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 purely for the sign-up bonus, 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)
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 5.85% 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 Honors 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. Representative APR 18.9% variable.
SILVER! £205 ‘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. Representative APR 59.3% variable including fee based on a notional £1200 credit limit.
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.
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, so net cost of £150.
Most importantly, though, you will retain your Starwood Preferred Guest Gold card, Club Carlson Gold card, Melia Rewards Gold, Shangri-La Jade and Hilton Honors Gold cards for a full 12 months, even if you cancel. This adds substantial extra value to the package.
£135 ‘free money’ – British Airways American Express Premium Plus
18,000 Avios points (£180 assuming 1p per Avios achieved), £195 fee but £150 fee refund if cancelled after four months so net cost of £45. £3,000 spend in 3 months required. Representative APR 76.0% variable including £195 fee based on a notional £1200 credit limit. Interest rate on purchases 22.9% variable.
£110 ‘free money’ – Virgin Atlantic Black Amex and Visa
25,000 miles (£250 based on achieving 1p per mile) bonus, £140 fee. This is a special offer which runs until 3rd April. Representative APR 57.4% variable including fee based on a £1200 credit limit.
£100 ‘free money’ – Virgin Atlantic White Amex and Visa
10,000 miles (£100 based on achieving 1p per mile) bonus, no fee. This is a special offer which runs until 3rd April. Representative APR 22.9% variable.
£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, but worth up to 1.5p if used for hotel rooms), £75 fee but £50 fee refund if cancelled after 4 months so net cost of £25. £1,000 spend in 3 months required. Representative APR 36.2% variable including fee based on a notional £1200 credit limit.
£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. Representative APR 22.9% variable.
£50 ‘free money’ – Etihad Guest American Express & Visa
5,000 Etihad Guest miles (£50 based on achieving 1p per mile) and no annual fee. You receive 5,000 miles when you spend £250 within 90 days. However, it is impossible to get this value from the miles unless you are adding them to an existing balance. Representative APR 22.9% variable.
£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. Representative APR 18.9% variable.
£50 ‘free money’ – Emirates Skywards American Express and Visa
5,000 miles (£50 based on achieving 1p per mile) bonus with your first purchase. No fee. Representative APR 22.9% variable.
£30 ‘free money’ – British Airways American Express
3,000 Avios (£30 based on achieving 1p per mile) bonus, no fee. £500 spend within 3 months required. Representative APR 22.9% variable.
£15 ‘free money’ – Lufthansa Miles & More American Express and Visa
1,500 Miles & More miles (£15 based on achieving 1p per mile) with your first purchase. No fee. However, it is impossible to get this value from the miles unless adding them to an existing balance. Representative APR 22.9% variable.
(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, Lloyds Avios Rewards card and Tesco cards currently have no bonus. The Emirates Elite card has a bonus worth less than the non-refundable fee.)
If there is anything to learn from this bit of fun, I suppose it is this:
If you and your partner took out 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. 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 Honors card, you would get two free nights which would make a great long weekend.
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.