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.
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? – December 2020 update
If you are looking to apply for a new credit or charge card, here are my December 2020 recommendations based on the current sign-up bonus.
British Airways American Express
5,000 Avios for signing up, no annual and a companion voucher for spending £20,000 Read our full review
British Airways American Express Premium Plus
25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review
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
The Platinum Card from American Express
30,000 points and an unbeatable set of travel benefits – for a fee Read our full review
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:
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
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
Earn both Avios and BA On Business points with your business spending 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
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.