And so it finally happened …. We have known for some time, although it has never been widely publicised outside of HfP, that American Express had cancelled all of its licensing deals with other credit card issuers.
The first to be hit was TSB. Barclays followed. Lloyds, for now, is hanging on although the Lloyds Avios Rewards credit card is surely for the chop (in its current form) soon.
MBNA is, by far, the largest issuer of licensed American Express cards in the UK. It currently issues double packs of American Express and Visa / Mastercard credit cards for:
- American Airlines AAdvantage
- Etihad Guest
- Emirates Skywards
- Lufthansa Miles & More
- United MileagePlus
- Virgin Flying Club
Yesterday, the first card fell.
The free American Airlines ‘Amex and Visa double-pack’ was withdrawn from the market. It was replaced by a new card pictured above.
There are only four things you need to know about this card:
It only comes as a Visa – there is no American Express partner card
It has an exceptionally high (stunning, frankly) earning rate of 1.25 American Airlines miles per £1 spent
It has an annual fee of £70
The standard sign-up bonus is 5,000 American Airlines miles, but until 22nd August that is increased to 15,000 miles if you spend £1,500 within 90 days
For legal reasons, there is a fifth thing you need to know:
The card has a representative APR of 38.4% variable, including the fee, based on a national credit limit of £1200
This card is a niche product but could herald a radical shake up for some people
These changes all stem from the 0.3% cap on credit card interchange fees which came in across the EU 18 months ago. Whilst American Express is exempt from this – which is why you haven’t seen reduced benefits on any cards issued by Amex itself – Amex cards issued by other companies are not exempt.
This is why Amex cancelled its licenses with TSB, Barclays, Lloyds and MBNA. There was simply no point in these companies continuing to issue combined Amex and Visa / Mastercard products – with a higher earning rate on the Amex – when the interchange fee on both cards was the same.
At 1.25 American Airlines miles per £1, this is the most generous Visa or MasterCard out there. There is nothing which comes close. Even if you earn six figures and are ‘allowed’ to pay £195 for HSBC Premier World Elite, you will only be earning 1 Avios, Asia Miles, Singapore or Etihad mile per £1.
If you have a lot of Visa or MasterCard spend, this card could be a revelation for you. I know there are many Head for Points readers who put six figure sums through a Visa or Mastercard.
If you are self employed, you can pay all of your income tax, national insurance, VAT and PAYE for any employees with a Visa or Mastercard for a 0.38% fee. At 1.25 American Airlines miles per £1, you would be paying 0.30p per mile.
The £70 annual fee is a stumbling block, of course. You need to be spending quite a lot to amortise that. If you are paying £35,000 per year to the Revenue, then your HMRC card fee at 0.38% would be £133 and your card fee £70. That is £200 of outlay for (35,000 x 1.25) 43,750 miles which means 0.46p per American Airlines mile. That’s more than acceptable.
Don’t jump in just yet
Even if you have huge Visa / Mastercard spend, I still don’t recommend jumping onto this card.
Over the next few months, it is likely that the Virgin, Lufthansa, Emirates, Etihad and United cards will see similar changes. One of those may be more suitable than this new American Airlines card.
Should you get the card purely for the sign-up bonus?
If you already have some American Airlines miles then, yes, it seems a no-brainer for the first year.
The annual fee is £70 – this is NOT refundable if you cancel the card
You receive 15,000 American Airlines miles for spending £1,500 within 90 days
That is under 0.5p per mile, plus you will get miles for your spending as well
If you are not a big spender then it unlikely to make sense carrying on into Year 2. For the first year, though, it looks good.
Do I qualify for the bonus?
The small print is strict:
This offer is only available once for every new customer applying for the MBNA / AAdvantage Credit Card. Previous and existing MBNA / AAdvantage Credit Card Account holders are not eligible.
This implies that anyone who held the old Visa / Amex double pack cannot get a bonus on this card.
In practice, MBNA has a habit of giving a sign-up bonus again, irrespective of its rules, if it has been a couple of years since you previously cancelled. I recently received my third ‘once per lifetime’ bonus on the Lufthansa Miles & More cards from MBNA. This is certainly not guaranteed and – given that you are risking £70 here – I don’t recommend a fresh application if your only interest is in getting the bonus.
What can I do with American Airlines miles?
I don’t want to go into this here as the article would go on for ever. There are a few key points to remember:
American Airlines is a oneworld member. Any mileage seat bookable via ba.com on a oneworld airline can also be booked on American Airlines miles.
You will need a different amount of miles – sometimes more, sometimes less – because American has its own pricing chart. Whilst Avios prices by flight, AA prices by trip irrespective of the number of connections needed. At the most extreme, First Class to Australia is just 230,000 AA miles compared with 400,000 Avios if booked via BA.
American only adds fuel surcharges to British Airways redemptions. This means that many redemptions have substantially lower taxes than if booked on Avios, including AA transatlantic flights.
American Airlines is a partner with Etihad. This is an extra redemption option which Avios does not offer. Etihad redemptions using AA miles need, ironically, far fewer miles than if you used Etihad Guest miles – and American doesn’t add the crazy fuel surcharges that Etihad now adds.
Your American Airlines education should start here with the reward chart for AA’s partners. This is all one-way pricing so, for example, UK to Abu Dhabi on Etihad in their amazing A380 Business Class Studio would be 85,000 miles return. You’d need £68,000 of card spend to earn that.
Unless you are a heavy credit card spender, I don’t recommend jumping into the American Airlines programme unless you already have some of their miles. If you do already have an active AA account, or if you spend so much on a Visa / Mastercard that you could earn enough for a flight purely from card spend, this new £70 MBNA American Airlines credit card is worth a look.
Want to earn more points from credit cards? – September 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
50,000 points bonus until 2nd October – 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.