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Why the free BA Amex credit card is a bad deal for low spenders

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Last Monday I ran this article on why I don’t believe that anyone should be spending £20,000 on the free British Airways American Express card in order to trigger the 2-4-1 voucher.

For a high spender, the free British Airways American Express card makes no sense.  If you could spend £20,000 on the free BA Amex card to trigger the 2-4-1, I think you are better off spending £195 to get the Premium Plus card instead. 

This is because:

The 241 voucher is only valid for one year on the free BA Amex, instead of two years for the BA Premium Plus voucher, which is a major issue if you want to book seats 355 days in advance

The £10,000 of ‘extra’ spending required to trigger the voucher on the free card (£20,000 compared to £10,000 on the Premium Plus card) could be directed elsewhere, triggering sign-up bonuses on other cards

You earn an extra 0.5 Avios per £1 spent, which offsets much of the £195 annual fee on the Premium Plus card

The bottom line is that the only people who I think should have the free British Airways American Express card are those who spend under £10,000 per year.

But even that is a bad idea, if we’re honest

I know that a lot of people don’t spend large amounts on their free BA Amex card.  They don’t trigger the 2-4-1 companion voucher BUT they like earning 1 Avios for every £1 they spend.

If this is you, you are now better off with the new and little-known American Express Rewards Credit Card.

Amex Rewards Credit Card

What is the American Express Rewards Credit Card?

ARCC is a standard Amex-branded credit card.  It has no annual fee and no substantial benefits, except for the ability to collect Membership Rewards points at 1 point per £1 spent.

There are three versions of the card available:

LOW RATE – 5,000 Membership Rewards points bonus and a representative APR of 9.9% variable (click here)

or

BASIC – 10,000 Membership Rewards points bonus and a representative APR of 22.9% variable (click here)

or

PURCHASES – NO sign-up bonus but 0% APR on purchases for 18 months and a representative APR of 22.9% variable beyond that (click here)

The first two cards require a £500 (5,000 points version) or £1,000 (10,000 points version) spend within three months to trigger the bonus.

You will not get the sign-up bonus if you have had a Gold or Platinum American Express card – or any other Amex card which gives Membership Rewards points – in the last six months.  You can still apply for the card, however.

Why is the Amex Rewards Credit Card better than the free BA Amex card for low spenders?

Here’s the interesting bit:

The free British Airways American Express card earns 1 Avios per £1 spent

The free Amex Rewards Credit Card earns 1 Membership Rewards point per £1 spent.  These transfer 1:1 into Avios points if that is what you choose to do.

What you get with the ARCC card is flexibility.

Yes, you can use your points for Avios.  You can send them over to BA via the Amex website and they will arrive within 48 hours.

However, you have other options.  Membership Rewards points can also be sent to Virgin Atlantic, Flying Blue, Emirates, Etihad and Delta among other airline partners.  You can also send them to Hilton Honors (1:2), Starwood Preferred Guest (2:1) and Radisson Rewards (1:3).  You can convert them to Club Eurostar (15:1).  You can even use them for shopping vouchers.  You can see the airline partners here.

The new ARCC card gives you more choice.  You can still take Avios if you want, and at the same 1 Avios per £1 earning rate.  If you suddenly decide that you want hotel points, or that Virgin Atlantic miles make more sense, or even that you want to abandon Avios altogether, you can.  Simply move your Amex points somewhere else instead.

With the free BA Amex card, your points are sitting in Avios from Day 1 and you can’t do anything else with them.  If Avios devalues its rewards, if BA stops flying your preferred route, if reward availability suddenly gets a lot harder to find, if Reward Flight Saver fees jump up, if new surcharges get added ….. you’re stuck.

Swapping to the Amex Rewards Credit Card gives you more control over your points.

The only good reason NOT to drop your free BA Amex is that having the ARCC card means that you cannot get a sign-up bonus on an Amex Gold or Amex Platinum card at the same time.  On the other hand, once you have gone six months without the free BA Amex, you would be able to apply for either of the two BA cards again, purely to earn a sign-up bonus.

Conclusion

There are good reasons for EVERY holder of the free British Airways American Express card to reconsider.

If you spend over £20,000 on the free BA Amex card to trigger the 241 voucher, I think you’re making a mistake as my article last Monday explained 

For lower spenders, who aren’t bothered about the 241 voucher, I believe that the Amex Rewards Credit Card offers a compelling alternative to the free BA Amex

Even better, two versions of the FREE ARCC card – Low Rate and Basic – offer an attractive sign-up bonus if you haven’t had a Gold or Platinum American Express card in the last six months.

If you go for the ‘Purchases’ versionyou will also get 18 months interest free credit on everything you buy.

If you go for the ‘Low Rate’ version, you will be paying a representative APR of 9.9% variable.  This is far cheaper than the free British Airways Amex card which charges a whopping representative APR of 22.9% variable.

Something to think about …..


Want to earn more points from credit cards? – June 2022 update

If you are looking to apply for a new credit or charge 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.

Until 18th July 2022 there is an astonishing special offer on these cards. You get 50,000 Avios on the Avios Plus Mastercard and 10,000 Avios on the free Avios Mastercard. You can apply here. We strongly recommend getting the Avios Plus card whilst this offer is running.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

50,000 Avios for signing up (A CRAZY SPECIAL OFFER!) and an upgrade voucher for spending ….. Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

10,000 Avios for signing up (SPECIAL OFFER) and an upgrade voucher for spending £20,000 Read our full review

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: The sign-up bonus on Amex Gold is increased from 20,000 Membership Rewards points to 30,000 Membership Rewards points until 19th July 2022. This card is free for the first year.

British Airways BA Premium Plus American Express Amex credit card

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 Amex Gold

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

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Virgin Rewards Plus credit card

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:

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

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 card

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.

Barclaycard Select Cashback credit card

1% cashback (3% on business travel for four months) and no annual fee Read our full review

Comments (78)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Dan says:

    If I cancel my Gold card and take out the ARCC, is my existing rewards points balance protected or should I transfer it out before cancelling the Gold?

    • Rob says:

      Your MR account is totally separate to your cards, nothing changes.

  • HL says:

    OT – no bits today
    I booked a one way ticket from LHR – DEL with 25000 Avios points + £204.41, phoned BA today to add a return leg but shocked with tax, they insist I will have to pay another 25000 points plus £289.4 + £35 call charge. For what I can understand, I only need to pay the additional tax which is £85 as £289.4 is for whole return booking. Was I wrong?

    • Rob says:

      Tax will come out at whatever a return ticket is if booked as a return in the first place. If two x 2 one way tickets cost more or less than a return, in taxes, BA will adjust it to what a return would be.

      • HL says:

        Thanks Rob.
        So even they charge me £289.4 for adding second leg they should refund me the tax I paid when booking one way ticket.

        • Rob says:

          No. They should refund you the difference between the taxes on a return trip (you can work this out by doing a dummy Avios booking for a return flight) and what you actually paid.

        • Mark says:

          Don’t forget it’s not just the taxes but the airport fees and “carrier imposed surcharges” as well. I’ve never done a redemption to India, but circa £500 for the return booking sounds like the right ballpark.
          As Rob says, try booking a dummy return and see what it comes out at.

        • HL says:

          Thanks Rob Mark, I’ve done the dummy Avios booking that’s why I know £289.4 is tax and charge for return ticket. As I’ve paid all the taxes and fees for one way, they should charge the balance of return ticket

      • Roberto says:

        As a side note Virgin do NOT do this anymore instead charging you two one way taxes rather than repricing it as a return as BA still do. This added over a hundred pounds to couple of return LAS flights I recently booked as they were initially released at T-330

  • John says:

    One minor difference is that the BA card rounds up for Avios and the MR cards round down.

    If you spend £2.50 a hundred times, you will only get 200 MR but 300 Avios.

    • Marcw says:

      That’s one of the reasons I have the free BA card. Also, as a low spender, it’s unlikely I’ll get any meaningful points or miles balances with other programs. At least with Avios, there’s a whole cocktail of opportunities: online shopping, Groupon, Tesco,… which all adds up. At least I can get a couple of rtrn flights to Spain (Christmas and Summer) and the odd long haul flight, usually summer as well (thanks to Iberia low taxes in economy long haul).

  • Cate ⛱️ says:

    Another plus for the ARCC card is that people like the look of it. I’m always getting nice comments about it when out shopping.

  • Andrew says:

    Tempted to switch over. I don’t normally put anywhere near the £20K through my BA Amex, but I’ve just put £11,000 on it to pay for conference facilities for the Charity I’m treasurer for. I’d normally pay by FP, but haven’t had access to the Charity Account with TSB for over a week now.

    Hopefully they’ll resolve the issue before the next statement!

  • james says:

    I’ve got the Amex Gold Preferred rewards and am due a 10,000 points bonus in August due to having easily spent the reward level. Was thinking about upgrading to Platinum as i have a 30,000 points offer on joining it if i spend £2,000 in first 3 months (easy for me to do). Presumably if i do this i will lose the 10,000 re-sign-up on Gold, so is my best course of action to renew current card in August, get sign up bonus then straight away switch to platinum, get spend bonus and then cancel and move to BA card? Thanks for any advice

  • Prins Polo says:

    IMO, the BA card isn’t a good choice for neither high nor low spenders, if it’s the card through which the main spend goes.

    I have re-applied for it (after having closed it some time ago) just because it’s free and there are often good Amex offers on it (often different to other cards). Since opening it a few months ago, I’ve already redeemed over GBP 300 of offers (and remember it’s a free card). This is the real value for me, not a sign up bonus of 5,000 which is equivalent to GBP 50.

    • Phil says:

      It’s a good point about the offers. Currently I have much more offers on there than I do on my Gold card.

      • S says:

        I have a grand total of 2 offers on my BAPP, Hackett and Prezzo. Both worthless.

        Too many offers to count on my Plat

  • Phil says:

    @Rob, do you have any articles on the economics of credit cards from the provider’s perspective?

    For example, do they aim to make most of their money from interest? Spending? Annual fees?Why is AMEX Gold free for a year but platinum isn’t? Why provide charge cards rather than credit cards?

    • @andrewseftel says:

      The FCA did a pretty decent write-up as part of their Credit Card Market Study a couple years ago.

      https://www.fca.org.uk/publication/market-studies/ms14-6-2-ccms-annex-5.pdf

      • Rob says:

        Varies by card, because propensity to pay interest varies – not many airline cardholders pay interest, similarly I doubt many John Lewis / Waitrose cardholders do. I know Virgin thinks the 3% FX fee will be a serious driver for the new Virgin Atlantic cards, given the propensity of the card base to travel, although there are no extra miles for foreign spend.

        • KevMc says:

          That sounds like they area little delusional. Those that are more likely o travel more often will spend abroad in the cheapest way they can.

        • @andrewseftel says:

          Missing a trick, I think. Double miles abroad would probably be a bit rich, but some sort of bonus on FX spend (counts double towards a voucher for example) would help shift the card into people’s minds when they’re abroad.

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