Are cobranded airline cards worth it anymore?
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Airline credit cards have been around for over 30 years now — almost as long as frequent flyer programs themselves. Over the years, airline mileage programs have changed dramatically, along with the number and types of general travel rewards credit cards available to consumers.
Now, airline cards are facing competition from cards that earn transferable points such as The Platinum Card® from American Express and the Chase Sapphire Reserve, fixed-value points programs and the recent proliferation of phenomenal hotel credit cards. The sheer number of airline credit cards has multiplied recently, too. For example, Delta now offers no less than seven cobranded personal and business credit cards.
Adding another layer of complexity, airline credit cards and their benefits are subject to frequent changes. Welcome bonuses yo-yo by tens of thousands of miles, annual fees rise and perks are removed or added, all while the mileage programs themselves undergo constant restructuring and frequent devaluations.
With all these factors to keep track of, you might well be asking yourself: Is it even worth carrying an airline credit card any more?
That’s certainly a good question — and one you should consider every year before your card’s annual fee is due. There are some great airline credit cards out there with perks tailored to different types of travelers, so chances are you can find one that works for your needs. Here are the elements you should consider when deciding whether an airline card is still worth it:
One of the first (and certainly the flashiest) factors you should look at is whether an airline card’s sign-up bonus is a good offer.
Start by checking how high the offer is compared to the spending requirement. For example, earning 100,000 Avios with the British Airways Visa Signature Card sounds great, but you need to spend $3,000 on purchases within the first 3 months of account opening to receive the first 50,000 Avios. Plus, earn an additional 50,000 bonus Avios after you spend $20,000 total on purchases within your first year of account opening. Before you apply, make sure you can meet any minimum spending requirements.
Next, you’ll need to do a little homework and determine whether you are getting the best offer for a certain card, because welcome bonuses on some cards change frequently throughout the year. For example, the Platinum Delta SkyMiles® Credit Card from American Express is currently offering 35,000 bonus miles after you spend $1,000 in purchases on your new card in your first three months, plus a $100 statement credit after you make a purchase with the card within the first three months.
But just a few months ago, it was offering 75,000 bonus miles for after meeting minimum spend requirements. There’s no guarantee that the higher offer will come back, but if you’re not in a rush, it could be worth waiting to see if you could get a second chance at 40,000 more SkyMiles (worth about $480 more, according to our most recent valuations).
If you’re planning on using your miles for a specific redemption, you should also consider whether the bonus will help you get there. For example, earning 50,000 American miles (after spending $2,500 in purchases in the first three months) with the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard will get you a lot of places. But if you’re hoping to redeem those miles for a flight in Qatar Airways’ Qsuites from the U.S. to Doha, you’ll still fall short with the bonus alone.
The information for the Citi AAdvantage Platinum Select, United Club card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Your other primary consideration should be your card’s annual fee. Make sure the value you’ll get out of your card will offset the cost.
For example, the Delta Reserve® Credit Card from American Express, Citi® / AAdvantage® Executive World Elite™ Mastercard® and United Club Card all charge cardholders $450 per year ($550 for the Delta Reserve if the application is received on or after 1/30/2020; see rates and fees). But that could still be worth it for some frequent flyers who can maximize value-added perks like lounge access and, with the Delta and American cards at least, the ability to earn elite-qualifying miles based on spending. If you don’t fly enough to take advantage of these perks, the larger fees may not be worth it on these cards.
For the most part, popular airline credit cards charge around $100 per year, which are easy to make up for in value. These include mainstays such as the Gold Delta SkyMiles® Credit Card from American Express ($95; $99 if application is received on or after 1/30/2020; see rates and fees), Southwest Rapid Rewards Premier Credit Card and the United Explorer Card ($95, waived the first year). Between earned rewards and perks such as free checked bags and priority boarding, even casual travelers may not have an issue offsetting the cost of the annual fee.
There are now several airline credit cards without annual fees, such as the Blue Delta SkyMiles® Credit Card from American Express (see rates and fees) and the JetBlue Card, although these are still the exception rather than the rule. They even offer bonus earning categories (restaurants with the Delta card and both grocery stores and restaurants with JetBlue). For that reason, they might be good choices for occasional travelers who want to rack up miles cheaply.
Each year your annual fee comes due, look back and determine if you were able to leverage your card’s perks to offset the cost of carrying it for another year.
Aside from one-time perks such as a sign-up bonus or a waived annual fee, airline credit cards typically offer a variety of money and time-saving benefits. These can include free checked bags, priority boarding and discounts on in-flight purchases such as food and beverages.
However, these benefits are only as valuable as the use you get out of them. For example, the Gold Delta SkyMiles® Credit Card from American Express costs just $95 per year ($99 after 1/30/2020). But cardholders are eligible for a free checked bag for themselves and up to eight companions on the same reservation. On one single round-trip domestic itinerary, that could be worth up to a staggering $540. It’s doubtful most cardholders are taking full advantage of this benefit, but even saving just a few hundred dollars a year could make the card worth it.
In terms of inflight discounts, many top airline credit cards offer statement credits or discounts on food and beverage purchases. If you’re flying regularly, you could easily rack up significant savings.
Only a handful of airline credit cards actually offer elite-boosting opportunities, and they tend to have high annual fees. But if you’re a frequent flyer and need a lift for that next tier of status, this could be a good reason to continue carrying a specific airline card. Among the cards that offer this type of benefit, the Citi / AAdvantage Executive World Elite Mastercard offers 10,000 elite-qualifying miles to cardholders who spend $40,000 or more in a calendar year. For every $10,000 you spend on the Southwest Rapid Rewards Premier Credit Card or the Southwest Rapid Rewards Priority Credit Card, you earn 1,500 Tier-Qualifying Points, up to a maximum of 15,000 per year, toward A-List status.
A few cards even award automatic elite status when you hit certain spending thresholds. The JetBlue Plus and JetBlue Business both offer automatic Mosaic status to cardholders who spend $50,000 or more on purchases in a calendar year.
Airline cards are the only types of credit cards that offer ways to help you hit elite status with airlines, which is a compelling reason for many to keep them in their wallets. You can check out our comprehensive guide on credit cards that can help you earn elite status for more details on how to maximize these types of benefits.
One of the best reasons to carry an airline credit card is to leverage a companion ticket benefit that can be worth hundreds or even thousands of dollars. Just keep in mind a companion ticket benefit can vary from airline to airline and even card to card with the same carrier, so be sure to read the fine print.
Among the best-known of these is the one offered by the Alaska Airlines Visa Signature credit card. As part of its sign-up bonus — and then every year upon renewal — cardholders receive an annual companion fare. It effectively lowers the cost of any economy class companion ticket from $121 ($99 fare plus any taxes and fees, usually about $22 round-trip). This one benefit alone can save you hundreds of dollars each year and make the card worth keeping.
The Hawaiian Airlines World Elite Mastercard includes a one-time 50% discount on a round-trip companion ticket in coach between Hawaii and North America and $100 off one companion ticket for round-trip coach airfare between Hawaii and North America after each account anniversary. Both the Platinum Delta SkyMiles® Credit Card from American Express and the Delta Reserve® Credit Card from American Express also offer annual companion certificates. Finally, the points earned with Southwest’s cobranded credit cards, including the Southwest Rapid Rewards Performance Business Credit Card and the Southwest Rapid Rewards Priority Credit Card, count toward earning the airline’s lucrative (and now harder-to-achieve) Companion Pass.
If you’re someone who tends to travel with a partner, family member or colleague, then considering a card with companion benefits might be well worth it. For a full look at this benefit and the many cards that offer a version of it, check out our guide to airline credit card companion tickets.
Award chart devaluations
In the longer term, you should assess the frequent flyer programs of the airlines with credit cards you are considering and see if they have retained their value over time. We’ve witnessed massive devaluations in award charts and loyalty programs, not just with U.S. carriers like Delta and United, but also with foreign airlines such as Lufthansa and Singapore Airlines, in recent years. As the dynamic pricing trend continues to spread, the value of airline miles is becoming harder to calculate. Depending on a variety of factors, you could score a great deal or get stuck paying an astronomical price for an average award redemption.
So before you jump into a new frequent flyer program with both feet and sign up for an accompanying credit card, you should investigate how the program has changed over the past few years to determine whether you will actually be able to use the miles you earn with the card.
How many other cards do you have?
Keep in mind that many of the major credit-card issuers have put certain restrictions in place to limit churning that might make preclude you from opening a new credit card or earning its sign-up bonus. Few of these rules are published, and there are exceptions to some. But they are still worth keeping in mind because the last thing you want is to apply for a card only to get denied (or worse, to get approved and think you are going to earn the sign-up bonus only to be told that you are ineligible for it).
The most infamous of these policies is Chase’s 5/24 rule, which applies to popular cobranded cards like the United Explorer Card and the Southwest Rapid Rewards Premier Credit Card. Chase will generally not approve you for a new card if you have opened five or more eligible credit cards (from all banks, not just Chase) in the last 24 months.
Likewise, Amex has gotten even more stringent about eligibility rules for many of its popular cards, including its Delta lineup, and limits bonus eligibility to once per lifetime on each product. On the plus side, the bank has created a welcome bonus qualification tool that will let you know if you’re ineligible for a bonus before you pull the trigger on an application.
Even if you are eligible to apply and earn the bonus, consider whether or not doing so will impede future applications. For example, if applying for an airline card now will put you over Chase’s 5/24 rule and squash your chances of getting approved for a Chase card you’ve had your eye on, it might not be worth it to pursue the airline card application (at least, not until you’ve added all of the Chase cards you want to your wallet).
Other options: Transferable points
If your primary goal is simply to use an airline card to rack up frequent flyer miles quickly rather than actually taking advantage of travel benefits like companion tickets, free checked bags and elite boosts, you might be better off applying for a card that earns transferable points.
There are more transferable points programs than ever these days, including American Express Membership Rewards, Capital One Rewards, Chase Ultimate Rewards, Citi ThankYou Rewards and Marriott Bonvoy. Each program partners with a number of airlines so that the points you earn with your credit card can then be transferred to any of them at the time you choose.This will insulate you from any sudden award chart devaluations with your main carrier, and give you more flexibility to redeem rewards with a larger number of airlines.
What’s more, many of the credit cards associated with these programs come with bonus-earning opportunities on purchases such gas, groceries, dining and a large number of travel purchases, not just airfare. This makes them even better earners than airline credit cards.
Whether or not it makes sense to carry an airline credit card will come down to several key factors. First, think about whether you will use its ongoing benefits like day-of-travel perks and discounts enough to offset its annual fee. Next, make sure you are getting a great deal on the sign-up bonus. Finally, think about whether a rewards card that earns transferable points instead will suit your spending habits and travel needs better. By answering those few questions, you will have all the information you need to make your decision.
Featured image by DuKai photographer/Getty Images.