Continental & United Airlines Credit Card Strategy

December 19, 2011 By Million Mile Secrets

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I’m getting lots of questions on the Continental One Pass Plus credit card via email (should I apply for it and when to cancel existing Continental credit cards).

A lot of readers are also receiving targeted offers for a 60,000 miles United or Continental card, and are wondering whether they should apply for the card, so I thought I’d write a post on it.

Background

As many of you know, Continental airlines is merging with United and soon the Continental credit card along with its sign-on bonus (40,000 miles or 60,000 miles if you’re lucky and received a targeted offer) will disappear.

But by applying for the Continental credit card while it is still around will get you extra Continental miles which will soon be United miles.

United miles are very valuable because United is a member of the largest airline alliance, the Star Alliance which usually has great award seat availability.

Chase *sigh* issues both the Continental and United credit cards so you most likely will not be approved for both the personal Continental and United card at the same time.

Also the terms and conditions for the United Explorer card says:

” United Mileage Plus Explorer cardmembers will only receive one 25,000 bonus miles award if they apply for both the United Explorer Card and the Continental OnePass Plus Card after 7/19/2011″

This suggests that applying for both the United Explorer and Continental OnePass Plus card will net you only ONE sign-on bonus.

And for added drama, there have been rumors of an untargeted and improved United credit card offer since September.

I don’t have any inside information, but I do see why a United credit card with a higher-than-usual sign-on bonus would be just what the marketing and PR folks want when they publicly announce the completion of the United and Continental merger early next year.

Different Scenarios

I’m going to discuss a few different scenarios or options you may have with the targeted and untargeted United and Continental credit cards and discuss the advantages and disadvantages of each scenario.

Scenario 1. I received a targeted offer for the personal United Explorer card with up to 60,000 bonus miles. Should I apply?

There is a targeted offer (sent to only a few people) for both the Continental OnePass and United Explorer card which offers 50,000 miles after using the card once and another 10,000 miles after spending $10,000 within 1 calendar year (for a total of 60,000 miles).

This is much better than the untargeted versions which offers 25,000 miles after using your card once, 5,000 miles for adding an authorized user and another 10,000 miles after spending $10,000 within 1 calendar year (for a total of 40,000 miles).

That’s because you you earn an easy 50,000 miles after just one purchase with the targeted offer versus only 30,000 miles with the untargeted offer after making 1 purchase and adding an authorized user.

If you don’t have the United Explorer card, 50,000 miles after the 1st purchase is, in my opinion, a pretty good deal.

This is the largest sign-on bonus for a United credit card which I can remember (please comment if you know otherwise!). The only risk is that Chase may have a higher sign-on bonus for the United Explorer card later on, and you would be ineligible to get that bonus since Chase lets you get the sign-on bonus only once per card-type.

But that’s the risk with every Chase credit card.

Scenario 2. I received a targeted offer for the personal Continental One Pass Plus card with up to 60,000 bonus miles. Should I apply?

Just like the targeted United offer, 50,000 Continental miles after your 1st purchase (which will eventually be United miles) is a much better deal than the regular offer of 30,000 miles after your 1st purchase and adding an authorized user.

The 2 risk which I see are:

1. Cancelling the card quickly. Assuming you apply for the card today, you’ll get the card within 10 days and your 1st statement (and the 50,000 Continental miles) will post to your account in another 21 days.

So by the 3rd or 4th week of January 2012, you’ll have to decide whether to cancel the card in order to prevent the Continental OnePass card from converting to the United Mileage Plus Explorer (once the merger between Continental or United is complete) or to let the card convert to the United Explorer card. If you cancel the card before it converts to the United Explorer card, you could apply for the United Explorer card later on and get the sign on bonus again.

But if you cancel the card as soon as you get the miles, you run the risk of being blacklisted by Chase and never getting to apply for another Chase card.

Some of you will find this risk acceptable for an extra 60,000 miles and some of you won’t.

Personally, if I had never cancelled a Chase card 8 to 9 months after getting it, I wouldn’t mind cancelling the Continental card within a few months since I could always explain why I cancelled the card. For example, “My partner hates United and we’ll never fly United, so I have to cancel the card before it converts to the United card.”

But I’d be much more cautious if I had a history of cancelling cards soon after the sign-on bonus posted, since that would suggest a trend of applying for cards only for the sign-on bonus.

2. Not being able to get the sign-on bonus for the United Explorer card.

The terms in the United Mileage Plus card say that you can’t get the sign-on bonus for both the United Mileage Plus card and for the Continental One Pass card if you apply after July 19, 2011.

“United Mileage Plus Explorer cardmembers will only receive one 50,000 bonus miles award if they apply for both the United Explorer Card and the Continental OnePass Plus Card after 7/19/2011″

I don’t have any personal experience whether this is actually enforced, but you should know that there is a risk that you won’t be able to get the sign-on bonus for the United Explorer card.

However, if you’ve been targeted for the Continental One Pass card with 60,000 miles it may make sense to apply for the card since the current best offer for both the United and Continental card is 40,000 miles.

Please share your comments if you have any personal experience with getting the sign-on bonus for both the United and Continental credit cards after July 19, 2011.

Scenario 3. Should I apply for the untargeted Chase Continental One Pass card before it converts to the United Explorer card?

Per the terms & conditions of the United Explorer card, if you apply for the Chase Continental One Pass after July 19, 2011, you’re not eligible for the sign-up bonus on the United Explorer card.

Now, this could be put in the terms & conditions to deter folks from applying for both cards, or Chase could be serious and actually track if you’ve applied for both cards and award you only 1 sign-on bonus.

Again, you’re going to have to determine if the risk and the credit inquiry (you get a hard credit inquiry each time you apply for credit) is worth it to you.

The bigger issue for me is cancelling the Continental OnePass card soon after you get the sign-on bonus (to prevent it from converting to the United Explorer card which may send a red flag to Chase). If you’ve never cancelled a Chase credit card quickly, you may be able to explain why you cancelled it so soon, but I don’t have any personal experience, since I wait at least 6 months before cancelling a Chase credit card.

Scenario 4. Should I apply for the untargeted Chase United Explorer card now?

I wouldn’t apply for this card, because 30,000 miles (after your 1st transaction and for adding an extra card user) isn’t a great sign-on bonus.

Much better to wait for a better offer than to apply for a mediocre offer now, especially since you can get the sign-on bonus only once per card type.

The only reason I’d apply for the Chase United Explorer card now is to take advantage of the 1 free checked bag which is a $50 value per round trip ticket.

But since you’re giving up a potentially higher sign-on bonus of 50,000 miles you should factor in how much you’d save in checked bag fees compared to the lower sign-on bonus.

Other benefits of the United Explorer card are being able to get upgrades (if you are an elite member) on award tickets and last seat award availability at double the regular mileage redemption level.

Scenario 5. I have a Continental One Pass personal and/or business credit card which was issued before July 19, 2011. Should I cancel the card?

Yes, because once your Continental card is converted to the United Explorer card, you won’t be able to get the sign-on bonus for the United Explorer card again.

If you have an upcoming Chase application in the next few months, you could call the Chase reconsideration line and offer (strongly suggest!) to either transfer the credit line from your existing Continental credit card or close your existing Continental personal or business card to get approved for a new Chase credit card.

Bottom Line:

I don’t see the point in applying for the untargeted 40,000 mile United Explorer card since there will almost certainly be a higher sign-on bonus later on.

If you’ve received a targeted offer for the 60,000 mile United or Continental card, it makes sense to jump on those now since you get the 1st 50,000 miles after only making 1 purchase!

And if you’ve got an existing Continental card before July 19, 2011, it makes sense to cancel or trade the credit line on that card for another Chase credit card before the Continental card is converted to the United Explorer card. Because that way you’ve got a good shot at getting the sign-on bonus for the United Explorer card.

Please comment if you have any personal experience with getting the sign-on bonus for both the United and Continental credit cards after July 19, 2011.

I’m traveling so won’t be able to get to comments quickly, and still have other email and comments to get to. But I’ll get to them by the end of this week!

Disclosure: I don’t get paid for any of the links to credit cards in the above post.