American and United airlines, in partnership with Citi and Chase banks, have new credit cards that offer a range of benefits in exchange for annual fees. The only thing is, many of these perks used to be given away for free. Joe Brancatelli shares secrets and proven tips for first- and business-class road warriors. Airlines and the banks that create their credit cards have unleashed a blizzard of plastic on unsuspecting business travelers. Here’s a subjective (but reliable) rundown of the best in class from each carrier. For business travelers, credit cards are all about the benefits and perks. And with American Express taking a big step forward in granting more of the good stuff, it’s worth sizing up how AmEx compares with Chase, Capital One, and many more. 
Two major banks and their airline partners this week tossed new credit cards into an already crowded, confusing, and fractious market. The result: more proof that “new” airline credit-card “benefits” are often little more than services that carriers and card issuers once offered for free.
Take Monday’s announcement of the grandiosely named Citi Executive AAdvantage World Elite MasterCard. The signature offering of the $450-a-year shard of plastic—free access to American Airlines’ Admirals Club network of airport lounges—is an undeniable perk. But its other benefits are literally things that American Airlines once gave away: a free checked bag on domestic flights and “priority” airport check-in and boarding, services created in recent years to further discriminate against general flyers. Citi’s big contribution? No 3 percent fee on foreign exchange transactions, a charge that was virtually unknown as recently as a decade ago.
Tuesday’s announcement by Chase and United Airlines of the $95-a-year MileagePlus Explorer Card was little different. Chase’s new “core” credit card for the newly merged United and Continental airlines and their still-undefined new MileagePlus frequent-flyer plan, Explorer’s benefits roster is almost completely composed of services once available free to all travelers. There’s the free checked bag and priority boarding, of course, and these “new” wrinkles: Carrying an Explorer card means your United miles won’t expire and guarantees that you can claim any available seat at the “standard” award level. The problem? Until now, United’s existing Mileage Plus program has offered so-called “last seat availability” on standard (double miles) awards and miles never expired in Continental’s OnePass program, which is being merged into the new MileagePlus. (By the way, your eyes aren’t playing tricks. United’s current program is two words, Mileage Plus, while the new program is one endless MileagePlus.)
To see a comparison of some of the key credit card products connected with major U.S. carriers, click here.
The perks-and-bennies shell game is part of the incestuous relationship between the largest legacy airlines and the banks that issue their credit cards. Chase, for example, provided United’s debtor-in-possession financing when United tumbled into bankruptcy in 2002 and was its lead lender when United emerged from Chapter 11 in 2006. Chase also became the primary processor of United’s credit-card charges and agreed to take Mileage Plus credits in lieu of a cash “holdback” against United’s insolvency. Meanwhile, American Express helped finance Delta Air Lines as the carrier fought its way through a 2005 Chapter 11 filing. It is funding from and frequent-flyer-mile purchases by Citi that has helped American Airlines stay out of bankruptcy.
Why do banks get into these bizarre arrangements with big airlines? Money, of course. Airlines may be chronically unprofitable as ongoing businesses, but they generate tens of billions of dollars worth of profitable credit-card charges each year. And the cards that the banks issue in the name of major carriers are among the most profitable products in the credit industry. So many people charge so much on airline credit cards that banks now award more frequent-flyer miles to customers each year than the airlines issue directly.
What does it all mean to us poor schlubs who fly the airlines and carry their credit cards? If we’re smart, we can use the cards to fatten our frequent-flyer accounts, enhance our “elite” status, and claw back some to the perks that the airlines have taken away. The problem? Separating the wheat from the chaff among the hundreds of airline-branded cards on offer.
Before considering the “best” cards issued by each carrier and its bank partner, a useful reminder: The American Express Platinum Card probably remains the single best general-purpose charge vehicle for most business travelers. For its admittedly large ($450) annual fee, there is an impressive roster of benefits: a frequency plan that allows points to be ported to almost two dozen airline and hotel programs; access to about 600 airport lounges around the world; statement credits for everything from checked-baggage fees to membership in the government’s customs-bypass program; a waiver of Amex’s 2.7 percent foreign-exchange fee; and status in several hotel and car-rental service programs. Is it the only card to carry? Of course not. The business-travel world is too complicated for that. But thanks to its recent upgrade of benefits, Amex Platinum offers the best value-for-money proposition for the most travelers.
A standard rejoinder: All airline-affiliated cards are peachy—if you don’t roll over your balances. If you do carry a balance on your credit cards, forget trying to earn frequent-flyer credits. At 14 percent to 29 percent interest, you’ll pay more than you can ever earn in the value of miles and points. Search for a card with the lowest interest rate instead. Another tip: If you are an infrequent traveler, you might do better with a cash-back card that offers 1 percent to 3 percent rebates on purchases. And one more bit of advice: If you’re more interested in free hotel stays than airline seats, consider the credit cards issued by the major hotel chains. The earnings ratios are at least as good as the airline cards, you’ll have an easier time claiming free rooms than free airline seats, and the perks (room upgrades, for example) may better suit your lifestyle.
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