What is the best alternative to the United Airlines MileagePlus UK credit card?

MBNA has written to holders of the United Airlines MileagePlus UK credit cards this week to tell them that they are closing on 21st July.

This was always an odd card which – most of the time – had no sign-up bonus attached to it.  The earning rate was also lower than some of the other MBNA airline cards.  However, because United has no American Express relationship and an odd deal with Starwood Preferred Guest, its own card was still the easiest option.

Today I thought I would run through the options if you still want to collect United Airlines MileagePlus miles from a credit card, or want an interesting alternative from another airline.  As it happens, things have perked up substantially since Marriott (which has a generous United transfer rate) acquired Starwood (which has a UK credit card and is also an Amex partner).

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 United Airlines cards.

Starwood Preferred Guest American Express card

What is your best alternative to the United Airlines 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 United Airlines miles at a decent rate

The good news is that there are still ways to earn United Airlines miles from a credit or charge card in the UK.

The highest miles earning option is the Starwood Preferred Guest American Express credit card You can get up to 1.34 miles per £1 spent which is better than the old MBNA cards!

United Airlines has a uniquely poor airline conversion rate from SPG of 2:1.  This means that you would only earn 0.5 United miles per £1 spent on the SPG Amex if you transferred them directly.  DO NOT DO THIS!

There is a way of increasing your earning rate   You can convert your SPG American Express points to Marriott Rewards points and convert to United MileagePlus miles from there.  This page shows the rates:

2,666 Starwood points = 8,000 Marriott points = 2,000 United miles (0.75 per £1 spent)

5,333 Starwood points = 16,000 Marriott points = 5,000 United miles (0.94 per £1 spent)

8,000 Starwood points = 24,000 Marriott points = 10,000 United miles (1.25 per £1 spent)

18,600 Starwood points = 56,000 Marriott points = 25,000 United miles (1.34 per £1 spent)

37,333 Starwood points = 112,000 Marriott points = 50,000 United miles (1.34 per £1 spent)

The annual fee on the SPG card is £75 and you get a sign-up bonus of 10,000 SPG points (30,000 Marriott points).  This makes the card well worth getting for the first year at least.

United Airlines is NOT an American Express Membership Rewards partner.  This means that you cannot earn miles directly from either American Express Preferred Rewards Gold or American Express Platinum.

The only thing you can do is transfer your Amex points into Starwood Preferred Guest and then convert to Marriott Rewards and on to United via the route above.  These cards give you 1 Membership Rewards point per £1 spent, and they convert at 2:1 into Starwood Preferred Guest.  You only earn half as many miles as if you were using the SPG card.

These cards DO come with excellent sign-up bonuses though.  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.

Even if it isn’t the best deal for day to day spending, you should consider taking out a ‘free for a year’ American Express Preferred Rewards Gold and banking over 10,000 United Airlines miles from converting the sign-up bonus to Starwood points, then to Marriott Rewards points and then to United!

Best American Airlines UK credit card replacement

Scenario 2:  You specifically want a Visa or Mastercard to collect United Airlines miles

Earning MileagePlus miles from a Mastercard or Visa now is now tricky.  You can’t get near the 0.625 miles per £1 that the free 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 United Airlines miles.  The £99 Premium card comes with 20,000 IHG points, worth 4,000 United Airlines miles.

Scenario 3:  You want a credit card which allows you to collect a different sort of Star Alliance miles

Not easy.  Since the Lufthansa and United Airlines cards were closed to new applicants in November 2017, there have been no dedicated Star Alliance UK credit cards.

Via American Express Membership Rewards:

You can collect with the following Star members via an American Express Platinum or American Express Preferred Rewards Gold or Amex Rewards card and then converting your Membership Rewards points to airline miles:

  • SAS – 1 mile per £1
  • Singapore Airlines – 1 mile per £1

Via Starwood Preferred Guest American Express partners:

Starwood Preferred Guest is the loyalty programme for the Westin, Sheraton, W, St Regis hotel group.  As I discussed above, it has a poor conversion rate to United Airlines.

You can, however, convert Starwood Preferred Guest points to a number of other Star Alliance airlines at 1:1.   The SPG Amex therefore earns 1 miles per £1, but this is increased to 1:1.25 if you convert 20,000 points at once.

The SPG American Express card has a sign-up bonus of 10,000 pointsThis means that you would receive 10,000 miles in most of the schemes listed below which is a decent start if you are opening a fresh account.  These are the Star Alliance members which are SPG airline partners:

  • Aegean – 1 mile per £1
  • Air Canada – 1 mile per £1
  • Air China – 1 mile per £1
  • Air New Zealand – 1 point per £65
  • ANA – 1 mile per £1
  • Asiana Airlines – 1 mile per £1
  • Miles & More – 1 mile per £1
  • Singapore Airlines – 1 mile per £1
  • Thai Airways – 1 mile per £1

Via the IHG credit cards:

The IHG Rewards Club credit card earns a poor 0.2 miles per £1 of credit card spend, although if you have the IHG Rewards Club Premium credit card, this is doubled to a more reasonable 0.4 miles per £1.  Star Alliance partners apart from United are: Air China, Air New Zealand (£400 spend = 1 point), ANA, Asiana Airlines, Copa (via Globalpass), Miles & More, Singapore Airlines, South African Airways, TAP Air Portugal and Thai Airways.

HSBC Premier is also an option if you want Singapore Airlines miles.  It has an excellent Visa / Mastercard rate (0.5 miles per £1 on the free card, 1 mile per £1 on the paid card).  You need a HSBC Premier current account, however, which has tough income and savings criteria.

As far as I can see, the only Star Alliance members with no UK credit card earning ability are Egyptair, Ethiopian and EVA Air.  Shenzhen Airlines uses Air China’s PheonixMiles programme, which can be accessed via Starwood, IHG, Marriott and Hilton.

Best American Airlines UK credit card replacement

Scenario 4:  You want a high-earning Visa or Mastercard and are willing to move away from United Airlines and Star Alliance

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, is more than you were getting for non-Amex spend from your old United Airlines 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 / Etihad Guest / Singapore Airlines Krisflyer collector (if you have a high income) are the HSBC Premier Mastercard or HSBC Premier World Elite Mastercard

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.  Until 18th September you get 1,000 Clubcard points (worth 2,400 Avios or 2,500 Virgin miles) as a sign-up bonus on the Tesco card.

Reviews and to apply

Here are my reviews of the cards mentioned above, which also explain the sign-up bonuses available:

Starwood Preferred Guest American Express – review, apply 

American Express Preferred Rewards Gold – review, apply 

American Express Platinum – review, apply 

HSBC Premier Mastercard – review, apply 

HSBC Premier World Elite Mastercard – review, apply 

IHG Rewards Club Mastercard – review, apply 

IHG Rewards Club Premium Mastercard – review, apply 

Virgin Atlantic Reward Mastercard – review, apply 

Virgin Atlantic Reward+ Mastercard – review, apply 

Tesco Clubcard Mastercard – review, apply 

Please read this important interest rate information:

Starwood Preferred Guest American Express – representative APR 36.2% 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

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.

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Comments

  1. OT. Do you still get access to the Virgin Australia domestic lounges by showing a UK Amex platinum card? I’m living here for a few months so it could be useful.

  2. They wrote to me saying my Miles & More cards will be closed in 28July. I knew this was coming and it’s unfortunate.

  3. Peter Farrow says:

    What is the best way to keep my United Airlines miles alive now their credit cards have gone?.. I don’t really want to add to them, just don’t want to loose them.

    • Re keeping your UA points from expiring. I too have quite a few. If nothing else crops up, would purchase the minimum (2,000) for $70 to keep them alive for a further 18mos.
      On the subject of the replacement card United is offering, the new benefits are 0.5% cashback on purchases and no FX fees.

      • but remember the 0.5% cashback is in reality more like 0.25% cashback – because MBNA are rounding transactions down to £2 multiples before awarding cashback

        • I only see myself using this card abroad where I am generally charging high 3-figure to low 4-figure hotel bills, so the rounding won’t matter much.

      • Callum says:

        You can just use their online shopping portal and buy something for a dollar or two.

    • Oh Matron! says:

      E-rewards and the odd survey.

  4. This is getting silly now…..the EU has single handedly killed the affinity points credit card market. How can they say they are acting in the Interests of consumers when the only choices as a result of their actions is now premium cards with a fee and stringent eligibility criteria. What were chances of MBNA abandoning these products if the cha few did not come into force?

    • The UK was a main proponent of this particular EU legislation, and have actually went further than the EU law and have included Paypal and other payment systems as well.

    • Because they are. Because when you use a card and the shops pays 1.5% to Visa, cash (potentially poorer) shoppers are subsidising you.

      • Though nothing stops the shops that were previously charging fees for paying with card from just raising their prices across the board to make up for it?

        I can’t possibly see how is it beneficial to consumers.

        • the real harry1 says:

          It’s beneficial to me! 🙂

          My Texaco has stopped charging 50p to use Paypoint Amex (council tax etc) lol

        • If a shop is now paying 1.2% less to accept credit cards, there is clearly less pressure to increase prices across the board – which benefits all customers.

          The idea that you can just randomly increase prices when your costs increase breaks every fundamental law of economics including several which have won Nobel Prizes, so if you have some insight here I think a trip to Sweden could be on the cards for you 🙂 Probably get to meet Trump as he picks up his Nobel Peace Prize.

      • Andrew says:

        I’m not so sure if cash shoppers are truly subsidising card users.

        The basic fee for banking cash varies between banks, but it’s usually in the region of 90p per £100 deposited – so 60p per £100 less at first glance.

        Then there’s the change handling fee (around £1.50 per £100 exchanged) and the sheer time wasted balancing the till and taking the cash to the bank or dealing with cash remittances via a security company. Say £7.83 an hour living wage on handling cash and £25 for a security pick up.

        • Peter K says:

          A local butcher said it cost him less for people to use contactless than cash. He was charged over 2% to deposit cash and a flat fee (11p IIRC) for contactless.

        • the real harry1 says:

          and all the expense of processing cash, in-house theft etc

          I’m doing my best to help, about the only cash I withdraw now is £15 a week that my daughter needs for bus up the hill/ taxi down to station after school

  5. although many of the cards closing down had an amex associated with them, neither of the reasons cited in the article for closure seem to be stopping virgin running with decent points accruing cards. The MBNA AA card that was launched only a year or so ago, and now closing, is broadly similar in terms of earning and fee to the virgin card.

    So either virgin have went with a model that many others could not see profitability with, or there are other reasons at play.

    • Genghis says:

      I thought Virgin Money offering a VS card was more to do with brand building?

      • Andrew says:

        How long is the Virgin Money brand going to be with us if Clydesdale is successful?

      • Correct. They do not have much of a credit card business and are happy to do this uneconomically (in my view) to build one. It is interesting to see the comments on their card business in the articles about the proposed takeover of VM by Yorkshire / Clydesdale. Similarly, VA treats the card as a marketing tool and presumably is selling the miles disproportionately cheaply.

  6. Worth knowing: you can credit SAS, Singapore Airlines, South African Airways and Air China to Virgin Flying Club, all of whom are Star Alliance.

  7. Daphne Gilbert says:

    The alternatives are really disappointing. Many retailers don’t accept Amex cards.

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