Is it time to ditch the Virgin America credit card?
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Update: In early October 2017, Virgin America announced that Comenity Bank will close all Virgin America Visa accounts on Jan. 4, 2018. After that date, the card will no longer work. The bank will prorate refunds of annual fees. For more information, visit the Virgin America's FAQ.
Dear Cashing In,
I have a Virgin America credit card. The $149 annual fee is coming due. I’m wondering if I should hang onto this card or not, since Virgin is merging with Alaska Airlines, and it might not be a good idea to pay a bunch of money for a card that isn’t going to work. – Jan
Airline mergers are nothing new: There have been about 20 of them in the past 20 years, according to the trade group Airlines for America. And some of them are big, such as United and Continental, or American and US Airways, or Delta and Northwest.
One of the big questions coming out of airline mergers is what happens to the credit cards of the airlines that are merging. That can be a big deal for the people who hold those cards and have grown accustomed to using them for miles and flights on a certain airline. Often, though, the switch winds up being good for consumers, as banks affiliated with the successor airline try to woo new customers and hang onto those that already have a card with an airline undergoing the merger.
When airlines merge, they usually settle on one bank to offer the airline’s credit cards. For instance, when United and Continental merged in 2010, both offered credit cards from Chase, so they settled on Chase with the combined airline. When Delta and Northwest merged in 2009, they settled on offering cards from American Express, even though Northwest had offered cards from U.S. Bank.
But the merging airlines don’t always settle on one bank. When US Airways and American merged in 2013, the combined airline continued to offer cards from both Barclaycard and Citi, and it still does.
It is unclear what will happen with the Virgin America Visa Signature cards offered by Comenity Bank, but it appears they will eventually disappear. This year, Comenity stopped allowing sign-ups for new Virgin America credit card accounts. If you still have the card, it has the same benefits, such as frequent flyer miles with every purchase, a free checked bag and a coupon for $150 off a companion ticket.
On the Virgin America website, it says: “There are no immediate changes to the Virgin America Visa card program and you will continue to receive your cardholder benefits when flying on Virgin America. … Virgin America, in cooperation with the issuing bank, will share additional details regarding the future of the Virgin America Visa card program as soon as they are available.”
However, the value of the Virgin America card is declining, as the merged airline starts to close down the old frequent-flyer program and transition everything to the Alaska Airlines banner. The Virgin America name will eventually disappear. At the end of September 2017, customers with Virgin America miles will lose the ability to book flights with (non-Alaska) partner airlines: Hawaiian, Virgin Australia, Singapore and Emirates.
You can already transfer miles from Virgin America to Alaska at a rate of 1.3 Alaska miles for every 1 Virgin America mile. If you don’t, the airline will do this automatically for you in early 2018.
If you have unused Virgin America miles, you might want to quickly assess if you foresee flights on any of those partner airlines in the next few months and book them before the end of September. If you are planning a trip on Virgin America or Alaska, you should investigate if it makes more sense to book the ticket using Virgin America or Alaska miles, since the awards redemption charts are different.
You might consider signing up for the Bank of America Alaska Airlines Visa Signature card* (annual fee: $75), which comes with a 30,000-mile bonus after spending $1,000 in the first 90 days, plus a free checked bag and free or discounted companion fares. The miles earned can be used on Alaska and Virgin America flights.
Often in airline mergers, it makes sense to hold onto a card of a merging airline because it will sometimes offer good deals to switch. But here, that $149 annual fee is steep. The benefits are declining rapidly, so it’s hard to see much of an upside to holding on as everything transitions to Alaska Airlines.
An Alaska Airlines spokeswoman said that after Dec. 31, 2017, “Credit card holders will no longer earn miles on Virgin America, and so converting to the Alaska Airlines Visa card will be encouraged.”
Sounds like a sensible plan.
*The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
Editors note: This article was updated on October 9, 2017 to reflect Comenity Bank's decision to close all Virgin America Visa accounts on Jan. 4, 2018.
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