Note: I started writing this post before reading that The Points Guy is considering signing up for this card. Brian, this one is for you:
At first blush, you would have to be insane to sign up for this card. It comes with a jaw dropping $450 annual fee which is not waived the first year! However, if you look a bit closer, you just might be swayed.
What you get for the annual fee (just the highlights):
MQMs:
The first year you have the card, you will be given 10,000 MQMs (Delta Medallion Qualifying Miles) after your first purchase. Since I’ve argued that the fair trading price for MQMs is about 3 cents each (see How much should you pay for elite qualifying miles), this signup bonus is worth at least $300
Sky Club Access:
Once you have this card, you and two guests can get into any Delta Sky Club. A Delta Sky Club membership costs between $300 and $450 (depending on your elite level). Personally, I would never pay for that, though. So, I would peg this benefit at about $150, but you should really judge for yourself how much it is worth to you.
Companion Certificate:
After the first year, when you renew the card, you receive a a free companion certificate. This will allow you to essentially buy two tickets to and from anywhere in the continental US for the price of one. Note two big downsides: the companion does not earn miles or MQMs and you and your companion will not be eligible for upgrades. I like to use these certificates on regional jets that don’t have first class anyway. Personally, I value this benefit at about $250.
Priority Upgrades
If you are on the upgrade list on a flight and other frequent fliers have the same status as you (e.g. Silver, Gold, Platinum, or Diamond) and they bought tickets in the same fare class as you, you will jump ahead of them because you hold this card. This benefit is unlikely to help you very often, but if you fly a lot it will probably be the difference between first class and coach at least once a year. I’ll call this one a $50 benefit (even though circumstances could make it worth much more).
Total benefits first year: $500
Total benefits ongoing years: $450
So, as you can see, the card pretty much pays for itself with its benefits. If you value the particular benefits listed above, you might want to seriously consider this card.
Benefits from Daily Spend
If you don’t spend a lot on this card, the benefits are minimal. You will earn one Delta Skymile per dollar on most purchases, and two Delta Skymiles per dollar on Delta purchases. Compared to several other cards, this is pretty lame. Where the card shines, though, is if you manage to put exactly $30K or $60K of spend on the card in a year:
Big Spend Benefits
Once you reach $30K in spend in a calendar year, you will be awarded with 15000 bonus miles and 15000 Medallion Qualifying Miles (MQMs) which will help you get to the next level of elite status at Delta. The same benefits kick in again at $60K of spend. So, if you manage to put exactly $30K or $60K of spending on your card each year, you will earn 1.5 SkyMiles and .5 MQMs per dollar spent. According to my Fair Trading Prices chart, SkyMiles trade at 1.29 cents each whereas MQMs trade at 3 cents each. This means that you would earn 1.29 * 1.5 + 3 * .5 = 3.435 cents of value per dollar spent on the card! This is really an outstanding rate of return for non-category spend (some cards offer better rates of return for spend within categories such as gas stations, grocery stores, etc.). Theoretically, you could spend $30K on Amex Gift cards by going through Big Crumbs to earn 1.6% cash back and increase your overall rate of return to about 5 cents per dollar! The more highly you value elite qualifying miles (MQMs), the more attractive this option is likely to be to you.
Conclusion
If you are a frequent Delta flyer and you value Sky Club access, this card is a good one to keep in your wallet or in a drawer. If you are also a big spender, this card is a surprisingly strong contender! Personally, I plan to use tricks for spending a lot of money and getting most of it back in order to spend $60K per year on this card!
Stay informed:
Follow me on Twitter / Like me on Facebook
Rebuttal:
MQMs) Far easier to wait for an AMEX transfer bonus that gives you MQMs as part of the deal. These are (almost) predictably occurring twice a year.
LOUNGE ACCESS) Sure, if you dont have AMEX plat or priority pass already, like most of us who read you already do…
COMPANION TICKET) Dude. *AFTER* the first year is the killer, which means you have to invest another 450 to get it. Compare to Alaska BofA $100 matching certificate.
DAILY SPEND: Hey, if you aren’t working on a sign-up bonus spend, you are doing something wrong! Thinking about daily spend is sooo “Level 1″, no? LOL!
FINALLY, what about sign up miles? For 450, they dont toss anything in whatsoever??
I was thinking the same thing as far as sign up bonus. After counting the value of the 10K MQMs from sign up and reducing it by the annual fee but you need to compare to the fair value of an alternative sign up bonus. This puts you back in the hole by $500 or so.
That’s true. This card cannot compete with others if your goal is to get signup bonuses. Instead, this is one to consider for spend benefits. The annual benefits just about break even with the annual fee. If you don’t highly value MQMs then there is no point.
Yes, but you’re assigning a value to the MQMs so you can still do the math. Isn’t that point of using fair trading values?
A better way to look at this is the card has a sign up bonus worth $300. It’s a little low compared to typical value of $500+.
It has an annual fee of $450, which is not paid for in the first year unless you want to count the value of the sign up bonus, but then you’re double counting.
HikerT: The way I look at is that the benefits pay for the annual fee (MQMs + Sky Club first year; Companion ticket + Sky Club ongoing years). In other words, I think of it as having a net zero signup bonus. So, I’m completely agreeing with you and bluecat in the assertion that, for credit card churning, this card is a loser. The value comes from spending $30K or $60K on the card and getting a better than average return for that spend. Also, I think that a lot of people would gladly pay more than 3 cents per mile for MQMs, which improves the value of the signup and the ongoing spend.
Agreed, you would have to spend 60K on the card to make up for the lost sign up bonus. If you value skymiles at 1.3 and MQMs at 3.0 then you would get $1680 of value from 60K of spend. Compare to using a 2% cash back card where you would get $1200 cash back. Extra value is $480 which is about the value of a sign up bonus.
I don’t consider the companion ticket to be an added benefit for this card. The Platinum AMEX provides the same companion ticket for $300 less in Annual Fee.
So basically, you’re paying an extra $300 in Annual Fee for all the other stuff that you mention in the article. Also, the Plat AMEX gets you 10k MQM after 25k in annual spending), so the added benefit of the reserve card is that you get 5k MQM for 5k additional spending (1 cent/MQM added benefit over the Platinum card)
HikerT: Yes, nice analysis! Plus, you can keep doing that year after year without additional hard pulls.
Steve: That’s all true. That’s why I have a Platinum Amex as well. The Platinum easily pays for itself (after the first year) with the companion ticket. The Reserve pays for itself if you value the other stuff (Sky Club, etc.). And, as you pointed out, the Reserve has a slightly better rate of return on high spend.
I still think the entire notion of “everyday spend” is an order of magnitude more complex than “working towards sign on bonus”. If you don’t believe me, look at today’s Dan’s deal posting where you basically need to carry a huge cheatsheet with you to know which card to use for which purchase! (Not a bad idea for an iPhone app, btw!) All of that is way too complex for all but the most nerdy among us.
SO..I contend that everyone should just *always* be working on a credit card signon bonus spend. If they have exhausted those, *then* they should consider whether or not a spend level bonus (like the BA Chase Visa) is worth it or just “default” to the Chase MR (or whatever) card.
BUT…if someone wants to publish a “cheatsheet” app (that can be tailored), I would gladly pay $5 for it!
I just reviewed HikerT’s analysis and realized that his calculation left out the 30K bonus miles you get with $60K of spend. With $60K spend, you would get a total of 90K redeemable miles and 30K MQMs. At 1.29 cents per redeemable mile, that is $1161 in value; and at 3 cents per MQM, that is $900 in value, for a total of $2061. Compared to $1200 you would get in cash back for that same amount of spend with a 2% cash back card, this card would give you $861 of value more!
Personally, I find the companion ticket to be worth far more than $250. I usually try to use it for my spouse and I to do cross-country holiday travel, in which case it is worth more in the neighborhood of $500.
[...] week I wrote an analysis of the Delta Reserve credit card. In that post I pointed out that the Reserve card has an excellent rate of return for daily [...]
I did an analysis of this card a while back. I carry it in my wallet.
Two important factors that aren’t fully highlighted here are that the (a) companion ticket is good for both economy and first class (or domestic “business”) tickets and (b) ongoing mqm bonuses are enough to keep pax at FO level on delta, or for delta flyers, bump them up a medallion category in most casts.
This card is the right card only for a small number of customers…but for those that it works for, it is very good.
http://www.sitinfirst.com/2011/10/amex-delta-reserve-card-just-right-for-certain-customers/
I’ll also add that redeeming the companion first class voucher has been extremely easy. It is capacity controlled, but not based on award seat availability – but rather based on A or D availability, which is much greater.
Thanks, didn’t realize the companion ticket was valid for first class. Nice! I’m really tempted to get this card for the upgrade priority now that I’ll be traveling more.
HikerT: Yep. I’ll update the original post with the info about using the companion ticket for first class.