Frequent Miler on the Air - Citi tires of throupling. Will AA & Citi go exclusive? | Card Talk Ep7 | 9-26-24

Episode Date: September 26, 2024

There are two issuers of American Airline's credit cards - Citi and Barclays. But recent reports suggest American Airlines may be considering an exclusive arrangement with Citi as their only credit card issuer. (00:10) - Citi is in talks with American Airlines to become the sole issuer of American Airlines credit cards. Read more about the Citi / American Airlines news here. And read the original source article here. (01:33) - Why might this be bad news? Read more about the best American Airlines credit card (the Silver card) here. (05:10) - Why might this be good news? (08:58) - What should we do now to get ready for a Citi-only American Airlines credit card world? Read more about the Aviator Red card here. (13:09) - Read about how to application rules for cards like this here. Visit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media. Music Credit – Beach Walk by Unicorn Heads

Welcome to Card Talk, the show where we help you decide if this credit card belongs in your collection. City tires of throupling. Will American Airlines and Citi go exclusive? Well, we'll see. I don't know. So right now, of course, you and I say right now, as we record this, there are two issuers of Citi American Airlines credit cards. There are Citi American Airlines credit cards and issuers of City American Airlines credit cards. There are City American Airlines credit cards and there are Barclays American Airlines credit cards. But news came out this week. CNBC reported that American Airlines is in talks with Citibank or Citibank is in talks with American, depending on who you ask probably, to become the sole issuer of American Airlines credit cards. So City, if if this is true, and if this were to come

to pass, then Citi would become the only issuer of American Airlines credit cards. Barclays would no longer issue American Airlines credit cards. Now, to be clear, this is a news report from CNBC. We don't know that it's true. We don't know, even if it is true, what kind of a timeline we're looking at in terms of this exclusive agreement, but at least the rumor mill is out that Citi may become the only issuer of American Airlines cards, and that doesn't seem far-fetched. I can imagine both sides enjoying an exclusive relationship because Citi, of course, wouldn't have to compete with Barclays for new cardholders or ongoing promotions or marketing spaces, And American Airlines presumably

would be able to charge Citi more money for their miles in order to have the advantage of the exclusive partnership. So if this were to happen, why might this be a bad thing? If Citi were to become the sole issuer of American Airlines credit cards, of course, that would reduce competition. Right now, both banks need to compete, for instance, for new cardholders. We often see great American Airlines welcome bonuses, intro bonuses, particularly on the Barclays side. The welcome bonus often only requires a single purchase in order to earn all of the bonus miles. And so that type of thing, the competing both in terms of welcome offers and ongoing benefits, if we were to eliminate one of the issuers, well, we would lose the benefits of that competition. Of course, we would lose the chance to earn additional welcome bonus offers because right now there are a bunch of different American Airlines credit cards. So you've got a few on the city side and then on the Barclays side, you have at least one anyway that you can earn a welcome bonus from. And so we'll lose that opportunity moving forward if this goes exclusive. And so, you know, those are potentially bad things, things that we wouldn't like.

And of course, you know, I only mentioned losing one card from Barclays because the Aviator Red card is the only one that you can currently apply for from Barclays. But if we lose Barclays as an issuer, we won't only lose the Aviator Red because there's also a sort of hidden American Airlines card, right? Yeah. So Barclays also has the Aviator Silver card, which when we compared all of the different American Airlines cards, we named the Silver card the best of all the american airlines cards and so we'd be losing this if city and american airlines go exclusive uh currently now it's best for those seeking elite status really is where it comes in into play and and it's available only as an upgrade from the aviator red card um but you know. But it gives you 5,000 loyalty points towards elite status with $20,000 spend.

And again at $40,000 and again at $50,000 spend. But it also gives you a companion ticket good for two guests after $20,000 spend. So three of you can travel together for just paying $99 plus taxes for the second and third person. $25 per day in-flight food and beverage credit. So basically, if you're flying AA, even in economy, you still get free food while on board. And a $50 annual in-flight Wi-Fi credit. So all that stuff that is all bundled up in that Aviator Silver card, which we'd have to say goodbye to.

Yeah, that would be a bummer. And I'm glad that we did this segment now because it's a good reminder for me that I'm a few hundred dollars short of my 20K spend to earn my companion certificate and my bonus 5K loyalty points. So I've got to finish that up before my card anniversary, which is coming pretty soon. So that's a good reminder there. So I've got to finish that up before my card anniversary, which is coming pretty soon. So that's a good reminder there. So that would be a bummer. Like Greg said, that card is only available as an upgrade from the Aviator Red and not everyone gets the opportunity to upgrade. It's sort of like by invite only. Some people are successful over the phone, but usually you'll see an offer to upgrade in your online account if you're eligible. I don't know how they determine

who's eligible to upgrade to the Aviator Self-Rights of History, but potentially a good deal. And hopefully after I earn my companion certificate in the relatively near future, I'll be able to report on how easy or difficult it is to use that. But at any rate, it'd be a bummer to lose that. So, okay, we would lose an opportunity for a new welcome bonus. We would lose the competition between Citi and Barclays for our business, both in terms of welcome bonuses and ongoing benefits. This sounds like it stinks. Is there any positive side of an exclusive partnership with Citi? Yeah, I think there is. But it's not a slam dunk, but it's possible that if Citi gets the exclusive with American Airlines, then maybe we will once again see the ability to transfer Citi thank you points to American Airlines one-to-one. And that would

actually be, I think, a really big win for the Citi thank you points system. And it would make all their best cards like the city strata premier premier which has 3x and a whole bunch of categories uh the double cash which earns 2x everywhere and and so on it'll make those uh cards i think even more compelling than before because at singstand right now there's nobody that transfers one-to-one to American Airlines, and getting that would be a pretty big coup for Citi. And for those who are into the Thank You Point ecosystem, I could see for some people that would be a net win, even when considering the loss of the Barclays AA competition. All right, so you said it's not a slam dunk. Do you think it's likely that City will become, thank you points will become transferable to

American Airlines? And can you gauge what you think the likelihood of that happening is, recognizing that you're just peering into a crystal ball and your crystal ball may not be any better than anybody else's here, but at the same time you can make a good educated guess right what do you think yeah i actually think it's it's very likely if city wins this relationship i i think that here's what i predict is going on behind the scenes that um the first part it's a no-brainer that there's a lot of money on the table, that Citi is going to have to offer a lot of money to secure a singular relationship with AA. And I think that they are most likely only willing to do that if it would cast a halo over their whole thank you point system. And that would happen because of the ability to transfer one-to-one.

Otherwise, you're only talking about the American Airlines card business itself, and there's like a limit to how far that can go. So my guess is if they win that exclusive, that we've got a very high chance of getting that transfer, and it would be one-to-one, and I'll call it 85 high chance of getting that transfer. And it would be one to one, and I'll call it 85% chance. Wow, wow. That's, that's bold. I I'll be surprised. I'm hope hopeful that you are correct. But I'm skeptical that that will happen. Of course, that does rest on whether or not they get the exclusive. I mean, there's certainly a possibility that this leaking to the press in the first place is sort of a move for American to just try to soak

both sides for more money. So, you know, it's hard to know whether or not this will actually happen. But yeah, I don't know. I'm still skeptical. I don't know that Barclays is what's been standing in the way of American Airlines or of Citi Thank You Points being transferable to American Airlines. Like you said, it would make sense for City to demand a price that will make that a reasonable option. But at the end of the day, American Airlines is in the business of selling their miles. And so they want X amount and City probably doesn't want to have to spend that X knowing how much it costs them in terms of City

thank you point transfers. So I feel skeptical that we'll see that. But hopefully you're right. That'd be awesome if true. Well, one way or another, this could happen. So what should we do to prepare ourselves in case City does become the only issuer of American Airlines credit cards? If this happens, what should we be doing now to get ready? I mean, I think the only thing that really makes sense to do that, I can think of, is to apply for that Barclays AA card. Aviator Red. Aviator Red. Thank you. And get in on, is it still, at least as we record this, I think it's a 70,000 point bonus after first purchase, something like that.

Anyway, if it's in that range, I would try to go for it. Yeah, I mean, it is an excellent bonus. 70,000 points after first purchase is 70,000 miles after first purchase is indeed excuse me what it still is now 70,000 miles after first purchase and payment of the $99 annual fee we should know you have to pay the $99 annual fee first before you'll get the welcome bonus but that's a really solid deal and I think you know if if Citi becomes the only issuer of the card then you'll have wanted to have gotten the aviator red while you could in order to earn that very easy welcome bonus i mean talk about

low-hanging fruit that's right about as easy as it gets but let me ask you do you think that if this were to happen if city were to win the business will there be a period of time where barclays is going to make a big push to get more cardholders while they still can? Do you think that maybe we'll see an even better offer coming in the Aviator Red? Wow. Great question. I don't know why I'm going to guess no here, but it doesn't just for some reason just doesn't feel like something that I can see happening. What about you? Well, no, I don't think it'll happen. I don't think it'll happen because according to CNBC's report, it sounds like Citi intends to buy the back book from Barclays. They intend to buy the existing cardholder portfolio from Barclays.

And if they do, then Barclays doesn't really have any good reason to incentivize a bunch of people to sign up except, I guess, to get some more money out of Citi for the number of cardholders. But I don't see that as being very likely. I will say, I think that Citi is likely to become the sole issuer of the American Airlines credit cards. And the reason I say that was there was a quote at the end of the CNBC story from a Barclays executive, from a statement they made to shareholders at some point point that basically said that they intend to pivot away from airline rewards and get into other types of rewards ecosystems. And maybe that's true. Maybe that was their intention all along. But it sounded like something that someone would say if they knew that the Hawaiian Airlines credit card was going to be going away at some point in

the not so distant future, which is something we speculated might happen since the merger with Alaska has gone through, and someone who knew that this was going on behind the scenes. So, of course, maybe I'm reading too far into it. What do I know? But I took that as a sign that maybe Barclays thinks they're going to lose this one. So, if I'm reading that correctly, then I would say it's likely that Citi will become the sole issuer of American Airlines credit cards, I think. And so, yeah, I would go with Greg that I think the time to get the Aviator Red is that your if your barclays card does become a city card because they buy the book of business um keep in mind like city will let you uh product change to any of their other consumer cards and um so if you're looking to expand your portfolio of of thank you rewards cards for example that'll be another card that you have

to get a third or fourth custom cash card or maybe your first rewards plus card. One of the cards, you know, I would do it to get one of the cards that don't usually have a very good welcome bonus. And this is a way of getting the, you know, 70,000 AA miles as a welcome bonus, but still getting one of those cards that can be really useful for other reasons. Yeah, I think that's an interesting strategy and a good point too. Now, one last question, because people might ask us, do you know anything about approval rules for this? Is there any sort of a Chase 524 type of a rule for Barclays? And or if you already have the card or you've had it before, can you get it again? Hoping that Nick has the answer to this. Oh, you are, are you?

Well, so first of all, there is not a 524 rule, but I do believe that Barclays tends to be more sensitive than other issuers. If you have lots of new cards in the last couple of years, it can be harder to get approved. And I think the latest word on the street is that it needs to be at least a year or two since you closed your last Aviator Red card before you'll get approved for another one. There was a period of time where people speculated you only needed about six months after closing it. But recent data points I've read sound like a year or two after you close it, you may be eligible for an Aviator Red again. So if you currently have one,

I think there's not much chance that you'll get another one or that you'll have enough time to close it and open another one. But if you close one a while back, it might be worth taking a swing at getting it again, whether or not you actually will. It's of course very hard to say, but sure. But there you go. There you have the best we've got. And also you can always go to our page for the application rules by card issuer. We have a resource page with the application rules by card issuer that Tim has worked on keeping up to date. So you can check that out as well. All right. I think that wraps it up for this week's card talk. If you want more information about this card, don't forget, you can find a direct link to our site in the show notes. Just expand the description box to find a link to our site. That's frequentmiler.com. You can join our

email list at frequentmiler.com slash subscribe, and we'll see you next time.