American Airlines has two issuers of its U.S. credit cards: Citibank and Barclays. Barclays can pitch cards inflight and in airports, but not within 100 feet of an American Airlines lounge) while Citibank got the rest of the card acquisition channels.
Mostly this allowed Barclays to retain its very profitable back book of customers, as well as replenish its cardmember base since even long-standing customers do cancel cards. Barclays had gotten the deal to issue US Airways cards when America West acquired US Airways, essentially funding that transaction. They eventually bought the back book of 10,000 remaining Bank of America US Airways card customers as well.
Barclays just isn’t big enough to bid effectively for the whole American AAdvantage card portfolio. Citibank had the chance to take the whole thing, and also to offer points transfers to AAdvantage as part of its ThankYou-brand card product suite. But they balked at the price. Ultimately American got the biggest deal possible by leaving two card issuers in place.
Now CNBC is reporting that once again American is talking with Citi about exclusivity, which would leave Barclays by the wayside. It is not clear what such a deal would look like.
- Barclays might retain a deal to continue servicing its existing cardmembers, with existing benefits and mileage-earning, and just no longer issue new AAdvantage cards.
- Citibank could buy the back book of Barclays cardmembers.
- Or Barclays AAdvantage cardmembers could lose their AAdvantage cards – either being moved to a Barclays-branded product, or cut off completely (though this last seems least likely).
As a customer I like the current arrangement.
- Remember that you can get both Citibank and Barclays AAdvantage card products today. Flight attendants on board American Airlines flights often remind passengers of this. That means more miles than under a single issuer.
- There’s still some competition to offer a better product, not just in comparison to other co-brands and bank-branded cards, but even within AAdvantage offerings.
- The Barclays Aviator Silver, which I have, is unique in that one of the federal tax payment processors treats at least a subset of cards as debit for fee purposes. I can pay federal estimated taxes and any balance due for a flat $2.50 rather than ~ 1.9%.
I am hopeful that my Aviator Silver will last through this deal, if indeed Citi gains exclusivity (so hopefully it’s only the exclusive right to issue new cards). And ultimately I prefer two issuers. But the question for American is going to be which will generate more revenue for them which is a function of just how much Citibank is will to pay this time – but beyond the deal terms, also which arrangement is likely to drive more card spend and thus more miles purchased by the bank issuer.
When the most recent co-brand deals were negotiated, the American Airlines card portfolio generated more annual spend volume than Delta’s and than United’s. That’s no longer the case – Delta’s Amex deal has the largest spend volume, and Chase’s United deal outpaces American, which the airline admitted at its investor day. Both United (202) and Delta (2019) have re-upped their card deals more recently than American.
Two months ago during the second quarter earnings call American described negotiations as “in the fifth inning” rather than close to the finish line, while also noting that “Citi wants to be involved in more and deeper ways.”
I would rather have two issuers as well, but it would be nice if Citi could have a card that earns 2x or 3x and then can transfer to AA. I get the bonuses on the AA cards and keep them for benefits, but never use them since 1x is not worth it compared to almost every other card.
No I don’t want point transfer to AA
How do you get the Aviator Silver? Is it truly invite only? Any details on how to get an invite?
care to share which processor treats the silver as debit?
I have both Citibank cards and the Barclays card. The Executive Citi Card (or whatever it’s called) I use to book flights and cash upgrades because of the 4X earning. I use the other 2 for hotels, meals and everyday expenses. I see huge value in the Barclays card over Citibank.
Wait – you can pay estimated taxes with a Barclay’s card for a $2.50 fee? And get points? Sign me up!
Is that correct, Gary?
Which IRS payment system lets you pay only $2.50 to pay taxes? I’ve had the Aviator Silver and never seen that before.
The $2.50 hint would say that it’s Pay1040, per https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card. Of course, just paid quarterlies last week
Can confirm the $2.50 service charge for tax payments. I pay this amount and I only have Aviator Red card.
Gary – same as others I’m curious which federal tax payment processor treats the card this way.
I recently downgraded my Citi AAdvantage Executive Pretentious Name World Elite to a free Citi AA MilesUp card.
Why: with my BA Gold status, I no longer need to pay for club access, and I didn’t want to take the hit for closing a line of credit.
I have a Barclay Silver (yes, you need to apply for Red first- Google it) and spend will still happen on that card to ensure EP status for next year.
If anything this positions me well for a bonus on whatever new card Citi will come up with to entice people to flock back to them.
I would suggest that folks that don’t have Barclay’s sign up and take that bonus now. It’s 60k miles, whic is nice.
Barclays can always fall back on their European hotel bill default currency swindle (where they charge in your home-country currency, instead of the local currency, by default, and collect a 3% fee).
Does my Barclays Business Aviator card have the same $2.50 tax payment fee?
What is the interval between cancellation of Barclay’s Aviator cards and the time when I can again qualify for an account opening bonus? Thanks.
Bad news for points enthusiasts. Citi is super tight with approvals and their interface blows.. Flying AA is no joy either. Constant mechanical issues, delays, and dysfunction is the norm these days.
To answer my own question, the Barclay’s T&Cs say that “Any bonus associated with this offer may only be earned once. You may not be eligible for this offer if you currently have or previously had an account with us in this program.”
Wonder if this is applied in practice?
I have had multiple BC Aviator cards over the years with no issue getting the bonus each time. Great card as only one purchase required.
While Barclays US operations aren’t as big, Barclays Internationally has just as much money as Citi so there must be more to this than just asset levels.
I would hate for AA to drop Barclays but if they left the legacy cards in place I guess I’d be OK with that.
If I was Barclays and AA pulled the rug out from under them I would offer to switch those AA cards for many of their other airline cards.
I would hate to lose my aviator card. Using flight cents is the best way I’ve ever found to quickly build up points
Is it only silver that processes as debit? And yes, which processor?
I had the Citi AA Platinum and Barclays Aviator Red cards for their bonuses, but spend very little on them as I mostly fly AS. But when AS increased the cost of their Lounge+ fees, it became less expensive to get the Citi AA Executive card that comes with Admirals Club access *and* AS Lounge access. I downgraded the Platinum card to the AA MileUp no fee card. But the Aviator Red and MileUp card stay I the desk drawer.
To be honest, I wouldn’t miss either one — other than any affect it might have on my credit score if I cancel them. I put minimal spend on the AA Exec card, as I use it pretty much for lounge access when traveling. Airline spend goes on either the AS card (my primary carrier – 3x), a minimal amount on the AA Exec card (4x), or — mostly — on my Citi Prestige card (5x) or my wife’s Amex Plat (5x).
I dropped the Aviator Barclay card after they turned down an in store Apple purchase. I even received a text of my phone asking me to confirm it was me. I did and was still denied. I paid with my Citi card with no issue and called Barclays. Waited 50 minutes on hold before I was connected to a human, sadly in an Asian country with poor English. I cancelled the card.
Any relationship to why they dropped Bilt, you think?
How does one get the silver? And which processor?
There’s only so many processors for tax payments, so it’s easy to test run, but I doubt that you can figure it out without actually doing a test transaction. As a (former) payment processor myself, we had rules in place to somewhat prevent these things, but we always had a small segment of customers who would clearly take advantage of it, so we simply fired them**. I.E., I’m not in the business to lose money to customers, that’s why they are customers. I *AM* in the business of providing a solid value proposition, and offering only a 1.9 % fee is very generous, and you can’t make money off of it in the long term.
-Jon
** it ended up being about 20 customers out of 5,000, and there was really only 3 of them (all three were religious organizations!) who went out of their way to take advantage of our pricing. (And we are not talking about $10, more like thousands. So we did call them up, and all 3 stopped doing it, and were still customers.
If I don’t have an AA branded credit card, any advantage to sign up for a Barclay card now while it is still avail?
Obviously a hot topic… the $2.50 debit card treatment. Let’s see if Gary gives us the answers we’re all looking for. The Barclay’s site only offers AA Aviator Red… I’m not seeing any Silver anywhere.
If you read through the comments, the answer is already posted. Also, there are only 3 processors, not difficult to figure it out by trial and error.
Gary, I too am an Avaitor Silver card holder. I was able to chose that or the Red at the time US Airways was becoming American and the cards were following suit. (I got a letter back then giving me the choice.) I would most appreciate any additional news about this you come across, as this will affect me greatly.
Thank you.
Comment in case any of the issuers read this: I use both AA cards to supplement my travel to maintain status. Since that program was put in place my AA spend on both cards increased significantly by over 100K more per year. Since United removed the 1.5 points earning for all purchases my spending has been reduced by more than 100 K per year. I have not used my Delta card except for Delta flights in several years, the point redemption is not worth it and I will most likely eliminate that card. My United Spend went to the Hyatt card and other chase cards, so Chase is still the winner in the loss of United spend. I also have a southwest card I will replace some day, it rarely gets used and I almost never fly them.
I’m very curious about what happens to my Aviator Silver if Citi buys the existing cardholder accounts. I would assume Red cards would be converted to Platinum Select, with the same $99 annual fee. But Citi doesn’t have a $199 AF card. Would Silvers have to choose between a downgrade to Select, or tripling the AF for Executive?
Barclay’s sucked beyond belief and led me to cancel. They shut me down while I was overseas due to attempted fraud by someone in US and offered no way to get a replacement card other than it being mailed to my home address.
In addition, they mailed letters requiring response to my home (8000 miles away) which I had to complete to keep from being charged for the fraudulent transactions. I never received them so the charges went back to my card.
In the end, I had to write a letter and FAX it to them. Yes, fax in 2023 to get them reversed.
They were very difficult to deal with – 1980s processes and general bad attitude.
I hope they get dropped totally!