The American AAdvantage program has been radically remodeled as of 2022, with the introduction of Loyalty Factors. Elite standing is not primarily based on what number of miles you fly, however moderately it’s primarily based on what number of Loyalty Factors you rack up.
One of many attention-grabbing alternatives right here is to earn AAdvantage elite standing completely by means of bank card spending. On this publish I wished to do some quantity crunching on the worth proposition of that, and reply a few of the commonest questions. Must you put spending in your American Airways bank card?
Bank card spending counts towards AAdvantage elite standing
New as of 2022, American AAdvantage has launched the idea of Loyalty Factors, which is the brand new sole metric by which you’ll earn AAdvantage elite standing. Particularly:
- AAdvantage Gold standing requires 30,000 Loyalty Factors
- AAdvantage Platinum standing requires 75,000 Loyalty Factors
- AAdvantage Platinum Professional standing requires 125,000 Loyalty Factors
- AAdvantage Government Platinum standing requires 200,000 Loyalty Factors
Sooner or later, the Loyalty Factors program yr will run from the start of March till the top of February of the next yr, moderately than following the standard calendar yr. Nevertheless, for 2022 you’ll have an additional two months to earn Loyalty Factors, that means that exercise between January 1, 2022, and February 28, 2023, counts towards standing.
Lengthy story quick, you earn one Loyalty Level per greenback spent on an eligible co-branded Barclays or Citi American Airways bank card. Welcome bonuses, spending bonuses, and different promotional bonuses, don’t rely as Loyalty Factors, for these functions. In different phrases, if a card affords double AAdvantage miles for a flight buy, you’d nonetheless solely earn one Loyalty Level per greenback spent.
This implies you could possibly earn Gold standing by spending $30,000 on a bank card, or you could possibly earn Government Platinum standing by spending $200,000 on a bank card.
It’s additionally price noting that in 2022, there are some alternatives to earn Loyalty Factors at an accelerated price with bank cards (we don’t know if these alternatives will exist past this yr):
- For the Citi® / AAdvantage® Government World Elite Mastercard®, you’ll be able to earn 10,000 bonus Loyalty Factors while you spend $40,000 in eligible purchases between January 1, 2022, and February 28, 2023
- For the AAdvantage Aviator Silver Mastercard, you’ll be able to earn as much as 15,000 bonus Loyalty Factors primarily based on eligible purchases between January 1, 2022, and February 28, 2023 — earn 5,000 Loyalty Factors should you spend $20,000, earn an extra 5,000 Loyalty Factors should you spend a complete of $40,000, earn an extra 5,000 Loyalty Factors should you spend a complete of $50,000
Which American Airways bank cards earn Loyalty Factors?
The next co-branded Barclays and Citi American Airways bank cards earn one Loyalty Level per greenback spent:
On high of that, the next card earns one Loyalty Level for each two {dollars} spent:
- AAdvantage Aviator Mastercard
Observe that cardmembers earn Loyalty Factors primarily based on assertion shut dates, in order that’s one thing to bear in mind should you want a sure variety of Loyalty Factors earlier than the top of a membership yr.
The chance price of American Airways bank card spending
Some persons are saying “effectively now a bunch of persons are simply going to spend $200,000 on their bank card to earn Government Platinum standing.” That’s completely true, and that’s why I believe this program is sensible from American’s perspective — persons are spending on co-branded American Airways bank cards like by no means earlier than.
That being stated, for a lot of savvy vacationers, I’m undecided that math checks out, no less than on an ongoing foundation. Based mostly on my valuation of factors:
Assuming you’re spending in a non-bonused class (which might usually have the bottom alternative price, in comparison with eating, groceries, or fuel, for instance):
- You can be incomes 1x AAdvantage miles per greenback spent, which I worth at a 1.5% return
- You can be incomes as much as 2x transferable factors on another playing cards, which I worth at a 3.4% return
Particularly, you could possibly earn 2x transferable factors with the next playing cards:
Now, folks might have completely different valuations of factors currencies, and that’s superb, as you’ll be able to modify the mathematics accordingly. However by my math, the chance price of utilizing a co-branded American Airways bank card is ~1.9%. In different phrases:
- Spending $200,000 on an American Airways bank card would “price” me $3,800
- Is Government Platinum standing (and 200,000 Loyalty Factors) price $3,800?
- Remember that you solely obtain Loyalty Selection Rewards (which embody bonus redeemable miles, systemwide upgrades, and so on.) should you additionally fly no less than 30 qualifying segments on American Airways or an eligible associate
A hybrid qualification method may make sense
Like I stated, on an ongoing foundation I couldn’t think about incomes Government Platinum standing primarily by means of bank card spending:
- For the $3,800 alternative price, you could possibly simply outright pay the fare distinction for top quality on so many flights, moderately than playing with upgrades (and upgrades for Government Platinum members are removed from a positive wager)
- For those who’re incomes standing totally by means of bank card spending, one has to marvel how a lot worth you’d really get out of the standing; it’s not price inefficiently spending $200,000 on a bank card so that you could get higher remedy on a number of journeys per yr
That being stated, on the margins I believe there may very well be worth in spending cash on an American Airways bank card. For instance, say you fly 30 segments per yr with American Airways anyway (which might be the decrease restrict of the place it’s even price going out of your approach to earn high tier standing).
For those who often ebook pretty cheap fares, you may in any other case earn 100,000 Loyalty Factors. At that time I believe it may very well be price placing some spending on bank cards to earn (or keep) Government Platinum standing. For those who’d in any other case fly 30 segments, at that time you additionally need to take into account the worth of Loyalty Selection Rewards, like getting as much as 5 systemwide upgrades or as much as 85,000 AAdvantage redeemable miles, which may have a major worth.
My plan with the Loyalty Factors system
As I defined in a separate publish, I believe the Loyalty Factors system is genius, although I’m actually fighting it. I’ve been an Government Platinum member for years, and I’ll in all probability keep my standing, although I’m doing what I can to reduce my spending on American Airways bank cards, given the chance price.
Right here’s my common technique:
- Up till now I haven’t been placing any effort into requalifying for standing, however moderately have simply been flying as ordinary; I’m “solely” at 70,000 Loyalty Factors the for the yr
- I’m going to begin focusing extra on incomes Loyalty Factors with low alternative price methods apart from bank card spending, like utilizing AAdvantage Eating, AAdvantage SimplyMiles, AAdvantage eShopping, incomes miles by means of the AAdvantage & World of Hyatt partnership, and so on.
- As we close to the top of this system yr, I’ll in all probability put some spending on an American Airways bank card, although I’m undecided but if I plan to go for Platinum Professional or Government Platinum
- I’m additionally contemplating ultimately simply going for standing with one other oneworld program, since that comes with some benefits as effectively
Is incomes elite standing with bank card spending unfair?
I’ve seen feedback from some alongside the strains of “not truthful, now I’m going to be competing for upgrades with individuals who by no means fly American Airways.” I’ve to strongly disagree with this logic, and I say that as somebody who intends to reduce my spending on American Airways bank cards:
- If somebody doesn’t really fly American Airways typically however earns the identical elite tier as you, they gained’t pose a lot competitors for upgrades
- For instance, say somebody earns Government Platinum standing with bank card spending, and flies simply 20,000 miles per yr on the airline; it might take 10 of those sorts of vacationers to pose the identical degree of competitors for upgrades as a single Government Platinum member who earns the standing by flying 200,000 miles per yr
- So even when elite ranks are swelled considerably, the chance to upgrades clearing must be minimal if folks aren’t touring that a lot
Larger image, whereas I do know there’s some rivalry between these incomes standing by means of flying vs. bank card spending, it’s essential to acknowledge that bank card agreements are the place main US airways make a lot of their earnings. American Airways roughly loses cash really flying passengers (within the third quarter of 2022, American’s price per air seat mile was greater than the income per air seat mile). As a substitute the airline makes cash on every little thing else, and notably from its frequent flyer program and bank card agreements.
Subsequently it’s cheap, should you ask me, that American desires to additional incentivize the habits that’s most worthwhile. Once more, I say this as somebody who has spent nearly nothing on my American Airways bank card this yr.
American Airways bank card spending FAQs
Since there have been a lot of questions in regards to the particulars of incomes Loyalty Factors for bank card spending, I figured I’d deal with a few of the commonest questions beneath. In no specific order…
Does American Airways bank card spending rely towards million miler lifetime standing?
Nope. Lifetime standing is calculated primarily based on the gap flown for American marketed flights, or base miles earned for journey on eligible associate marketed flights. Bank card spending doesn’t rely towards that.
Don’t you additionally want 30 flight segments to earn elite standing with American?
Not fairly. You’ll be able to qualify for any printed American Airways elite tier completely by means of bank card spending. Nevertheless, if you wish to qualify for Loyalty Selection Rewards (provided to Platinum Professional and Government Platinum members), which incorporates perks like systemwide upgrades, you’d have to additionally full 30 qualifying segments.
Does American Airways bank card spending assist improve odds?
Sure it does. Not solely do you earn AAdvantage elite standing with bank card spending, however inside every elite tier, upgrades are prioritized primarily based in your rolling 12-month whole of Loyalty Factors. You earn one Loyalty Level per greenback spent on an eligible co-branded card, so the extra you spend, the upper your improve precedence might be inside your elite tier.
Do you must use an American Airways bank card to earn Loyalty Factors for a flight?
You don’t, and this appears to trigger some confusion. No matter which bank card you employ, you’ll be able to earn 5 Loyalty Factors per greenback spent on American Airways flights. In case you have elite standing, you’ll be able to earn wherever from 40-120% bonus Loyalty Factors, for a complete of as much as 11 Loyalty Factors per greenback spent on American Airways flights. For those who pay with an eligible American Airways bank card, you’ll be able to earn one further Loyalty Level per greenback spent on American Airways flights.
Backside line
New as of 2022, you’ll be able to earn all printed AAdvantage elite tiers completely by means of bank card spending. The catch is that should you’re a savvy bank card consumer, there’s a major alternative price to spending cash on American Airways’ co-branded bank cards.
I calculate the chance price of American Airways bank card spending as being someplace round 1.9%, although others might have completely different valuations. Which means spending $200,000 on an American bank card would “price” me $3,800, in comparison with the perfect choices on the market.
Personally I couldn’t think about incomes AAdvantage standing completely — and even primarily — by means of bank card spending, as I simply can’t make sense of the mathematics. Standing isn’t that useful, particularly should you’re not flying all that a lot (which might presumably be the case should you’re incomes standing by means of spending).
There’s no denying that American’s new Loyalty Factors system is sensible, although. Customers have enormously elevated spending on American Airways bank cards with a purpose to earn elite standing, and that’s extraordinarily worthwhile habits for the airline.
Do you intend on incomes American AAdvantage Loyalty Factors by means of bank card spending? If that’s the case, what’s your logic?
