Credit Cards

United Blames Chase for Customers Not Using Their Lackluster Credit Cards

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Written by Charlie

The United credit cards do not have as loyal a following and user base as Chase’s own cards do – is that really Chase’s fault for offering a superior product?

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I have written about this before and last week, there was a Wall Street Journal piece (paywall) about the strain between Chase and United over the airline’s disappointment in customer use on their credit cards. Is Chase really to blame for United’s credit cards being down in usage?

United Blames Chase for Customers Not Using Their Lackluster Credit Cards

A few years ago, some of my favorite airline cards to have and recommend were the United Airlines credit cards from Chase. They offered some nice sign-up bonuses with a reasonable annual fee and the higher fee versions offered benefits that looked a bit like airline elite status benefits.

Banks Are Getting Aggressive with Benefits – Airlines, Not So Much

Fast forward and we have the banks aggressively going after customers with great point bonuses that offer significant value, through redemption partners and even with higher fee cards of their own. Not only that, but they are meeting the customers where they are at with higher bonuses on the spending that matters to many that own the cards.

United is saying that it is Chase’s fault that customers are choosing to use the bank’s own cards instead of the United co-branded cards, that somehow Chase is to blame for incentivizing cardholders more than United is apparently willing to. Is that really Chase’s fault?

Comparing the Chase Sapphire Reserve vs the Chase United Club Card

For example, customers that hold the excellent Chase Sapphire Reserve likely do so because they travel at least a couple of times per year. If they don’t travel, they are far better off dumping that card and using a different card. The reason is that the points earned have maximum value when used for travel and that travel is aided by benefits like this:

  • 3X points earning on purchases made on travel and dining
  • 1.5 cents per point when points are redeemed for travel through the Ultimate Rewards portal
  • Priority Pass lounge membership for free lounge entry around the world
  • Annual travel credit of $300

Those benefits are perfect for a traveler. Compare all of that (and the accompanying $450 annual fee) to what you get with the Chase United Club card (and its $450 annual fee):

  • 1.5 miles on all purchases
  • 2 miles per dollar on United purchases (seriously?!?)
  • first and second checked bags free in the US
  • United Club membership
  • Hertz Gold Plus Presidents Circle status
  • Premier access when traveling (expedited security lines, check-in, boarding, and baggage – like a Silver elite member would get)
  • Waiving of close-in booking fee on awards (normally $75 for general members)

The 1.5 miles per dollar on all purchases is very similar to the Chase Freedom Unlimited – which has no annual fee! Plus, if those points earned with the Chase Freedom Unlimited are transferred to an Ultimate Rewards card, they can be transferred to United at 1:1.

The 2 miles per dollar on United is a joke. The Sapphire Preferred (with its $95 annual fee) offers 2 miles per dollar on all travel. The United Club membership is nice but having Priority Pass is good for flying with any airline so better for the traveler that uses multiple airlines.

No Contest!

To me, unless you are a major United traveler (and then you would probably have elite status anyway), the Chase United Club card doesn’t come close to earning business from the Chase Sapphire Reserve. If someone has both, they would be almost crazy to put any spending on the United Club card (with the singular exception of if you use the spending to get the United spending waiver for elite status).

That brings us to the other major point – even if the United Club card offered 3 miles per dollar on United spending, those are still United miles. United miles are about to lose a lot of value when the program goes into revenue redemption mode and I would never put a bulk of spending on an airline card.

United’s Misplaced Frustration

To me, it is laughable that United is putting the blame on Chase for their customers being drawn away from airline credit cards. Airlines have shown again and again that they do not care about the loyalty of the customer who flies a ton on cheaper tickets. What they value more is the high-dollar spender (even if they travel 5 times in a year) and the credit card user. While they have changed the program to reward those big spenders on tickets, they have not done anything to reward the big credit card user.

The United Explorer card used to have a feature (until last year) that would give a 10,000 mile bonus for $25,000 of spending in a year. At least that was a nod towards the big spenders but United removed that benefit.

The current contract between United and Chase apparently is for another 6 years and United wants to get more out of this partnership with Chase, according to people that spoke to WSJ. They also said that United wants Chase to pay more for the miles they reward for spending with customers.

Why This Is Ridiculous

This is ridiculous – United is on the cusp of making customer pay more for award tickets when they are tied to revenue (specifically with premium cabins) yet they want Chase to pay more to buy those miles from United!

Fortunately, people in the know say that Chase says the airline should do more to earn loyalty from travelers. This is absolutely true. Yes, I understand that the co-branded relationship with airlines and banks is huge business for the airlines (eclipsing even travel) but United has done very, very little to try and earn loyalty in the air or with the credit card. Global Entry reimbursement, seriously?

Summary

Airline co-branded credit cards are big business to the airline and to the bank. United is fighting a losing battle right now since they are slashing the value their miles have in redemption while wanting the bank to pay more for the miles they reward to cardmembers.

What I do not think we will see is United ending their partnership as a transfer partner with Ultimate Rewards (not sure the contract would even allow for that anyway). If they were able to do that, I think that would have happened already. I do think United is going to make it more expensive on the redemption end for miles as they move to revenue (as far as what value they give to the miles) – and that is just going to make their cards more worthless.

Who would bother earning United miles on a credit card when a Chase card with a $95 annual fee (CSP) gives 1.25 cents per point in redemption for travel? Oh, and that travel earns miles also!

United, time to actually start earning loyalty with your cards instead of sticking to benefits that were popular when Continental was still a company.

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About the author

Charlie

Charlie has been an avid traveler and runner for many years. He has run in marathons around the world for less than it would cost to travel to the next town - all as a result of collecting and using miles and points. Over the years, he has flown hundreds of thousands of miles and collected millions of miles and points.
Now he uses this experience and knowledge to help others through Running with Miles.

8 Comments

  • Well said. Maybe some higher ups at United will actually listen to the blow back and realize how silly their complaints are.

  • Erica Johnson, Chase Executive Office, Chase-United Loyalty, Customer Relations
    1-888-214-7712 x 6548050

  • My United Explorer offers 1st checked bag free on international United-operated flights as well. That includes connecting flights as long as you check in with United (by extension, limiting connecting points outbound and departures inbound to cities they fly to). Is that not the case on the Club card?

    Anyway, it’s mostly a sock drawer card. I only use it for United flights (closest airport is EWR, don’t have status) and the odd Chase Offer (don’t have either Sapphire card, and my award flights are booked through SQ, so no real need for UA miles anyway).

    • Forgot about the basic economy tickets on international flights! I had been talking about the 2nd bag waiver with the United Club card – forgot that some itineraries make you pay for the 1st bag now!

      • @Charlie: I always book Basic Economy, as I get the checked bag free with the card, and the Amex Gold fee credit covers 4 (poor) seats/year. We’re used to the back of the plane, so as long as we’re seated together, that’s fine.

        What I was referring to, though, is the DOMESTIC requirement. I don’t see that on the website for either card, just that the flight has to be United-operated. Digging deeper, I found that in the case of connecting flights, the first flight in each direction has to be United-operated.

        I think Delta’s cards have the same policy – the flight has to be Delta-operated, but does not have to be domestic. I think American’s cards will give you checked bags only on domestic flights, though.

  • United has a become POS airline that I only fly when absolutely necessary, and I say that since I was a Premier 1K for years. The costs/crappy service has moved them to the bottom of the big 3 barrel and until DeNada Munoz and his clown sidekick Scotch Kirby are gone, I will continue to avoid them like the plague.

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