What would a new British Airways credit card look like in the 0.3% interchange fee world?
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Last weekend I discussed the closure to new applicants of the IHG Rewards Club Visa credit cards, issued by Barclaycard.
I used the article to examine strategies that credit card companies may now use to make their products attractive, given that it is now virtually impossible to make any money off your purchases (0.3% merchant fees don’t get you far) and that loyalty credit card holders rarely pay interest.
In the new credit card environment, this is what I think you need:
an annual fee, unfortunately
some benefits provided by the travel company, partly funded by the annual fee and partly funded by their desire to keep their logo in your wallet
an incentive to put a significant amount of expenditure through the card
a relatively modest earning rate day to day
I began to think what a new super premium British Airways American Express card would look like.
Would it even be an American Express card? With Amex interchange fees now capped at 0.3% on their co-branded cards, BA gets all of the downside of limited Amex acceptance with none of the upside that comes from fatter fees. Unfortunately, a new IAG-wide Amex deal has only recently been agreed.
The British Airways Premium Plus card is probably the most successful travel card in the UK. This is not just because of the BA link – it is because of the 2-4-1 voucher that comes with it. No other airline has had the nerve to match it. Some, slightly pathetically, have pretended to introduce equivalent 2-4-1 vouchers (looking at you, Virgin and Emirates) but these are virtually impossible to redeem for practical or financial reasons.
So, where would we go with a new card?
Let’s call it the British Airways Even More Premium American Express.
These are my initial thoughts. My card would, by definition, be very exclusive because – frankly – the market doesn’t want modest spenders now. Put £500 per month on your credit card and it only generates £1.50 of interchange fee. That hardly covers the cost of posting your statement and handling your payment, let alone the cost of lending you money interest free for up to 56 days and paying for some miles.
I want a simple but compelling package for my new card. How about:
an annual fee of £300
1.5 Avios per £1 (with the free BA card cut to 0.5 Avios per £1 and the Premium Plus cut to 1 Avios per £1)
a 2-4-1 voucher at £10,000 of spend, as now
British Airways Executive Club Bronze status for free as long as you hold the card
British Airways Executive Club Silver status if you spend £20,000 within a card year
There are obvious snags with my card, of course:
It has no attraction at all to current Silver or Gold card holders – we would need to know what % of current BAPP cardholders were Silver or Gold first. If it was 20% or less, which it probably is, it would still leave a large potential market for this product.
How would it fit with your British Airways membership year? If you hit Silver in the first month of your membership year you get 26 months of status. Hit it in the last month and you only get 16 months. There would be a skill in lining up your Amex card year and membership year to best advantage. On the other hand, if you were confident that you could hit £20,000 of spend every year then it wouldn’t matter as you would retain permanent Silver status regardless.
BA would lose revenue from passengers who no longer need to chase tier points – but would gain some from people who move travel to BA because they would now have lounge access. In particular, it may win back customers who walked away after the tier point changes last year made it virtually impossible to gain Silver with just short haul flights.
I’d love to add 0% foreign exchange fees to my card benefits but that is hugely unlikely. It is the only way apart from the fee that the issuer would make any money from me.
There is nothing clever or complex about my card. That was done on purpose. The easier it is to understand, the more it will appeal.
I would get such a card if it existed. Spending the £20,000 would be possible and my vanity would encourage me to pay £300 to get a permanent British Airways Silver card. This is despite the fact that I rarely fly Economy anyway – but the benefit of free seat selection would mean it pays for itself.
If you have any ideas for your own new BA card – remembering that the benefits need to be funded from a paltry interchange fee and the annual fee – please share them below.
Want to earn more points from credit cards? – April 2024 update
If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
Barclaycard Avios Plus Mastercard
Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review
Barclaycard Avios Mastercard
5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review
You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.
British Airways American Express Premium Plus
25,000 Avios and the famous annual 2-4-1 voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review
The Platinum Card from American Express
40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 bonus points and 1.5 points for every £1 you spend 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:
SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.
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
American Express Business Platinum
40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review
American Express Business Gold
20,000 points sign-up bonus and FREE for a year Read our full review
Capital on Tap Business Rewards Visa
Huge 30,000 points bonus until 12th May 2024 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 Business Credit Card
1% cashback uncapped* on all your business spending (T&C apply) Read our full review
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