It’s Official: American Airlines Is Cutting the Most Valuable Benefit on Many of Their Credit Cards

Credit card companies and their co-branded partners always need to do one big thing for customer retention – find a way to keep the customer happy with the card long after the initial sign-up bonus has been spent. It can be something like a unique perk, club access, free bags, elite status, etc. The balancing act is to offer something that does not take away all the revenue from their side of the equation.

American Airlines Is Cutting the Most Valuable Benefit on Many of Their Credit Cards

For years, one of the best things about some American Airline credit cards from Citi (and then Barclays) was the rebate feature – earning 10% back on all miles spent in a calendar year. This was capped at 10,000 miles per year but it created a very nice reason to keep the card open year after year. While some may argue that a $95 annual fee is not worth spending for 10,000 miles (if you spend 100,000 miles in a year), it has always just been “that thing” that kept many customers from cancelling the card.

Well, as of today, American Airlines has sent out e-mails to let customers know that this benefit will be discontinued. The worst part about this change (besides it actually ahppening) is that it ends April 30, 2019. That is really a bad move on their part. This is a calendar year benefit and, as such, should have remained in effect through the end of the year. At the very least, it should have been tied to a member’s anniversary year.

Another reason this is bad is that there are many people that have received new AA cards recently and the 10% rebate is a nice way of getting those bonus miles back when spent. Some people may not even receive their bonus miles by the time this benefit goes away. Bad move, AA.

I have always enjoyed this benefit. Early on, it helped me upgrade from Cathay Pacific business class to first class. I didn’t have enough miles to move to first class so I booked in business and then had the rebate miles applied to upgrade to first class. 🙂 They stopped letting things like that work but it was something that really helped me to enjoy my first international first class cabin.

So, What Do We Get In Return?

Back to the first part of this post – what does the card and co-brand give us to keep us as customers? The answer, at least on the Citi side, is really laughable. They will be increasing the American Airlines flight discount from $100 to $125 – which is only obtainable after spending $20,000 in a cardmember year. Most people are not putting $20,000 on a personal airline card (and really shouldn’t given how many other great cards and category bonuses are out there, especially with flexible point programs). Giving a measly $25 bump on something that requires $20,000 in spending is just ridiculous.

But…Why???

To be perfectly honest, I cannot understand why AA feels the need to cut the rebate benefit. It was already capped at 10,000 miles per year and people only received that when they redeemed miles. That meant that people had to have earned 100,000 miles in order to get 10,000 miles back upon redemption.

With no transfer partners (other than Marriott), that meant those miles were earned by spending on the credit card (money for AA), shopping through portals (money for AA), or flying on AA or partners (money for AA).

Anyways, I bet there are going to be a whole lot of cancellation calls going out on May 1. If you have an AA card with the 10% rebate, definitely call the issuer and complain about this and cite it as a reason to cancel. My guess would be that retention bonuses may be more generous than in the past (though they will likely require some extra spending).