How good is the Virgin Atlantic credit card?

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When researching my recent posts about using credit cards to pay taxes (here and here) I learned that the Virgin Atlantic American Express card offers promising potential for non-bonus spend.  Here are the details:

  • Earn 1.5 miles per dollar on all purchases
  • 7,500 anniversary Flying Club miles will be posted to your Flying Club account when you spend a minimum of $15,000 in net purchases within the anniversary year with your Virgin Atlantic Card.
  • An additional 7,500 anniversary Flying Club miles will be awarded when you spend $25,000 in net purchases within the anniversary year with your Virgin Atlantic Card.
  • Half price (in miles) companion economy award ticket will be awarded when you spend $25,000 in net purchases within the anniversary year with your Virgin Atlantic Card.

In addition to the standard award structure shown above, the Virgin Atlantic card offers 50,000 sign-up bonus miles:

  • 20,000 Flying Club bonus miles after your first retail purchase
  • 25,000 additional Flying Club bonus miles after you spend at least $2,500 in qualifying purchases
  • Earn up to 5,000 Flying Club bonus miles when you add additional authorized users to your Card

 

Adding it up

You can maximize point earnings by spending exactly $25K per year on this card.  Points would add up as follows:

  • Base earnings: $25K x 1.5 miles per dollar = 37,500 miles.
  • Anniversary miles: 7,500 miles for $15K spend + another 7,500 miles for $25K spend = 15,000 miles.
  • Sign-up bonus: 20K for first purchase + 25K for $2,500 spend + 5K for adding an authorized user = 50,000 miles.

The above calculations result in the following totals for $25K annual spend:

  • First year: 102,500 miles
  • Ongoing years: 52,500 miles

That means that, in addition to the 50K sign-up bonus, you will earn 2.1 miles per dollar on all card spend as long as you end your anniversary year with exactly $25K spend.

If you compare this card to a 2% cash back card, the 2.1X earning rate means that the opportunity cost of using this card to earn miles is less than 1 cent per mile.  That’s quite a bit better than any other mile earning card that I’m aware of.

2.1 miles per dollar for non-category spend is a terrific earning rate, but it is only worth it if the miles earned are valuable to you.  Are they?  Let’s take a quick look at using Virgin Atlantic miles…

Virgin Atlantic flight awards

Virgin Atlantic’s award chart, upon first glance, looks amazingly generous.  Here is a part of the chart (you can find the full chart here):

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The mile requirements shown above are round-trip prices.  So, for example, it costs only 35,000 miles to fly economy round trip from Chicago to London!  Given that most airlines charge 60,000 miles round trip for the same journey, that’s excellent!  Reality sets in when you examine the next column titled “Taxes & Carrier Imposed Fees”.  Fees such as $500 for economy, and $1300 for upper class are a bit steep for “free” flights!

In reality, the taxes & fees are not exactly the same as the amounts shown above.  For example, I ran an economy award search from Chicago to London and I was shown the following fees:

  • Chicago to London, round trip: 35,000 miles + $441.80 fees.
  • Chicago to London, one-way: 17,500 miles + $131.50 fees.
  • London to Chicago, one-way: 17,500 miles + $272.21 fees.

Two things are evident from these results: 1) Fees for flights to London are much cheaper than fees from London (you’ll find this pattern with virtually all carriers due to UK imposed departure taxes); and 2) Total fees for booking two one-way flights are slightly cheaper than booking a single round-trip.  Two one-way flights come to $403.71 in fees vs. $441.80 for the round-trip.

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The trick to maximizing the value of Virgin Atlantic miles on economy Virgin Atlantic flights seems to be to use the miles to fly to London, but find another way to return.  A great option is to use other airline miles for the return trip, preferably from a different European city (in order to avoid UK imposed departure taxes).  Miles that can be used for one-way return flights with low fees include American Airlines, United, or even British Airways Avios via one of their partners that charge lower fees.

Let’s look at the same flights in Upper Class:

  • Chicago to London, round trip: The system was unable to process my request even after multiple tries.
  • Chicago to London, one-way: 45,000 miles + $416.50 fees.
  • London to Chicago, one-way: 45,000 miles + $524.64 fees.

As you can see above, taxes and fees for Upper Class flights are quite steep regardless of whether you are flying to or from London.  Is it worth it?  To fly the same route on a Star Alliance flight in business class using United miles at the Saver level would cost 50,000 miles each way and $2.50 in fees for flights to London, and $284.10 in fees for the return.  So, with United miles you would spend an additional 5,000 miles each way, but you would save hundreds of dollars. 

A case can be made that Upper Class redemptions are a good deal because miles can be acquired cheaply and one can think of the taxes and fees as a huge discount over a full fare Upper Class flight.  That’s true, but the fact is that there are better deals for flying Upper Class / Business Class to Europe using miles from other programs.

Partner flight awards

Now that Delta is a co-owner of Virgin Atlantic, it is possible to redeem Virgin Atlantic miles on Delta flights.  Here is the award chart:

image

The award chart is very similar to Delta’s own award chart, so you won’t get outsized value in using Virgin Atlantic miles when flying Delta but it can still be a good use of those miles in the off chance that you can find award availability.

A more interesting partnership may be the one with Virgin America.  Here is the award chart showing round-trip award prices.  Note how inexpensive some of the shorter flights are!

image 

One Mile at a Time details the use of Virgin Atlantic miles on Virgin America flights here.

Other options

I’ve looked briefly at using Virgin Atlantic miles for miscellaneous other redemptions such as Eurostar trips, hotels, “Virgin Vouchers“, and more, but none of these options appeared to be great values.  Have you found any good alternative redemptions?

Conclusion

Thanks to the generous Bank of America Virgin Atlantic credit card, it is possible to accumulate Flying Club miles very inexpensively.  And, there are some excellent high-value uses of these miles such as short flights on Virgin America or coach flights on Virgin Atlantic to London.  There are also competitive redemptions available through the Delta partnership.  If you are sure you can make use of those high value and/or competitive redemptions, then this credit card is probably worth its place in your wallet.  For others, Virgin Atlantic miles are worth having to round out your portfolio of miles, but you probably wouldn’t want to think of Virgin Atlantic’s Flying Club as your primary go-to program.

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