Why the free Barclaycard Avios Mastercard is the best cashback credit card for most people

Barclaycard has just launched two new Avios earning Barclaycard Avios Mastercard credit cards.

These are very, very good products with everything you could ask for, and are easily (in my view) the most attractive Visa or Mastercard credit cards in the UK. You get:

• a great sign-up bonus which the majority of HfP readers will qualify for – and it’s even bigger if you apply this week
• a very high Avios earning rate
• an annual BA cabin upgrade voucher for hitting spending targets

Every HfP reader in the UK should seriously consider applying for one of these cards.

You can apply for the Barclaycard Avios Plus credit card here and the free Barclaycard Avios credit card here.

Why the free Barclaycard Avios card is exceptionally good if you want cashback, not Avios

Slightly counter-intuitively, the free Barclaycard Avios Mastercard is now the best free cashback card in Britain for most people.

It even beats the two American Express Platinum Cashback cards unless you are a big spender.

It is equally as good as the free British Airways American Express card, but the Barclaycard Avios Mastercard is more widely accepted.

Do you believe Nectar points are as good as cash?

My argument assumes, of course, that you believe Nectar points are as good as cash. Whether you do believe this will depend on how much money you spend in Sainsbury’s, in Argos or on eBay.co.uk, the main outlets for Nectar points.

A reminder about how Avios and Nectar convert

In January 2021, Avios and Nectar unveiled their new partnership, making the two currencies interchangeable.

In a huge surprise, the two companies introduced two-way points transfers. This page of ba.com explains how Nectar transfers work.

Not only that, but the transfers were at a very generous rate for both parties:

• 250 Avios gets you 400 Nectar points, which are worth £2 off your shopping at Sainsbury’s, Argos or eBay

• 400 Nectar points get you 250 Avios, which HfP tends to value at around £2-£2.50

Following the launch of the partnership ….

• the value of a Nectar point increased from 0.5p unless you have a very low valuation of an Avios point (and if you do have a low valuation of an Avios, you’re unlikely to be reading this)

• Avios suddenly had a ‘floor’ value of 0.8p, since this was what you got by moving them to Nectar and redeeming for shopping credit. You would be a mug to redeem Avios for any other redemption which got you less than 0.8p per point.

This led to a big disruption to the established order. For example:

• you’d be mad to redeem Avios for hotel bookings, car hire, seat selection fees or even, in almost all cases, ‘Part Pay With Avios’, since all of these get you less than 0.8p per point

• most American Express Membership Rewards redemptions became irrelevant, because almost all of them get you less than 0.8p per point. You should transfer to Avios and into Nectar instead, guaranteeing the 0.8p valuation.

The free Barclaycard Avios Mastercard has now become the UK’s best cashback credit card

….. for most people. Yes, weird but true.

If you know someone looking for a free cashback credit card, tell them to get the free Barclaycard Avios Mastercard.

The representative APR is 29.9% variable.

There is a bonus of 5,000 Avios if you spend £1,000 within three months. This is worth £40 of Nectar points which is a very generous sign-up offer for a free credit card.

This is how the free Barclaycard Avios card compares to the best cashback cards.

It is clearly better than other Mastercard / Visa options such as:

• Barclaycard Rewards Visa (0.25% cashback)
• John Lewis Partnership Mastercard (0.25% in John Lewis vouchers)
• Sainsbury’s Nectar Mastercard (0.1% in Nectar points)

Let’s jump straight to the top of the market. The UK’s best ‘pure’ free cashback credit card is American Express Platinum Cashback Everyday.

The representative APR is 31.0% variable.

It pays you, per calendar year:

• 0.5% cashback on spend up to £10,000 (but 0% if your annual spend is under £3,000)

• 1% cashback on spend above £10,000

The cashback comes as a lump sum at the year-end, added to your card balance.

Let’s compare this to the free Barclaycard Avios Mastercard. The free Barclaycard pays:

• 1 Avios per £1 spent, with 1 Avios converting into 1.6 Nectar points, worth 0.8p

Compare the free Barclaycard Avios card to the free Amex Platinum Cashback Everyday

This is what you would receive each year in cashback with different levels of spending. Remember that Cashback Everyday requires £3,000 of annual spending before it pays out.

• £1,000 – £0 with Cashback Everyday vs £8 Nectar credit with Barclaycard
• £2,000 – £0 with Cashback Everyday vs £16 Nectar credit with Barclaycard
• £3,000 – £15 with Cashback Everyday vs £24 Nectar credit with Barclaycard
• £4,000 – £20 with Cashback Everyday vs £32 Nectar credit with Barclaycard
• £5,000 – £25 with Cashback Everyday vs £40 Nectar credit with Barclaycard
• £6,000 – £30 with Cashback Everyday vs £48 Nectar credit with Barclaycard
• £7,000 – £35 with Cashback Everyday vs £56 Nectar credit with Barclaycard
• £8,000 – £40 with Cashback Everyday vs £64 Nectar credit with Barclaycard
• £9,000 – £45 with Cashback Everyday vs £72 Nectar credit with Barclaycard
• £10,000 – £50 with Cashback Everyday vs £80 Nectar credit with Barclaycard
• £11,000 – £60 with Cashback Everyday vs £88 Nectar credit with Barclaycard
• £12,000 – £70 with Cashback Everyday vs £96 Nectar credit with Barclaycard
• £13,000 – £80 with Cashback Everyday vs £104 Nectar credit with Barclaycard
• £14,000 – £90 with Cashback Everyday vs £112 Nectar credit with Barclaycard
• £15,000 – £100 with Cashback Everyday vs £120 Nectar credit with Barclaycard

Unless you spend over £25,000 per year, the free American Express Platinum Cashback Everyday card gets you a lower return than the Nectar points you’d earn from the free Barclaycard Avios credit card.

This assumes, of course, that you treat Nectar points as equivalent to cash. If you shop in Sainsbury’s then they definitely are as good as cash.

If you would need to go out of your way to use them, either at Sainsbury’s, Argos, eBay.co.uk or another partner, then you need to factor that in.

I would never deny that cash beats the equivalent value in vouchers, although you will get the occasional Nectar promotion where you can get more than 0.5p per point.

Compare the free Barclaycard Avios card to the £25 Amex Platinum Cashback card

American Express has a second cashback card, Platinum Cashback.

The representative APR is 36.7% variable, including the annual fee.  The representative APR on purchases is 31.0% variable.

This carries a £25 annual fee but has a higher return:

• 0.75% cashback on spend up to £10,000

• 1.25% cashback on spend above £10,000

The free Barclaycard Avios card is still more rewarding than the £25 Platinum Cashback card unless you are spending £17,000 per year.

Here is the return, adjusting for the £25 annual fee on the Platinum Cashback card.

• £1,000 – £(17.50) with Platinum Cashback vs £8 Nectar credit with Barclaycard
• £2,000 – £(10) with Platinum Cashback vs £16 Nectar credit with Barclaycard
• £3,000 – £2.50 with Platinum Cashback vs £24 Nectar credit with Barclaycard
• £4,000 – £5 with Platinum Cashback vs £32 Nectar credit with Barclaycard
• £5,000 – £12.50 with Platinum Cashback vs £40 Nectar credit with Barclaycard
• £6,000 – £20 with Platinum Cashback vs £48 Nectar credit with Barclaycard
• £7,000 – £27.50 with Platinum Cashback vs £56 Nectar credit with Barclaycard
• £8,000 – £35 with Platinum Cashback vs £64 Nectar credit with Barclaycard
• £9,000 – £42.50 with Platinum Cashback vs £72 Nectar credit with Barclaycard
• £10,000 – £50 with Platinum Cashback vs £80 Nectar credit with Barclaycard
• £11,000 – £62.50 with Platinum Cashback vs £88 Nectar credit with Barclaycard
• £12,000 – £75 with Platinum Cashback vs £96 Nectar credit with Barclaycard
• £13,000 – £87.50 with Platinum Cashback vs £104 Nectar credit with Barclaycard
• £14,000 – £100 with Platinum Cashback vs £112 Nectar credit with Barclaycard
• £15,000 – £112.50 with Platinum Cashback vs £120 Nectar credit with Barclaycard

You need to spend £17,000 – adjusting for the £25 fee – before the American Express Platinum Cashback card beats the free Barclaycard Avios Mastercard.

And, of course, the Mastercard is more widely accepted than the American Express cards.

How about the American Express Nectar credit card?

I know what you’re thinking:

“Surely the official Nectar American Express card earns you more from Nectar points than the free Barclaycard Avios credit card?”

Here’s the thing ….. it doesn’t. The Nectar American Express card has a £25 annual fee after the first year, which cuts into your return.

The representative APR from year 2 is 37.8% variable.  The representative APR on purchases, and in the first year, is 31.0% variable.

The Nectar American Express card earns you:

• 2 Nectar points, worth 1p, for every £1 spent

This is how your returns stack up, adjusting for the £25 fee on Nectar American Express after the first year:

• £1,000 – £(15) with Nectar Amex vs £8 Nectar credit with Barclaycard
• £2,000 – £(5) with Nectar Amex vs £16 Nectar credit with Barclaycard
• £3,000 – £5 with Nectar Amex vs £24 Nectar credit with Barclaycard
• £4,000 – £15 with Nectar Amex vs £32 Nectar credit with Barclaycard
• £5,000 – £25 with Nectar Amex vs £40 Nectar credit with Barclaycard
• £6,000 – £35 with Nectar Amex vs £48 Nectar credit with Barclaycard
• £7,000 – £45 with Nectar Amex vs £56 Nectar credit with Barclaycard
• £8,000 – £55 with Nectar Amex vs £64 Nectar credit with Barclaycard
• £9,000 – £65 with Nectar Amex vs £72 Nectar credit with Barclaycard
• £10,000 – £75 with Nectar Amex vs £80 Nectar credit with Barclaycard
• £11,000 – £85 with Nectar Amex vs £88 Nectar credit with Barclaycard
• £12,000 – £95 with Nectar Amex vs £96 Nectar credit with Barclaycard
• £13,000 – £105 with Nectar Amex vs £104 Nectar credit with Barclaycard
• £14,000 – £115 with Nectar Amex vs £112 Nectar credit with Barclaycard
• £15,000 – £125 with Nectar Amex vs £120 Nectar credit with Barclaycard

You need to spend £13,000 before, adjusting for the £25 fee which kicks in from Year 2, the Nectar American Express gets you more ‘pseudo’ cashback than the free Barclaycard Avios Mastercard.

Conclusion

It’s a weird old world, but – as the numbers above show – the free Barclaycard Avios credit card is now the best cashback credit card in Britain for most people, unless you are spending over £13,000 per year.

To beat the return on the free Barclaycard Avios Mastercard, assuming you transferred your Avios into Nectar points, you’d need to spend:

• £25,000 per year on the Amex Platinum Cashback Everyday or

• £17,000 per year on the £25 Amex Platinum Cashback or

• £13,000 per year on the £25 Nectar American Express

….. before it became a better deal.

Is any non-flyer really going to apply for the free Barclaycard Avios credit card purely to use it as a cashback card? Probably not, but they should.

To learn more about the cards, read our Barclaycard Avios Mastercard credit card review here and our Barclaycard Avios Plus Mastercard credit card review here.

PS. Before anyone mentions it ….. I am aware that you can make the same case for the American Express Rewards Credit Card. This is free for life and earns 1 American Express Membership Rewards point per £1. These would convert 1:1 into Avios and then 1:1.6 into Nectar. American Express remains less flexible than a Mastercard, though.