Citibank’s American Airlines Debit Card Discontinued?

At the end of 2011 Citibank dropped the bombshell that their AAdvantage debit card rewards were going up in smoke. What happened next? I’ll explain…

Previously there were two offers available for the AAdvantage debit and this is how they worked:

  • Basic: This is the entry-level card and the price is $25 per year to have it. For each $2 spent, 1 AAdvantage mile is given. There is a ceiling for how many miles you can earn and it’s 60,000 per year.
  • Premium: For a $65 annual fee, this American Airlines debit card rewards you with 1 mile per $1 spent (same as their credit cards) and the ceiling on this one is 100,000 miles per year.

On both of these debit cards, purchases where a PIN was entered did not earn any rewards. In order to earn the miles, the cardholder has to press the “credit” button after the card is swiped and sign.

But on December 9, 2011 that all changed…

When the Durbin Amendment went into effect back in 2011, it limited the revenue banks can make on debit transactions.

As it stands now, it’s practically impossible for Citibank to pay out AAdvantage miles and make a profit since debit processing fees are just a matter of pennies. So if they’re only taking in a few pennies on a $100 purchase, you can understand why they can’t afford to pay out 50 or 100 miles along with it. For that reason the AAdvantage debit program has been discontinued.

What happens to existing cardholders?

If you already had the American Airlines debit card then don’t be alarmed – your miles haven’t been cancelled.

You get to keep the miles earned before 12/9/2011 provided that you do one of the following every 18 months:

  • redeem your AAdvantage miles
  • earn more miles on either American Airlines or their subsidiaries (American Eagle, AmericanConnection)
  • earn more miles with an AAdvantage participant

But as far as earning more AAdvantage miles from a debit card, you are out of luck. Citibank has discontinued this for good and no other banks will be issuing a replacement debit program for American.

Is it worth switching to their brand new credit card?

  • The $25 version of the AAdvantage debit card earned 50% less miles than what the credit cards offer.
  • The $65 debit card gave the same 1 point per dollar that the AAdvantage Gold and Platinum credit cards pay out. However it had a rewards ceiling of 100,000 miles.

So in a nutshell, the $65 debit card was on par with the $95 Platinum AAdvantage credit card in terms of earning miles on non-AA purchases. However that’s where the similarities stopped.

Launched last year in 2012, the AAdvantage Platinum credit card blows the ol’ debit cards out of the water. Look at all you get with this new offer:

  • First Year Free: The fee is waived for the first year, which saves you $95 (from what I recall the debit never offered that).
  • $100 Flight Discount Every Year: You get this every year of cardmembership you make at least $30k in purchases (the year starts the date you apply).
  • Higher Rewards: 2 miles per dollar on qualifying American Airlines purchases and 1 per dollar everywhere else. Now there is no yearly limit to how many miles you can earn.
  • 25% Discount For In-Flight Purchases
  • Priority Boarding: Get your seat right away, this helps you snag the overhead bin space!
  • Free First Checked Bag: You get this on all domestic destinations!

Even if the debit cards from American Airlines were still around, after you compare all the additional benefits you get with new AAdvantage Platinum using this current promotion for 2013, it’s a lot more bang for your buck.

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The thing is was that their AA debit card was a good rewards option for people with bad credit. Because if you have bad credit it will be hard to get a rewards credit card.

Don’t even bother, this card is no longer available, even for existing members, after December 1, 2011.

I have been considering the Citi AAdvantage credit card because of the bonus miles. But I don’t think I would earn enough year-to-year to justify the annual fee. But that fee is waived for the first year. I haven’t found anything in the fine print that says I can’t get the bonus miles, accumulate some more in the first year and then close the card before a year is up.

Am I missing anything that would prevent me from getting those miles and getting out before the annual fee kicks in?

You are absolutely correct. Although banks would prefer you to keep a card for many years, there is nothing preventing you from canceling if you change your mind about the card and would like to cancel it before the first year is up.