MBNA has written to holders of the Etihad Guest UK credit cards this week to tell them that they are closing on 27th July.
Quite a few readers may have this card as there were some VERY generous sign-up bonuses over the years. It reached 25,000 miles at one point which was great for a free credit card, especially as you could pool the miles in a family account.
Today I thought I would run through the options if you still want to collect Etihad Guest miles from a credit card, or want an interesting alternative from another airline.
Why did this happen?
You should NOT assume that these cards will return under a new issuer.
Two linked events caused this. The core driver was the European Union cap on interchange fees. This restricted the fee that payment processors could charge retailers for accepting credit cards to 0.3%. It is very difficult to run a successful mileage card on this basis.
The second driver was American Express being caught up in the 0.3% cap, even though it was originally expected to be exempt. American Express decided to pull all of its licensed cards from the market, which means that MBNA, Lloyds, TSB and Barclays had to stop issuing Amex-branded products such as the Etihad Guest cards.
What is your best alternative to the Etihad Guest UK credit card?
There are a number of ways of looking at this. Let’s run through them.
Scenario 1: You want a card which still lets you earn Etihad Guest miles at a decent rate
The good news is that there are still ways to earn Etihad Guest miles from a credit or charge card in the UK. The earning rate is OK too.
The highest miles earning option is the Starwood Preferred Guest American Express credit card. You earn 3 points per £1 spent, and these convert at 3:1 into Etihad Guest miles. If you convert in chunks of 60,000 points you get a 5,000 mile bonus, meaning that you are actually getting 1.25 Etihad miles per £1 spent.
It isn’t as generous as the MBNA credit card, which gave 1.5 Etihad miles per £1 on the American Express element and had no fee, but it isn’t bad.
The annual fee on the SPG card is £75 and you get a sign-up bonus of 30,000 points (10,000 Etihad miles). This makes the card well worth getting for the first year at least.
These cards give you 1 Membership Rewards point per £1 spent, and they convert at 1:1 into Etihad Guest. This means that you are getting 1 Etihad Guest mile for every £1 spent on Amex Gold or Amex Platinum.
These cards come with excellent sign-up bonuses. Amex Gold comes with 20,000 points for signing up, whilst Amex Platinum comes with 30,000 points. Amex Gold is free for the first year.
In the short term, taking out a ‘free for a year’ American Express Preferred Rewards Gold, banking 20,000 Etihad Guest miles from converting the sign-up bonus and earning 1 mile per £1 spent – with no fee for 12 months – is probably your best deal.
Scenario 2: You specifically want a Visa or Mastercard to collect Etihad Guest miles
If – and it is a big ‘if’ – you qualify for HSBC Premier then you have a very easy solution staring you in the face.
The HSBC Premier Mastercard is free. You earn 1 point per £1 spent which converts into 0.5 Etihad Guest miles.
The HSBC Premier World Elite Mastercard has a £195 annual fee. There is a sign-up bonus of 40,000 points (20,000 miles) with a further 40,000 points (20,000 miles) at your card anniversary if you have spent £12,000. You earn 2 points per £1 spent which converts into 1 Etihad Guest mile.
The snag is the eligibility criteria for HSBC Premier. You must pay in your salary and have either savings or investments of at least £50,000 with HSBC, or an individual annual income of at least £75,000 and a HSBC mortgage, investment, life insurance or protection product.
For everyone else, earning Etihad Guest miles from a Mastercard or Visa now is trickier and less lucrative. You can’t get anywhere near the 0.75 miles per £1 that the MBNA card offered.
The only slightly decent Visa / Mastercard option is via the IHG Rewards Club Mastercard (0.2 miles per £1, assuming you convert 10,000 IHG points into 2,000 airline miles) or, with the £99 IHG Rewards Club Premium Mastercard, 0.4 miles per £1.
There is a sign-up bonus on these cards. The free IHG Mastercard comes with 10,000 IHG points, worth 2,000 Etihad Guest miles. The £99 Premium card comes with 20,000 IHG points, worth 4,000 Etihad miles.
Scenario 3: You want a high-earning Visa or Mastercard and are willing to move away from Etihad Guest
Without a doubt, the two Virgin Atlantic Mastercards are the most generous Visa or Mastercard products available – either the Virgin Reward Mastercard (free, 5000 miles bonus) or Virgin Reward+ Mastercard (£160, 15000 miles bonus).
You get 0.75 miles per £1 on the free card and 1.5 miles per £1 on the paid card. This is FAR better than any Avios or hotel card. The free Virgin Atlantic card equals, at 0.75 miles per £1, what you were getting for non-Amex spend from your old Etihad Guest credit card. You also get a 2-4-1 or upgrade redemption voucher for hitting spending targets. The only downside is that, with no short haul routes, you are unlikely to earn enough miles purely from the credit card to get a good redemption so the cards are best suited to regular Virgin flyers.
The best long-term cards for an Avios / Asia Miles / Singapore Krisflyer collector (if you have a high income) are the HSBC Premier Mastercard or HSBC Premier World Elite Mastercard. Whilst Etihad Guest is a partner, as we discussed above, the three other transfer options would also allow you to focus your card spend elsewhere.
If you simply want a free Visa or Mastercard and collect Avios, the best option is the Tesco Clubcard Mastercard. You get 1 Clubcard point per £8 spent which translates into 0.3 Avios per £1. However Tesco rounds down each transaction to the nearest £8 which means your actual earning rate is lower. You get extra value because Clubcard points have many uses – as well as Avios, you could send them to Virgin Flying Club or a totally different Clubcard partner altogether, such as Uber or hotels.com.
Reviews and to apply
Here are my reviews of the cards mentioned above, which also explain the sign-up bonuses available:
Please read this important interest rate information:
Starwood Preferred Guest American Express – representative APR 39.7% variable including fee based on a notional £1200 credit limit
American Express Preferred Rewards Gold – representative APR 57.6% variable including the annual fee (free in year 1) based on a notional £1,200 credit limit, interest rate on purchases 22.9% APR variable.
HSBC Premier Mastercard – representative APR 18.9% variable
HSBC Premier World Elite Mastercard – representative APR 59.3% variable including fee based on a notional £1200 credit limit
IHG Rewards Club Mastercard – representative APR 18.9% variable
IHG Rewards Club Premium Mastercard – representative APR 41.5% variable including fee based on a notional £1200 credit limit
Virgin Atlantic Reward Mastercard – representative APR 22.9% on purchases
Virgin Atlantic Reward+ Mastercard – representative APR of 63.9% including the fee, assuming a £1200 credit limit
Tesco Clubcard Mastercard – representative APR 18.9% variable
(Want to earn more miles and points from credit cards? Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)
Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.