(EDIT: This article was updated in April 2014, the numbers are current as of 1 April)
It is almost a year since I last looked at this topic. There have been a lot of changes and new launches since then, so I thought it was a good time to re-run the analysis.
Our ‘Credit Cards Update’ tab lists all of the card deals currently available. What I thought might be interesting, though, would be to rank the sign-up bonuses in terms of cold hard cash. Put simply, if I get this card and cancel it quickly, how much value can I get?
This experiment is, of course, subjective. I have considered various factors:
The value of the sign-up bonus – see below for my methodology
The annual fee, if any
For Amex Platinum, BA Premium Plus Amex and SPG Amex, the fee refund if you cancel after a typical 4 months
Notes on valuation
The biggest question mark is over the value of the sign-up bonus. For hotel cards, I have valued points based on the number required for a top-end redemption which I value at £250 per night. The exception is Starwood, which makes high category awards disproportionately expensive.
For airline miles, I assume they are worth 1p each. I know that I generally use a 0.75p value for Avios, but you can get 1p easily with, for example, Reward Flight Saver short-haul redemptions.
(Of course, for airlines like Lufthansa where short-haul redemptions are bad value, a small amount of miles can be effectively worthless. In some programmes, you would need to already have a decent balance to get full value from the bonus miles.)
I have valued Amex Membership Rewards points at 1p, since they transfer 1:1 into airline miles and I am valuing those at 1p.
The ‘free money’ £ value I quote is therefore calculated as:
‘value of sign-up bonus’ minus ‘annual fee’ (for an Amex, I assume you cancel within 4 months for a 2/3rd fee rebate)
For the ease of simplicity, I have ignored in the £ calculations any referral bonuses or cashback available when you sign-up, except for the Tesco card where the referral bonus makes a material difference.
Bring on the winners!
OK … here we go! Remember that application links and full details on all the cards can be found on the ‘Credit Cards Update’ page.
This analysis does not include cards with no sign-up bonus, which is the why the Lloyds and TSB Avios cards do not appear.
GOLD! £250 ‘free money’ – Hilton HHonors Platinum Visa
Sign-up bonus of 1 free night in any Waldorf, Conrad, Hilton etc hotel (easily worth £250 if used well), no fee. £750 spend in 90 days required.
JOINT SILVER! £200 ‘free money’ – American Express Preferred Rewards Gold
20,000 Membership Rewards points (worth £200 if turned into 20,000 Avios or other airline miles) and £0 fee. £2,000 spend in 3 months required.
JOINT SILVER! £195 ‘free money’ – British Airways American Express Premium Plus
25,000 Avios (£250), £150 fee but £100 fee refund if cancelled after four months (although this may invalidate your 241 voucher if you have triggered it but not redeemed it). £3,000 spend in 3 months required. The 25,000 Avios offer ends on 21 May 2014.
JOINT BRONZE! £160 ‘free money’ – Virgin Atlantic Black Amex and Visa
30,000 miles (£300) bonus until 30th June 2014, £140 fee. £3,000 spend in 90 days required.
JOINT BRONZE! £150 ‘free money’ – American Airlines AAdvantage Amex and Visa
15,000 miles (£150) bonus until 31st May, no fee. £1,000 spend required within 90 days.
JOINT BRONZE (but effectively GOLD – see notes!) £150 ‘free money’ – American Express Platinum
30,000 Membership Rewards points if referred (worth £300 as gets you 30,000 airline miles), £450 fee but £300 fee refund if cancelled after 4 months.
Most importantly, though, you will retain your Starwood Preferred Guest Gold card, Club Carlson Gold card and Le Club Accorhotels Platinum card for a full 12 months, even if you cancel. This adds substantial extra value to the package.
£115 ‘free money’ – Lufthansa Miles & More American Express and Visa
11,500 Miles & More miles with your first purchase. This is a special offer until the end of May. No fee. However, it is impossible to get this value from the miles unless adding them to an existing balance.
£100 ‘free money’ – Virgin Atlantic White Amex and Visa
10,000 miles (£100) bonus until 30th June 2014, no fee. £1,000 spend in 90 days required.
£100 ‘free money’ – IHG Rewards Club Black Visa
40,000 points (80% of a top end £250 night), £99 fee. (This link is a special one which is better than the usual 20,000 points offer.) Bonus triggers on first purchase.
£90 ‘free money’ – British Airways American Express
9,000 Avios (£90) bonus, no fee. £1,000 spend within 3 months required. Offer ends 21 May 2014.
£75 ‘free money’ – Starwood Preferred Guest Amex
10,000 points (valued at £100 as good for 10,000 air miles), £75 fee but £50 fee refund if cancelled after 4 months. £1,000 spend in 3 months required.
£75 ‘free money’ – IHG Rewards Club Visa
15,000 points (30% of a top end £250 night), no fee. Bonus triggers on first purchase.
£55 ‘free money’ – Marriott Rewards MasterCard
10,000 points (22% of a top end £250 night), no fee. £200 spend within 6 months required.
£50 ‘free money’ - Etihad Guest American Express and Visa
5,000 miles (£50) bonus when you spend £250 in 90 days. No fee. However, it is impossible to get this value from the miles unless adding them to an existing balance. If you redeem for cash via PointsPay you will receive only £20.
£50 ‘free money’ - Emirates Skywards American Express and Visa
5,000 miles (£50) bonus when you make your first purchase. No fee. However, it is impossible to get this value from the miles unless adding them to an existing balance. If you redeem for easyJet flight credit you will receive just £20.
£25 ‘free money’ - Tesco Clubcard MasterCard
1,000 Clubcard points are available if I refer you, you otherwise you get nothing! These are worth 2,400 Avios or 2,500 Virgin Flying Club miles. No fee. (The referral can also be backdated with the Tesco card. If you have applied in the last 2-3 months, email me at raffles [at] headforpoints.co.uk and I will send you the relevant form.)
The sign-up bonus on the Emirates Skywards Elite cards does not cover the non-refundable annual fee, so there is no value to be gained in getting those cards and cancelling them quickly. The United cards currently have no sign up bonus so have been removed from this list.
(I did not consider the Flybe or Ryanair cards in this analysis as the value of the ‘free’ flights offered by the cards are difficult to calculate.)
If there is anything to learn from this bit of fun, I suppose it is this:
If you and your partner only ‘churned’ the best 3 credit cards each, you could get over £1,250 of value between you. That is certainly nothing to be sniffed at!
Secondly, do not underestimate the value of the hotel cards, especially for churning. Whilst a small number of airline miles has little value, a small number of hotel points can get you one night somewhere, and one night is often all you need. If you and your partner both applied for the Hilton card, you would get two free nights which would make a great long weekend.
Remember that I can refer you for the American Express Preferred Rewards Gold card if you are thinking of applying for that – you gain an extra 2,000 Membership Rewards points that way. (I can also refer you for the BA, Amex Platinum, Virgin, Starwood Amex and Tesco cards – see ‘Credit Cards Update’ for details.)
(Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.)