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Is it time to ditch my airline card for bank rewards or a Costco card?

Summary

How to evaluate the benefits, costs and your preferences to find the right rewards card.

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Dear Cashing In,
I have been using American Express at Costco, so now I need a Visa card. I also have an American Airlines MasterCard, which I use for miles, since I live in Philadelphia and American has a hub here. However, it is getting harder and harder to redeem those miles.

My question is, PNC Bank just offered me a Premier Traveler card that gives miles back for any airline. You buy the ticket with the card, and then they give you a credit on your statement. However, you cannot do an upgrade with the card.

If I need a Visa card, am I better off getting the Costco Citi card that just gives cash back? Is the American MasterCard a waste? Am I better off using the PNC card that lets you fly on any airline and then just gives you a credit? This is all so confusing. – Llene

Dear Llene,
There is no doubt that choosing the right credit card can be confusing. One of the problems is that there is no standard, correct answer. What might be a great reward card for you might be a poor reward card for me.

If I like stockpiling American miles, for instance, and you don’t, then we are going to disagree on the value of the Citi AAdvantage MasterCard. If you spend a lot of money at Costco but I rarely shop there, then Citi’s new Costco Anywhere Visa will make more sense for you than for me.

When choosing among reward cards, I find that it is helpful to simply write out the cards’ features and costs and view them side-by-side. This approach helps you see how the rewards work and how much in rewards you would earn so you can make

an informed decision.

Generally, I would say that if the amount of rewards between cards appears close, it usually makes sense to go with a cash back card, because you nearly eliminate the hassles of cashing in airline miles. As you note, it seems to be tougher nowadays to find award seat availability on American.  A survey of award seat availability released May 11 showed that, among U.S. airlines, American had the fewest seats available at the lowest redemption, and that availability was down more than 10 percentage points compared with 2015.

Let’s look in more detail at the three cards you mentioned:

  • American Airlines MasterCard. Both the Citi AAdvantage Platinum Select MasterCard (annual fee: $95, waived first year) and the Barclaycard AAdvantage Aviator card (annual fee: $89, not open to new applications) have similar features: one mile per dollar spent, double miles for American Airlines purchases, free checked bag, priority boarding.
  • PNC Premier Traveler card (annual fee: $85, waived first year). With this card, you earn two “miles” for every $1 you spend. Then, you redeem the “miles” for travel purchases that appear on your credit card statement, and you receive a statement credit. Each “mile” is worth 1 cent, so in effect, this is a 2 percent back card when redeemed on travel purchases.
  • Citi Costco Anywhere Visa (no annual fee, but $55 Costco membership required). It gives 4 percent back on gas, 3 percent back on restaurants and travel, 2 percent back at Costco and 1 percent on all else – in the form of an annual reward coupon redeemable for cash or merchandise at Costco stores.

So when you stack those up against each other, which has the most value?

It’s complicated, right? It depends how you spend your money and how you want to redeem rewards.

You might start by asking yourself how much you fly American and how much you value the free bag and priority boarding. At one mile per $1 for most purchases (two miles per $1 for American Airlines purchases), you’re going to need to spend a lot

on this card for an award ticket, which may or may not be available.

Assuming you like flexibility and redeeming for travel, the PNC card can make some sense, since you’re getting 2 percent back when redeeming on travel. It also comes with a 30,000-“mile” sign-up bonus, which is worth $300 on travel. There are other cards that operate similarly, such as the Capital One Venture (annual fee: $59, waived first year), which offers higher sign-up bonuses than PNC’s version.

The Costco card could be worth it if you spend a lot on those bonus categories: gas, dining out, travel and at Costco. Using it anywhere else nets you only 1 percent back, which is inferior to the PNC card and others like it. However, the reward is in cash, which is more flexible than a statement credit for travel.

I could also see a balanced approach where you get both the PNC and Costco cards, using the Costco one at Costco and in those bonus categories, and using the PNC card everywhere else. Then figure out if the American card is still worth the annual fee.

It’s a lot to weigh. But you’re taking the smart step of evaluating your options before making a decision.

See related: FAQs on new Costco Citi Visa card, Costco card switches from American Express to Citi, How to transfer your rewards and points into other reward programs

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Credit Card Rate Report Updated: November 25th, 2020
Business
13.91%
Airline
15.50%
Cash Back
15.85%
Reward
15.75%
Student
16.12%

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