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Credit Card Rip-off Alert - New American Airlines Card

Credit card companies are notorious for marketing these "great deals" to lure you into applying for their credit cards. I was on a American Airlines flight this last week and the flight attendants were marketing the opportunity to earn 60,000 bonus rewards points that you can apply towards airline tickets. As I have always said, credit card rewards are best applied towards travel and quite frankly a credit card like American Airlines program can be a good deal....at least until this card came out. This was the new AADVANTAGE Aviator Red World Elite Mastercard. I will say one thing for sure. If you carry a balance on this card, you will see RED for sure!


The 60,000 travel points is awesome and easy to get. However, there are two big downsides to this card.


Interest rates - if you carry a balance or transfer a balance you get charged a minimum of 18.24% for good credit all of the way up to 27.24% for marginal credit. Don't they call interest rates that high penalty rates? Compared to a Pentagon Federal Travel Card whose rates start at good credit at 12% up to 17% for marginal credit. (link)


Just think of all of the airline tickets you could purchase from the savings from high penalty rates on this card with the difference between 27% and 17% interest?   


Annual Fee - They waive this during the first year. Afterwards, it is $99 a year. Just think if you leave that fee on your balance and get charged the highest rate, you will pay roughly $27 of interest on that first year. Now compared to the card above, it has no fee.


This card is not for those who want to carry a balance. However, if you want to beat the system, apply for the card, use the travel awards and then cancel before they start charging that annual fees. My disclaimer is that terms and conditions can change making even that strategy a bad deal. If enough people started beating the credit card companies at their own game, then I am sure they would figure out a way to close that loophole.  


Remember credit card companies are deceptive and are not in business to give you good deals. Based on the terms and conditions of this offer, they could easily give you 60,000 in travel points. Thus not a good deal.