Don’t Close! Downgrade to these No Annual Fee Airline Cards, Instead

No Annual Fee Airline Credit Cards

It’s generally optimal to focus on credit cards earning transferrable bank points rather than airline miles.  Rewards from the former can be moved to a variety of airline and hotel programs, or my historic preference, cashed out.  But at a certain point (pun intended), individuals can do bigger things by augmenting their portfolio to airline credit cards (and others).

People can get ahead most easily by signing up for cards with larger welcome offers, often in return for paying an annual fee.  After cardmember year one, it’s harder to justify paying that annual fee, which was more than subsidized by the first year’s signup bonus, especially if the card doesn’t provide any meaningful ongoing benefits.  Perhaps the simplest move is to close that card after cardmember year one to avoid the second year annual fee.  But it might make more sense to downgrade that existing card to a no annual fee version, including these options.

Citi American Airlines AAdvantage MileUp Card

Instead of closing that pricey Citi AA Executive or Platinum card, consider downgrading to the no annual fee MileUp card.  In my view, AA miles are a more valuable airline currency to earn via airline credit card spend than Delta, United, or Southwest, as those three can be obtained via bank point transfer partners.  AA is still the only domestic airline heavyweight which isn’t a permanent transfer partner of any of the major bank point programs.  And the MileUp earns 2x miles on all grocery purchases, one of the more generous card spending categories (the card earns 2x with AA and 1x everywhere else).  Plus, we can’t forget that Loyalty Point chasers pick up 1 LP on all this spend, as well.  And cardholders obtain a 25% discount on any AA onboard food and beverage purchases.

Barclays AAdvantage Aviator Mastercard

Perhaps you picked up a nice signup bonus on the Aviator Red last year and aren’t targeted (or have a need) for an Aviator Silver upgrade.   Cardholders can downgrade to the $49 annual fee Aviator Blue for 2x-AA, 1x-everywhere earning.  (I loved that card years ago.)  But there’s a no annual fee Aviator option that earns a forgettable 1x with AA and 0.5x everywhere else.

Why on earth would I recommend this no fee card to anyone?  Because Citi will soon be the sole issuer of AA cards.  Barclays Aviator cardholders will likely receive a product change to an AA card in the Citi family.  Downgrading to the no fee Aviator card rather than closing the Aviator Red will eventually provide an individual another card and more flexibility with Citi.

Chase United Gateway Card

I now-only-sort-of-at-most recommend a downgrade to the Chase United Gateway card.  Why such a tepid endorsement?  Because the biggest feature of the card now requires a significant spend requirement.  For many years, well before it was called the Gateway, Chase’s no annual fee United card came with a killer perk for simply holding it – expanded award availability.  That changed during Chase’s recent demolishing of the United card portfolio.  Gateways cardholders now only obtain that expanded award access after $10k in calendar year spend – eew.  Making things ickier, the card isn’t exactly rewarding for ongoing spend – 2x United, 2x gas/transit/commuting, and 1x everywhere else.

This may sound familiar – cardholders must spend $10k in a calendar year for two free checked bags.  But hey, cardholders get 25% back on United inflight and Club premium drink purchases.  Starting your sentences with “I remember the days when” is free.

Delta SkyMiles Blue Amex Card

I’ve never held the Delta Blue Amex.  The signup bonus has been in the paltry 10k neighborhood for many years.  That’s a hard-no for individuals like me who prefer to maximize Amex’s general five credit card limit with bigger rewards through annual fee products.  But those not looking to jam-pack those slots may prefer to downgrade one of the more expensive Delta cards to the Blue in the second year.  The card earns 2x on all Delta and dining purchases and 1x everywhere else.  This also opens up the possibility of being eligible for a lucrative upgrade back into a nicer Delta Amex card.  While we can’t predict if/when those happen, but there’s no financial hit in holding onto the Blue in the meantime.  Unfortunately, Delta and Amex exclude the Blue from the TakeOff 15 benefit, which would make this downgrade more attractive.

A small group may really care about picking up the Blue’s 10k welcome offer via a new application.  For everyone else, a downgrade is probably the better option.

No Annual Fee Airline Credit Cards – Conclusion

My wife loves her MileUp card, and so do I.  We don’t have a need for the other options currently, but I can definitely see them as solid alternatives for certain attentive cardholders.  Whether it’s airline credit cards or beyond, consider all of your upgrade and downgrade options before closing anything.  More credit cards, even if you don’t use them often, can create more flexibility and opportunities than you may expect.

What no annual fee airline credit cards do you hold and why?