The future of loyalty credit cards is here and it’s not a pretty sight

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.

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.

Conclusion

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.

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Want to earn more points from credit cards? – December 2023 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:

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.

SPECIAL OFFER: Until 9th January 2024, you will receive 30,000 Membership Rewards points (convertible to 30,000 Avios) with American Express Preferred Rewards Gold. You receive 25,000 points if you spend £3,000 in three months and a further 5,000 points if you hold the card for 15 months. You can apply here.

SPECIAL OFFER: Until 9th January 2024, you will receive a huge 100,000 Membership Rewards points (convertible to 100,000 Avios) with The Platinum Card. You receive 75,000 points if you spend £10,000 in six months and a further 25,000 points if you hold the card for 15 months. You can apply here.

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:

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.