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? – 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.
The following offers will end soon:
- 2,000 Virgin Points on Virgin Atlantic Reward Mastercard (ends 15th October)
- 30,000 Virgin Points on Virgin Atlantic Reward+ Mastercard (ends 15th October)
- 10,000 Avios on British Airways American Express (ends 2nd November)
- 40,000 Avios on British Airways American Express Premium Plus (ends 2nd November)
- 60,000 points on The Platinum Card from American Express (ends 2nd November)
- 30,000 points on American Express Preferred Rewards Gold (ends 9th November)
Here are the top current deals:
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 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
American Express Preferred Rewards Gold
Your best beginner’s card – 30,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward Mastercard
The UK’s most generous free Visa or Mastercard at 0.75 points / £1 Read our full review
Virgin Atlantic Reward+ Mastercard
30,000 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
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
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: