Pros: A way for some cardholders to get free air travel, good customer service.
Cons: $50 annual fee, 19% interest rate, 2% "greed" fee on foreign purchases, etc.
For some reason, people love to get airline miles as a reward for credit card usage, and who am I to argue? My domestic partner has a Citibank AAdvantage MasterCard which she uses for all her purchases.
The only outstanding feature of this card is that it gives one American Airlines AAdvantage mile for every dollar of purchases. The other features--billing statements, customer service, and extras like travel insurance--are comparable to most other major fee and no fee Visa and MasterCard accounts.
This card carries a high $50 annual fee. In addition, it charges 18.9% interest on purchases and 19.99% (that's right, 20 %) interest on cash advances, both of which are truly outrageous. Anyone with good credit can get a card with an ongoing (not introductory) rates five points lower. In addition, the charge for transgressions like exceeding one's credit limit, although pretty standard for the industry, is around $30.
One More Well Hidden Disadvantage
When you use this card to make purchases in foreign countries, the international MasterCard association converts the charge to US dollars and adds a 1% "currency exchange" fee. CitiBank tacks on another 2%, but doesn't do anything to earn it. All of this is hidden from you because the billing statement only shows the foreign currency amount you charged and the US dollar amount they are charging you but does not itemize the actual currency exchange rate, the MasterCard association fee, and the CitiBank fee.
For a complete discussion of this type of gouging, see my epinion on How credit card issuers get greedy on foreign transactions at your expense . It contains a list of credit card issuers that do and do not charge this extra amount on foreign purchases.
Who Should and Shouldn't Get This Card
Most people would be better off with a no-fee credit card that charges a much lower interest rate, but this card may be useful to you if you want to collect AAdvantage miles, if the value of the miles you will collect is greater than the $50 annual fee, and if you avoid interest charges by paying off your bill in full every month. In order to justify the $50 fee, you probably need to charge at least $25,000 per year on this card.
If you normally carry a balance on your credit card, the CitiBank card is not for you because the annual fee plus high interest rates more than offset the value of the airline miles.
Furthermore, if you are planning to travel outside the US, look into getting a credit card that does not charge the extra 2% fee mentioned above.
As a general caution, you should never use any credit card to obtain cash advances because you start paying a very high interest rate the moment you get the cash. Instead, use a debit, check, or ATM card. This is especially true for the AAdvantage card, because the interest rate on cash advances is 20%.
For my review of a card that doesnt charge the extra 2% on foreign transactions, click here.