(EDIT: This article was updated in October 2016)
Our ‘Credit Cards Update’ tab lists all of the card deals currently available. What I thought might be interesting, in very mercenary terms, 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?
These are objective calculations based on the following formula:
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)
If you want to check your credit record before applying for a new card, click here for a free 30-day trial of Equifax’s online credit report service. Note that a monthly fee of £14.95 will apply following the 30 day free trial of this product if you do not cancel within the trial period. You can cancel your subscription at any time.
Travel rewards credit cards have high interest rates and are not suitable for you if you do not clear your balance in full every month. You should focus on a credit card with a low interest rate such as the AA Low Rate Card. This has a very attractive representative APR of 6.4% variable on purchases and balance transfers.
Bring on the winners!
OK … here we go! Remember that 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.
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.
SILVER! £205 ‘free money’ – British Airways American Express Premium Plus
25,000 Avios points (£250 assuming 1p per Avios achieved), £195 fee but £150 fee refund if cancelled after four months. £3,000 spend in 3 months required.
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, assuming 1p per airline mile achieved) and £0 fee for the first year. £2,000 spend in 3 months required.
SILVER! £200 ‘free money’ – HSBC Premier World Elite MasterCard
40,000 Avios or other airline miles (£400 assuming 1p per Avios achieved) for spending £12,000 in your first year. £195 fee, non-refundable. Note that HSBC Premier has strict eligibility criteria.
BRONZE! £150 ‘free money’ – Etihad Guest American Express & Visa
15,000 Etihad Guest miles and no annual fee. You receive 5,000 miles when you spend £250 within 90 days and a further 10,000 miles when you spend £2,000 within 90 days. However, it is impossible to get this value from the miles unless you are adding them to an existing balance
BRONZE! £150 ‘free money’ – American Express Platinum
30,000 Membership Rewards points (worth £300 as gets you 30,000 airline miles, assuming 1p per airline mile achieved), £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, Melia Rewards Gold, Shangri-La Jade and Hilton HHonors Gold cards for a full 12 months, even if you cancel. This adds substantial extra value to the package.
£110 ‘free money’ – Virgin Atlantic Black Amex and Visa
25,000 miles (£250 based on achieving 1p per mile) bonus, £140 fee. Bonus posts after £3,000 of spending within three months.
£100 ‘free money’ – Lufthansa Miles & More American Express and Visa
10,000 Miles & More miles. You receive 1,500 miles with your first purchase and 8,500 miles when you spend £1,000 within 90 days. Valued at £100 assuming 1p per mile achieved. No fee. However, it is impossible to get this value from the miles unless adding them to an existing balance.
£90 ‘free money’ – British Airways American Express
9,000 Avios (£90 based on achieving 1p per mile) bonus, no fee. £1,000 spend within 3 months required.
£90 ‘free money’ – Virgin Atlantic White Amex and Visa
9,000 miles (£90 based on achieving 1p per mile) bonus, no fee. Bonus posts after £1,000 of spending within 3 months.
£75 ‘free money’ – Starwood Preferred Guest Amex
10,000 points (valued at £100 as good for 10,000 air miles, assuming 1p per mile achieved), £75 fee but £50 fee refund if cancelled after 4 months. £1,000 spend in 3 months required. If you have been targetted for the current 20,000 points offer then I would increase the value to £225 (20,000 SPG points = 25,000 airline miles = £250 – £25 fee for 3 months card fee).
£55 ‘free money’ – Marriott Rewards MasterCard (temporarily suspended for new applications)
10,000 points (22% of a top end £250 night), no fee. £200 spend within 6 months required.
£50 ‘free money’ – American Airlines AAdvantage Amex and Visa
5,000 miles (£50 based on achieving 1p per mile) bonus, no fee. Bonus triggers with first purchase.
£50 ‘free money’ – IHG Rewards Club MasterCard
10,000 points (20% of a top end £250 night), no fee. Bonus triggers with a £200 spend within 90 days. Alternatively, the IHG Rewards Club Premium MasterCard comes with £100-worth of points but has a £99 fee.
£50 ‘free money’ – Emirates Skywards American Express and Visa
5,000 miles (£120 based on achieving 1p per mile) bonus with your first purchase. No fee.
£21 ‘free money’ – Lloyds Avios Rewards American Express and MasterCard
4,500 Avios points are available if I refer you, you otherwise you get nothing! £24 annual fee. Email me at raffles [at] headforpoints.co.uk and I will send you a referral link.
(I did not consider the Flybe card in this analysis as the value of the ‘free’ flights offered by the card is difficult to calculate. The United Airlines card currently has no bonus. The Emirates Elite card has a bonus worth less than the non-refundable fee. There is no bonus on the TSB Avios cards or the Tesco Premium card.)
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 £1,200 of value between you based on my valuation model. 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.
Representative APR rates for the cards above can be found on our ‘Credit Cards Update’ page.
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. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.