The future of loyalty credit cards is here and it’s not a pretty sight

MBNA launched a new rewards credit card yesterday.  This is not a travel rewards card.  The reason I am writing about it is that it shows you what the future of free non-Amex reward credit cards will be like.

To put this card into context, you need to remember that MBNA has historically been the most generous player in the market when it comes to credit card sign-up bonus.  Back in 2013 it offered 35,000 American Airlines miles with the FREE UK AA cards.  As late as September 2015 it was offering 25,000 Etihad Guest miles with the FREE UK Etihad cards.

What is fascinating about this card is that it is possibly the first brand new free UK rewards card launched since interchange fees were cut to 0.3% last December.   It is a sign of what the card companies can now afford, and a sign of what you will see on existing cards once the current contracts expire.

The new card is targetted as customers of intu shopping centres across the UK.

The first thing to notice is that it only comes as a Mastercard.  

Historically MBNA has offered double packs of Amex and Visa / Mastercard products with higher rewards on the Amex card.  This is now dead because third-party Amex cards (ie MBNA, Lloyds, Barclays ones) are subject to the same 0.3% fee cap as Visa and Mastercard.

American Express is believed to be in the process of cancelling its licensing agreements with MBNA etc since those contracts are now pointless.

The second point to note is that the rewards are unexciting.  

This is what you get back from Year 2:

a £10 intu Gift Card when you spend £3,000 on card purchases
an additional £10 intu Gift Card when you reach £5,000 on card purchases

The best possible return you can get is 0.4%.  However, in order to achieve 0.4%, you need to stop spending on the card as soon as you hit £5,000.  The more you spend above £5,000, the lower your overall return will be.

These rewards are doubled in Year 1 but that is just a way of making the sign-up deal sound more interesting.

The third thing to note is that the card has a lot of soft offers which cost MBNA nothing.

These include one year of Gourmet Society membership, 30% off main courses at Pizza Express and free buggy hire at Intu shopping centres.

On the positive side, it is worth noting that the interest rate – at 16.9% – is lower than the 22.9% which is now charged on most of the MBNA airline cards.

Conclusion

This package – a maximum return of 0.4% on your spending and, realistically for most cardholders, less – is the best that MBNA thinks it can afford in the new credit card world.

Coming from the company that brought you hugely aggressive sign-up bonuses in the past, it is a vision of where all rewards card, including airline ones, will end up when the current contracts come up for renewal.

Want to earn more points from credit cards? – December 2021 update

If you are looking to apply for a new credit or charge card, here are our November 2021 recommendations based on the current sign-up bonus. 

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the top current deals:

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers.

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending:

Barclaycard Select Cashback Credit Card

1% cashback and no annual fee Read our full review