New United/Chase 'Mileage Plus Visa Card' a disappointment

With its new "Choices" credit card program, the United Airlines/Chase Bank "Mileage Plus Visa Card" joins the industry trend toward bank-buys award tickets as an alternative to conventional frequent flyer miles. Given travelers' growing disillusion with conventional frequent flyer rewards, the move is understandable. Unfortunately, the new program is stingier than several of its more prominent rivals.

Starting with last January's billing, cardholders now receive one "Choice" per dollar purchased on their Mileage Plus card rather than one mile. You can use these Choices to arrange United tickets—for any available seat—as well as hotel rooms, rental cars, enrollment in Economy Plus Access, or to buy up to 5,000 elite-qualifying miles. Presumably, the program will add additional options later.

In effect, United/Chase is joining American Express, Capital One, Diners Club, and a bunch of other credit cards in offering a "bank buys" frequent flyer program. Simply put, you accumulate points with the bank, and when you have enough for a given seat or other reward, the bank buys it for you. The advantage over regular frequent flyer points is that if a seat is available, you get it, in contrast to trying to find one of the very few seats airlines allocate for frequent flyer miles. The disadvantages are that on most programs, you can't combine those bank points with the miles you earn by flying and you can't use the bank points at all for upgrades. Plus, you need so many of them to buy premium seats that, in effect, you can't use them for business- or first-class travel.

If you prefer the old mile system, rest easy: You can still use your Choices as miles if you want to try for award seats, upgrades, or premium-class seats. Choices isn't unique in that regard; the recently updated Diners Club "Club Rewards" program also gives you the choice of using your credit for bank-buys tickets or airline miles, as does a slightly different system with American Express "Membership Rewards." But other bank-buys programs, including Capital One's, do not give you that choice.

Although Choices is similar to other bank-buys programs, it's stingier. For air tickets, the conversion is basically one cent per Choice. In the example United uses in its publicity, you need 12,900 Choices to buy a ticket for $129. On the surface, that looks good, given that you usually need 25,000 miles for a domestic round-trip. But the example is somewhat disingenuous: You can't buy many useful United tickets for as little as $129 round-trip. A ticket from Chicago to Las Vegas, for example, would currently require almost 30,000 Choices.

The "exchange rate" is even lower for non-airline awards: 15,000 Choices for a $120 hotel room, for example, or 7,500 Choices for a $60 car rental. In effect, each Choice is worth only 0.8 cents. And you can spend Choices only through United.com.

The closest parallel program, Diners Club, is significantly more generous. When applied toward any travel purchase, a Diners Club point is worth 1.25 cents. And you can buy your ticket anywhere, including discount outlets, as long as you use your Diners Club card. Or you can still convert your Club Rewards points to miles in the frequent flyer programs of 21 airlines—fewer than last year, but still a good list. Instead of giving you a bonus on the conversion, Capital One gives 1.25 points (more for a few purchases) per dollar, but the result is the same.

Given how tough it is to find frequent flyer award seats for old-style miles these days, I'm not at all surprised that United/Chase has opted to add a bank-buys option. You can expect similar moves from other big airline/bank combinations. However, you can hope that, when they do, they'll be more generous than United's stingy program. For now, if you want bank-buys tickets, you're likely to find Diners Club, American Express, and Capital One to be better options than Choices.