Letters started to land on doormats yesterday from MBNA explaining what rewards scheme would apply to ex-bmi Diamond Club credit cards now that the Avios scheme has closed.
Interestingly, MBNA has decided to make different offers to different people. It isn’t yet clear if they are doing this based on the card type you used to hold OR the amount of money MBNA made from you in the past. It seems to be the latter.
There are at least three different variants:
Some people are told they will get no rewards
Some people who held the Mastercard are being offered an eye-wateringly good 0.75% cashback on all future spend (details here) on what will now be a free card
Some people who held the Amex and Visa combination are being offered 1% back on the American Express and 0.5% back on the Visa (details here) on what will now be a free card
What did I get?
My Diamond Club will be converted to an MBNA credit card. This card will carry no rewards or cashback at all.
What is interesting about this decision is my ‘history’ with Diamond Club. I am responsible for probably the biggest single transaction ever made on a bmi Diamond Club credit card.
Despite this, I have paid a grand total of £0 interest on the cards over the last decade.
So, why have I been given a card with no rewards? Have I historically spent too much? Have I paid too little interest? I imagine I will never know.
For the rest of you – or at least those of you who did not also receive the ‘no rewards’ card – there is a substantial arbitrage available here if you are self-employed or have any other reason to pay tax to HMRC.
Let’s take VAT payments for sole traders. The credit card fee is 0.38%. Because it is a business expense, the net fee for most people is nearer to 0.25%. Giving you 0.75% cashback represents a decent profit.
Even on your personal tax payments, where you cannot write off the card fee as a business expense, you will make a margin of 0.37% which is worth having.
Anyone who receives the 0.75% cashback Mastercard deal should consider themselves lucky and should be thinking carefully about why they may want to use a rewards Visa or Mastercard instead.
I am not yet sure what I should do. I am tempted by the Lufthansa Miles & More card, purely as a way of getting Lufthansa First Class redemptions. I may not qualify for the sign-up bonus as I have had the card before, but I would get a 33% bonus on my spending for 6 months. That would make 1 mile per £1 on their Visa card.
I also qualify for the HSBC Premier World Elite Mastercard as I have the current account – I used to work for HSBC once and lifetime Premier came as a perk – which pays 1 Avios per £1. There is a £195 fee but the sign-up bonus offsets this in Year 1.
Want to earn more points from credit cards? – August 2022 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.
EDIT: Until 25th October 2022, there is an exceptionally generous sign-up bonus on The Platinum Card. You will receive 60,000 Membership Rewards points – double the usual amount – and £200 to spend at Amex Travel. You need to spend £6,000 within six months to earn the bonus.
British Airways American Express Premium Plus
25,000 Avios and the UK’s most valuable card perk – the 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 & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points, £200 travel credit and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 points bonus 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:
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
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
Capital On Tap Business Rewards Visa
10,500 points bonus – the most generous Avios Visa 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.