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I lose out with MBNA’s replacement for Diamond Club

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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?

Nothing.

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? – July 2021 update

If you are looking to apply for a new credit or charge card, here are our July 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. Here are the other top current deals:

British Airways American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and a companion voucher for spending £20,000 Read our full review

BA Premium Plus American Express card BAPP

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

Nectar American Express

American Express Preferred Rewards Gold

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American Express Platinum card Amex

The Platinum Card from American Express

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Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

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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

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

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 (122)

  • martin says:

    I feel a bit cheated now – I got the no rewards card! My wife closed her account as soon as she’d emptied the miles out, which is a shame as it would have been interesting to compare. 0.5% on a Visa is alright – I’d have been happy with that!

    • Steve says:

      That’d be the minimum you should accept, seeing as you can get that much on either the John Lewis or Asda non-amex credit cards

  • Zoe says:

    No rewards here. Never paid interest spent 1 – 5k per month.
    Will check my husband’s letter later.

  • Chris says:

    No rewards here, aleo never paid interest.

    My MasterCard letter was slightly different to my Amex/Visa letter, with something about access to some kind of MasterCard benefit (early ticket access maybe). I can’t remember exactly, it was so uninteresting I shredded it about 1 minute after reading

  • Dannyrado says:

    No rewards here. On either my two card pack, or my bmi MasterCard.

    Perhaps it would be worth approaching them Rob, to explain that many of us hfp’ers will literally just cancel the card… surely they would be better offing us something/anything. The thing is, I know many of the mbna folk in Chester, and many of them have no idea about miles, points schemes..

    • Callum says:

      Does the fact they have reward schemes at all not tell you they are fully aware some people will only get reward cards? They clearly don’t particularly want you as a customer!

      • Div says:

        Callum – I totally understand what Dannyrado is getting at. A decent percentage of MBNA staff do have no real understanding of loyalty points.

        I can tell you this on the basis in particular from various documents I had sight of as part of a complaint that went very high up in the organisation, and ended up with the ombudsman. There were a number of things that were very revealing about how poorly some of them understood loyalty motivations.

        But it’s not just high level, a lot of the more junior people (not just customer services, but also product offers development) seem to have very poor understanding of high affluent spenders.
        A lot of MBNA business seems to be low income spenders who go into default.

        It not only clouds their CS attitudes, it also skews their thinking generally. (And I’m not just talking about preventing abuse).

        Add on top of that some bad systems…

  • Genghis says:

    “I am responsible for probably the biggest single transaction ever made on a bmi Diamond Club credit card.”

    You tease Raffles. Tell us more…

  • Karl Ransom says:

    I’m more interested in the amount of the “probably the biggest transaction”

  • Callum says:

    No wonder our tax system is such a mess of you’re seemingly allowed to scam the system and get kick backs from tax payments! (Though I’m not sure I completely follow how you’re writing off 30% of the card fee so maybe I’m just not understanding this at all!)

    And maybe I’m remembering it wrong, but didn’t it turn out the Amex cards will/do fall under the same cap as mastercard and visa? In which case, why offer more rewards on the Amex?

    • Yuff says:

      I don’t think HMRC is in a mess due to payment options 😉
      Also, it won’t cost them to receive the payment, if the payee gets a reward, for using a certain type of payment card, surely that’s down to the person making the payment being smart 🙂

      • Callum says:

        I didn’t say this CAUSED problems, just no wonder it has problems if getting kickbacks from reducing your tax liability is allowed.

        Though this is based upon my assumption that debit card charges are lower.

        • Callum says:

          Well, I’d say them being greedy (me included, so not me being “holier than thou”!). I’m sure a certain orange man will agree with you though!

        • Callum says:

          They do, and if you were only paying by credit card it would be cost neutral for HMRC. They are discussing paying by credit card then effectively getting a 20-40% discount on the card fee by claiming it back from HMRC as a “business expense” – one which was completely unnecessary, ergo HMRC are losing out.

    • Genghis says:

      I’m not too sure about the number itself but anyone carrying out a trade can claim the card fee as an expense.
      So a sole trader at 40% IT band would in next years return decrease their earnings by the card fee paid thereby decreasing tax by 40% of the amount. Likewise with a small Ltd co (<£300k revenue) but at 20%.
      Raffles, where do you get the 35% from?

      • Raffles says:

        It was a rough average based on the fact that people have different tax rates.

      • Callum says:

        Thanks, Raffles explanation of it being an average makes perfect sense now!

  • Stuart Graham says:

    Yes mine also said it would convert to a Visa card with no mention of an Amex card.
    Also no rewards

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