card, and that’s before taking any of the card benefits into account. Eventually, I decided that these credits were not the same as cash and couldn’t be valued that way.

AMEX just made another move to prove my point.

One of the primary ways to offset the high annual fee of American Express cards, like the Platinum or Gold card, is the airline fee credit. It’s important to note that this is an incidental fee credit, not an airline credit or a travel credit. Here are the airlines on which you can use the credit:

  • Alaska
  • American
  • Delta
  • Frontier
  • Hawaiian
  • JetBlue
  • Spirit
  • Southwest
  • United

Note that you can only get the fee credit for a single airline, which you need to choose after getting approved for the card and which you can change once a year, in January. There are reports you can get AMEX to let you change the airline mid year but they’re under no obligation to do so. 

Instead of telling you what’s covered, AMEX says that airline fees charged directly by the airline are reimbursable, except for the following expenses:

Airline tickets, upgrades, mileage points purchases, mileage points transfer fees, gift cards, duty free purchases, and award tickets are not deemed to be incidental fees

While it may be easy to incur $200 in fees for an airline like Frontier or Spirit, other airlines that don’t charge extra fees, such as Southwest, might be a bit trickier. And who has a Platinum card and flies on Spirit often enough to choose it as their airline of choice for the credit, anyway?

Despite the wording of the policy, it’s been possible to creatively work around some of the restrictions and use the credit for “not quite” the intended purpose. I’m not going to share the methods here, but a simple Google search will show you how and there are dedicated threads on FlyerTalk for each airline.

Over the last several years, AMEX has cracked down on the workarounds. You used to be able to fund a United gift registry with your card, which could then be used for any United expense, including airfare, but that got shut down. You could also buy Delta Airlines gift cards but without warning, only purchases from desktop purchases still worked, not ones made with mobile devices.

United1

Most recently, one of the most popular workarounds, buying American Airlines gift cards from the website, has apparently stopped working. This change is due to American now coding gift card purchases as a gift certificate when sending the information to AMEX. Since the credits are automatically generated, AMEX’s computers are now simply ignoring these charges for the credits.

Now, I’m not saying there’s no value to the air travel credit. You can use it to pay for baggage fees, if you don’t already get a free bag through other means. You can also use it to upgrade your seat, since airlines would rather sell discounted upgrades instead of giving them away to frequent flyers. The same goes for paying for lounge passes, if the airline still lets you buy one.

You need to ask yourself if you’re sure you’re going to need to spend this money or would have you not spent it if you didn’t have a credit burning a hole in your wallet? If you’re only spending it “just because,” remember this is money you already paid out of your pocket for the annual fee. Spending it frivolously just because you have it doesn’t make any sense. AMEX is tricking you into to thinking like this because if you haven’t used the money by the end of the year, it disappears. Talk about setting money on fire.

Now that the number of airlines you’re able to creatively use your AMEX credits with is shrinking, the airline you choose at time beginning of the year is even more important. That also is what makes the closure of the American workaround hurt the most. Most people didn’t discover the change until after the window had closed to make your selection for the year. Pretty sneaky there, AMEX. 

AMEXPlatinumCard

I’m not saying the AMEX Platinum or Gold cards aren’t worthwhile having for some people. If you value lounge access, the annual fee of the Platinum card might be worth it without getting any credits at all. And the Gold card is a good choice for for earning Membership Rewards points for ongoing spending at restaurants and supermarkets. Just stop thinking that these credits are like cash, cuz they’re not. If you had cash, AMEX couldn’t suddenly change the rules about what you can and can’t spend it on. 

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