I got an email from an acquaintance/blog reader of mine a few days ago. He had first reached out to me a few years prior for some advice knowing that I dabble in miles and points every now and then. I offered my own take on things, and also pointed him towards some of the other blogs I’ve learned so much from.
But back to the most recent email. My reader had come across the news that Citi was out with the 100K Citi Executive card. I could tell he was excited, and who wouldn’t be? It’s not everyday that an offer for 100,000 miles of any kind come along. These being AAdvantage miles makes the offer even more enticing. The reader asked “do you think I should apply for this card?”
Knowing this reader is no stranger to mileage earning credit card opportunities, I was kind of surprised at the question. Usually, when someone that I know is relatively well-schooled in cards and miles asks me if they should apply for a particular card it means one thing – they are looking for someone to tell them not to apply. In my reply, I asked the first question I always ask – are you carrying any credit card debt? I am not a financial planner or expert, but I know how to count and I know a little bit about human nature. If the answer to the card debt question is yes, stop right now.
As I suspected, the answer was yes. I also got a bunch of details about how this reader always pays their bills in full each month just like we talked about before, but got a little over extended to the tune of a “few thousand” with Christmas, a couple of unplanned repair bills, etc. I did not ask specifically how much debt we were talking about, and I’m not even sure it matters. A “few thousand” may be 10 thousand for all I know. My advice to this reader was that anyone is free to do what they feel comfortable with, but if it were me, I’d just say no. If you’re behind with holiday spending and some unexpected bills, I just don’t think it’s worth the risk to promise yourself that you’ll manage better going forward just to get a particular card product….even if it comes with the promise of 100,000 miles.
Miles earned from credit cards have flown me to lots of interesting places. That said, I always strive to play any game from ahead, not behind. Thinking of applying for a big mileage/points card offer and carrying thousands in credit card debt? Deal with the debt first. Just my opinion.
– MJ, February 8, 2014
As some others have said, the fee is not $450 – it’s $250, as as soon as you spend $200 (on anything, not just AA as some people have been saying) you’ll get a $200 statement credit. I guess this is just a convoluted way of saying that the annual fee is $250 for the first year, and $450 after that.
Anyway, you can get 50k miles with a ~$95 annual fee pretty easily. So we’re really talking about an additional 50k miles for an additional $155. If you could buy 50k miles for $155 right now, would’t you do that?
And on top of that you get lounge access, free checked bags, priority boarding, and all that. Not a huge value to me, but it should be to some people.
The only thing that should give you pause is the $10k spend in 3 months. If you have a plan for that (i.e. you’d normally spend that, or you have some big purchases coming up, or you can get reimbursed for some purchases through work or friends or whatever), then this is a no-brainer.
MJ, I appreciate your voice of reason. I’m indifferent about the 100k offer (actually, I’d like the miles but $450 is a hefty fee…would rather spend on the Plat AMEX for lounge access, but I digress). At the end of the day, it’s important that sound financial decisions far outweigh earning those extra miles…whether that be taking MR’s, churning cards, etc. It’s definitely possible to do all that and be financially wise, but don’t be dumb! Keep up the great work.
My understanding is that another credit report is pulled a day or two before closing just to make sure no new debt was accrued. Probably depends on mortgage company/underwriter, but getting new credit right before a new mortgage could result in a higher rate, additional fees or worse . . .
Kijo, that did not happen during my most recent mortgage exercise, but it’s a good point to make. Of course, we went from first offer to closing in about 30 days. If something stretches out, I can envision some mortgage companies taking a second look when the time comes. In the end, this is an individual decision based on the comfort level of those involved.
Good points. How about my situation. I’m going to be buying a house in the next few months. Already in the mortgage process. They’ve pulled my FICO in the 750 range between various sources. I haven’t churned any cards for about a year. I really really want the 100k card would you apply for a 1 card churn?
That’s a tricky one. I’m not an expert as I said in the post. I’d lean towards thinking you’d be OK since they’ve already pulled your credit reports.
Well – at the risk of sounding cliche’…. I’d say that depends. 🙂 The 50K + 50K will not get you Admirals Club membership. And there’s also the $200 statement credit that comes with the Exec card – effectively making the annual fee $250. In the end I guess I’d say my answer would be that if you will use the other benefits of the exec card…pick that one. If not, then I think the 50K + 50K answer is a very attractive one.
PS – I have no debt and meeting the $10k min is no issue for me.
Oh since we’re on the topic of the 100k AA card, I would like to pick your brain.
Do you think it’s better to apply for the 50k AA Personal + 50k AA Business rather than the 100k Citi AA card? Both give me 100k AA miles. I don’t have any of these cards and a friend pointed out that the first option is better since the annual fee is waived for the first year. I’m just afraid I’ll miss out on this 100k offer. It seems like the two cards in option one has been around.
What do you think? Thanks MJ!
Totally agree. The other thing is to make sure you know where you’re going and why and how those miles help you get there. Accruing miles just to have miles is a sure way to waste them or have them expire on you.
I also had a friend mention this 100K offer to me (I had seen it previously). My thinking is that $450 is a not-insignificant chunk of change and unless you have a concrete plan for 100K miles, I’d just as soon get one of the 50K AAdvantage Citi cards, which come with a $95 annual fee that’s waived the first year.