My review of MBNA’s Horizon Visa credit card – possibly the UK’s best credit card to use when travelling

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This is my review of MBNA’s new Horizon Visa credit card.

Yesterday I wrote about how MBNA has pulled the plug on the UK Etihad Guest credit card from 27th July.  This is also now confirmed as the final date for the MBNA American Airlines credit card.

I also expect that the Lufthansa, United and Emirates cards will also be closed on 27th July.  MBNA may be staggering the letters or it may be staggering the closing dates, it isn’t clear.  The Virgin Atlantic MBNA credit card is closing earlier, in the first week of July.

If you are looking for:

alternatives to the American Airlines credit card, read this article

alternatives to the Etihad Guest credit card, read this article

alternatives to the Miles & More credit card, read this article

alternatives to the Emirates Skywards credit card, read this article

alternatives to the United MileagePlus credit card, read this article

Obviously holders of the MBNA Virgin Atlantic cards can simply switch to one of these two new Virgin Money-issued Virgin Atlantic cards.

MBNA Horizon credit card review

However, MBNA is desperate for you to stay

All holders of the Etihad, American, Lufthansa, United and Emirates airline cards are being offered a new MBNA Visa product called Horizon.

This card is not available to the general public.  You will only get it if you are a holder of a co-brand card which is being closed.

Horizon is, frankly, great.  My best guess is that it will be the least profitable credit card in the country!

Just look at this for the list of benefits:

No annual fee

0.5% cashback on all your spending

No foreign exchange fees

Free cash withdrawals, both in the UK and overseas (although you pay interest from the date of the withdrawal)

Some people are being offered a cash incentive to retain this card until October!

I mean …. where is MBNA going to make any money here?!  They give you 0.5% cashback on the back of receiving a 0.3% interchange fee.  They won’t make any money when you use the card abroad.  They won’t make any money – apart from a tiny interest charge – when you withdraw cash on the card.  They won’t make any money on annual fees.  And, hopefully, they won’t make any money off you in interest charges because you’re not that stupid.

The only tiny catch is that the 0.5% cashback is paid on transaction multiples of £2.  This means that a £1.99 purchase earns nothing and a £7.99 purchase only earns 3p (0.5% of £6).

The APR is 22.9%, with a higher 27.9% rate applying to cash withdrawals.

MBNA Horizon credit card review

Should you keep this card?

I currently have the MBNA Lufthansa credit card which I am expecting to see closed very shortly.  My gut feeling was that I would be cancelling the replacement MBNA card before it even arrived.

(When my MBNA BMI Diamond Club credit card was closed, MBNA chose to give unprofitable customers like me a replacement card with zero benefits to encourage us to leave, which I did.  Profitable customers got a better deal.  This time everyone seems to be getting the same good deal.)

If I am offered the Horizon Visa card when / if my Lufthansa credit card is closed, I will be keeping it.

I won’t use it much in the UK.  0.5% cashback is fine but I can get a far better return from the IHG Rewards Club Premium MastercardAs I calculated in this article, you should expect to get an overall return of 2.3% on your first £10,000 of spending on that card.  Even when you have triggered the free night, the two IHG points per £1 are worth 0.8% back.

You can also get between 2.4% and a whopping 12.3% back on the new Virgin Atlantic credit cards (my maths is here) although you need to be a regular Virgin Atlantic flyer to maximise that value.

However, as a card to use when I am travelling, this will do the trick.  0.5% cashback on my holiday spending and no FX fees is a great deal.  Tandem has the same benefits including free cash withdrawals but Tandem is unlikely to offer the same chunky credit limits that MBNA usually gives.  Tandem also does not offer free UK cash withdrawals.  That said, one upside with Tandem is that cashback is paid monthly whilst MBNA is only paying out annually.

Conclusion

I have no idea what MBNA’s strategy is with Horizon.  Stopping your existing customer base from defecting by paying them to stay – which is effectively what MBNA is doing here – doesn’t make a huge amount of sense in the long run.

Whilst I admit that MBNA runs a very impressive operation, almost up to Amex standards, holders of the co-brand cards were primarily loyal to the airline and not to MBNA.  Perhaps they are hoping that most of their customers won’t be aware that they can continue to earn American, Lufthansa, Etihad etc miles via the Starwood Amex, Amex Gold, HSBC Premier etc and will stick around.

If you are being transferred to a Horizon Visa, I would think twice before cancelling it unless you already have another option for foreign spending with a good credit limit.  You can feel happy tucking it into your passport and focusing your UK card spend elsewhere.

(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.)

Final closing date for MBNA's Virgin Atlantic cards announced - what should you switch to?
How to get a 35% bonus on your Membership Rewards balance - but why it isn't always a great idea
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Comments

  1. Matthew says:

    Well it was enevitable wasn’t it. The letter dropped on my doorstep today. Think I will keep the card purely for the no fees abroad! Such a shame about losing the virgin Amex!

  2. James says:

    Anyone have an idea where we stand with cancelling these cards now and getting a pro rata refund on the annual fee?

    The awards ends on the 7th July but the letter states that we have to wait until the end of July to get the refund.

    However, I now have no need for the Virgin card as it’s going into an Horizon account which I will also have from my AAdvantage card.

    The Virgin card is the easiest to close as I’ve just paid the month off and not spent anything on it.

    Why should I have to wait 2 months when a) they’re changing the terms for what I paid for, b) I can remove a card 2 months sooner from my credit file and c) I should get 2 months fees pro-rata.

  3. RussellH says:

    Is this a new option? GDPR?

    I have just found that details are no longer remembered (Firefox – 2 machines with different versions).

  4. Nigel says:

    OT. I currently have have the amex gold, can I also take out the BAPP and recieve the sign up bonus on the BAPP card??. The terms are a little confusing.

  5. Jeremy I says:

    Still no news on the united cobranded card.. i will miss that when it goes as i have found the sweet spots in the scheme very useful…

  6. So would all spend on the virgin white amex up to July 6th count toward the upgrade voucher? I’m about 5k off but could probably hit it with some blue-sky thinking….

    • No, spend which has cleared to your account by 6th July accounts. There is a difference.

  7. James says:

    Unless I’m missing something, I don’t see the benefit of keeping it open and on your credit file simply for using abroad.
    We’ve got Revolut for that which didn’t require a credit check (granted it’s not a credit card though).

  8. Clive says:

    OT sorry if a repeat but BA have launched a reward flight sale (50% off).

    https://www.britishairways.com/en-gb/executive-club/offers/reward-flight-sale

    Economy only but seeing lot’s of availability even to Maldives over Christmas

  9. “best” credit card for travelling? Seems to me it only draws with tandem?

    • Tandem is still a start-up which is shifting its model from week to week. Tandem also cannot sustain the loss on its card indefinitely unlike MBNA / Lloyds.

      • Genghis says:

        And tandem would require another credit search. Not good for churners

  10. Heran says:

    Can you only use it for business spending or can use it for personal spending?

    • You might get closed down for personal spending because this card has a 1.5% interchange fee (give or take) which the retailer who takes your card needs to pay.

  11. Heran says:

    Not just foreign spending. Also once you have achieved the target threshold or no miles to spend (say you make a big redeem every few years and you just made one with few miles left so voucher you will earn will be of no value in the immediate future), the benefit of other cards are very marginal compared to the Horizon card. Yes the free Virgin card gets you 0.75 mile per £ which is slightly better than Horizon, but cash is always more liquid and convertible than anything else, as we learned from the recent lesson (https://www.headforpoints.com/2018/05/28/qatar-privilege-clubs-shock-devaluation/).

  12. guesswho2000 says:

    As some of us (me included) have multiple MBNA airline cards, I assume we’ll end up with multiples of the same card? I’ve been given the Horizon to replace my AA, no word on Etihad yet.

  13. Roger1* says:

    MBNA have generally been flexible with limits, increasing one by decreasing others for example.

    If my M&M card goes the same way, I’ll potentially have 3 Horizon cards. I don’t need 3 and would probably ask MBNA to combine them as a single limit on one card.

  14. Willa says:

    Do we know if Horizon offers the same exchange rates as Tandem – i.e. no markup?

    • Anyone advertising 0% works off the published Visa / MC rates, so they are the same.

    • Seems Horizon uses Visa rate and Tandem uses MasterCard. MasterCard always has better rate but we are talking about ~0.1% difference here

  15. Stephen says:

    If anyone else was thinking like me: I asked MBNA if I could transfer an old non airline card I still had with them to the Horizon package and they very politely but firmly said no. Oh well!

  16. Sean Bhalach says:

    The “No foreign exchange fee” sounds good, but what you actually end up paying is the [Foreign exchange fee (in this case 0)] + [the percentage on the exchange rate]. Could they adjust this percentage so that the zero fee really doesen’t gain you anything?

    • Genghis says:

      Evidence?

    • Visa has a conversion calculator. If you put in the currencies and transaction date, you should see the charge on your statement matching what’s showing on Visa website.
      If it’s not the case, then they are not charging free FX.
      Note that MasterCard typically have very slightly better rate so Starling bank card is still arguably the best for traveling (with £200 ATM per day not per month as for Revolut)

  17. TripleB says:

    The visa exchange rate + 0.5% cutback puts the effective exchange rate (GBP against major trading currencies USD, EUR, CAD, AUD, JPY) very, very close to that of transferwise. For anyone with expenses in one of those currencies which can be paid on a card this is starting to look like a very interesting proposition.

  18. Interesting picture used by MBNA on the new cards. This is one I took back in 2009 from a cruise ship leaving St Petersburg

    https://www.dropbox.com/s/qhe6t74rudpbma2/gw-IMG_0199.jpg?dl=0

  19. Received my MBNA letter for Horizon card yesterday (white virgin card) – seemingly a day later than the black card users – just in case any free white card users were wondering where their letter was!

  20. Betty Swollocks says:

    All airline cards will be given the new Horizon card

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