Arriving today in a shiny large envelop was an offer to “enjoy a better travel experience”, or rather an offer for the Citi American Airlines AAdvantage credit card, or rather an offer to go into debt.
This unoriginal offer features a bonus 50,000 miles for those who spend $3,000 in the first three months. Sound familiar? This truly is an unfeasible bonus that most credit card holders cannot nor should not achieve.
The card requires a $95 annual fee. But have no fear, this fee is waived for the first twelve months.
The reward amount is one mile per $1 spent, with the exception of some eligible American Airlines purchases, which then earn two miles per $1 spent. The offer, however, conveniently stated this in reverse order with some strategic bolding, making it seem as though you would earn two miles per $1 spent.
So with a typical reward flight requiring 50,000 miles and the national average cost for a domestic U.S. flight in 2013 being $380, one would need to spend on average $12,500 on their credit card each year for four years to make the investment in the $95 annual fee worth it ($95 x 4 years = $380 = 1 flight = 50,000 miles = 12,500 miles x 4 years). But that’s just breaking even.
This credit card features various levels of Annual Percentage Rates (APR, 13.99%, 17.99% or 21.99%) based on creditworthiness. These rates are also tied to the market Prime Rate. The penalty rate for a late payment or a payment that is returned is 29.99% that applies INDEFINITELY.
If you really want to take that dream trip, I would instead recommend saving $50 per month for a year, which be $600 for a getaway. This gets you to your goal a much faster than four years with some money left for food and lodging.