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10 UK travel credit cards hike their interest rates sharply

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I was updating the credit card database page on Head for Points yesterday and noticed some shocking changes to the interest rates charged on many popular travel credit cards.

Since the EU capped credit card interchange fees at 0.3% in December, it has become hugely difficult to make money out of average spenders.  Whilst travel credit card holders are wealthier than average, this means that very few of them pay interest.

The upside, as I was told at the credit card conference I attended earlier in the year, is that when they do pay interest, they are paying it on a larger than average balance.

UK Rewards credit and charge cards

Here are the changes I noticed yesterday on a range of free cards.  The rates quoted are for new applicants and may not necessarily have been imposed on existing cardholders:

American Airlines American Express and Visa (MBNA) – up 5% to 22.9%

Emirates Skywards American Express and Visa (MBNA) – up 5% to 22.9%

Etihad Guest American Express and Visa (MBNA) – up 4% to 22.9%

HSBC Premier MasterCard (HSBC) – up 7% to 18.9%

Lufthansa Miles & More American Express and Visa – up 6% to 22.9%

United MileagePlus American Express and Visa – up 4% to 22.9%

Virgin Atlantic White American Express and Visa (MBNA) – up 5% to 22.9%

Where these cards have a paid version (Emirates, Virgin) those have also gone up by just over 5%.

Marriott Rewards has also increased the rate on its MasterCard but that card is not currently available to new applicants.

In the short term, as card issuers are tied into contracts with the airlines, ramping up interest rates is the only weapon they have.  Changes in annual fees or earning rates would require contract renegotiation – but those will be coming too over the next couple of years as deals are renewed.

Want to earn more points from credit cards? – September 2021 update

If you are looking to apply for a new credit or charge card, here are our September 2021 recommendations based on the current sign-up bonus

You can see our full directory of all UK cards which earn airline or hotel points here.

The following offers will expire on 2nd November 2021:

  • 10,000 Avios on British Airways American Express
  • 40,000 Avios on British Airways American Express Premium Plus
  • 60,000 points on The Platinum Card from American Express

Here are the top current deals:

British Airways BA Amex American Express card

British Airways American Express

10,000 Avios for signing up, no annual fee and an Economy 241 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

40,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

Nectar American Express

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

60,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

15,000 points bonus and the most generous non-Amex for day to day spending 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.

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

60,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company 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 Credit Card

1% cashback and no annual fee Read our full review

Comments (68)

  • Will says:

    The ruling makes pretty good sense, the Visa/MasterCard System doesn’t provide sufficient competition to keep card rates as low as they should be.

    Visa/MasterCard have market share positions that are in reality a license to print money at the expense of the customer.

    For example in 2015 Visa had a net income of $1.5bn on $3.3bn revenue.

    That’s extraordinary for such a simple company. I’d rather make my money that way than designing and manufacturing jet engines for example – compare to Rolls Royce accounts of £0.8bn net income on £13bn revenue.

    It’s about time credit cards were restrained, from balance transfers on unsecured debt to incentivising customers using them to get “free” points and rewards, it’s all just a big distraction to encourage excessive usage.

    If alcohol companies were giving avios on per unit of alcohol sold people would be up in arms, credit card debt can be as dangerous to a persons finances as alcohol can to their health.

    • Alex W says:

      Well you get Heathrow rewards points on duty free, or Avios in the BA High Life shop!

    • RIccati says:

      I say, it is nether the place or the role of the government to care about the profits and business model of Visa/Mastercard.

      The role of the government is to create and incentivise the environment where competition arises (from small and big players such as Apple Pay and alike). If you want to cut costs — let companies to have direct debit like access to bank accounts and be done with Visa/Mastercard.

      • Genghis says:

        I think the gov’t needs to do more to educate adults on how to handle finances. MSE does a great job but and kids are being taught about finances at school. People need to realise that they can’t live beyond their means and rack up expensive credit card debts

        • RIccati says:

          But this has nothing to do with interchange cap regulation.

          In fact, there is a lot of vested interest — the government/regulators don’t like complexity and pretty much everyone preferring people to use debit cards.

          • Genghis says:

            But it has got a lot to do with the less well off paying interest on credit card balances

      • Rob says:

        Apple Pay still feeds through the Visa / MC interchange platforms though. What we need is for Apple and Google to create their own integrated payment platforms – it is totally feasible given that these companies throw off huge amounts of cash which could be used as ‘float’.

        • Will says:

          Yes, and you can see with PayPal (who are akin to worldpay in the chain and still use Visa / MC interchange) how
          1. The access to card processing can be made widely available with no subscription
          2. The fees associated with processing can be realistic.

          It will be interesting to see if PayPal processing fees now change with the cap on Visa/MasterCard.

  • lee says:

    looking for clarification on upgrading from amex gold to plat anex that you still get 20k rewards for spending 1k within 3 months , is it possible to upgrade the card then spend the 1k straight away then they say it can take 60 days to add the points this would leave just over 2 months of paying the plat amex fee then i could cancel my card all together then re apply within 6 months is this correct ? And also im i allegible for the points if i upgrade if ive only had my gold card 3 months so far ?

    • Genghis says:

      You should be eligible. Give it a go. After spending the £1k, points post within a few days so you should be able to cancel then for a quick 20k MR points.

      • lee says:

        Can u cancel as soon as you reach the the 1k spend ? or do you wait till they deposit them in your rewards acc , also how long do they take in average to deposit the points ?

        • Genghis says:

          Wait until deposited in your rewards account. Takes a few days after hit spend. IIRC Tilly71 had same experience. Set up your transfer out details while hitting spend. Then you can do a transfer out and then cancel

    • Jonny says:

      yep the points should hit very soon after the relevant transaction (i.e. at the same time as the points from the transaction itself hit). i just benefited from this myself in a similar manner.
      fine to cancel after transferring the points away (though probably best to wait until they reach their destination to be safe)

  • Johnnycl says:

    So do we know when current contracts with airlines/hotels are due for renegotiation? If we have an idea of timings it could be worth taking out a card on the current earnings scheme in case they offer locked-in benefits on a grandfathered basis.

    It will be interesting to see what the first mover does and see the precedent be set.

  • Zander says:

    I’m surprised to see that the fee cards of Emirates and Virgin have also had an interest rate hike, you would’ve thought that they may get away with the same interest rate but no. I’ll have to wait until the contracts come up for renewal to see if benefits change, I’d like status with the fee Emirates card but that’s probably pushing it!

  • World Traveller says:

    I spotted this in Thursday’s Evening Standard:

    “Also buried deep in the Tesco figures: A Brussels clampdown on prices charged by credit card companies to their corporate customers is costing Tesco Bank dear in commissions. Tesco Bank saw it’s operating profits fall 14% to £162 million largely as a result of the impact on new rules imposed in December had on MasterCard.That’s £26 million in pure profit going from Tesco Bank to businesses taking card payments, and as Tesco says, that’s only the start of it; the full impact won’t be felt until the next financial year.”

    • Rob says:

      Given that the rules didn’t kick in until December that is quite a hit.

    • Genghis says:

      So Tesco Bank’s OP has fallen due to the interchange cap. How has the rest of the Group been affected? Surely OP has increased a fair bit.

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