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. You can find full details here.
The representative APR is 16.9% variable.
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.
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 miles and points from credit cards? Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the 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.