The best reward credit cards

American Express has slashed the introductory points bonuses on its reward credit cards, but should you still consider them?

American Express has halved the introductory points bonuses on its reward cards and made them harder to get.

The changes are effective immediately (they were implemented yesterday, April 16) but won't apply to customers who've already got an Amex, only new customers. 

The points bonuses were a big reason to choose American Express: in the case of the Preferred Rewards Gold card, the 20,000 point bonus could pay for return flights to Morrocco.

Now the bonus is 10,000, just enough for flights to Paris, plus you'll need to spend an increased amount to claim it: £3,000 on the card in three months. As we found, just spending £2,000 in three months was hard enough.

Two other cards have been affected: the Rewards card now only has a 5,000 bonus and only if you spent £2,000; the Rewards Low Rate card offers just 2,500 points for a £1,000 minimum spend.

It's a blow for reward card users, particularly considering American Express cards have less acceptance in shops, high-interest charges and high fees for use abroad.

That said, American Express market-leading cashback cards have not been affected by the changes.

Nor has the American Express British Airways card, the Amex Nectar card or Amex Starwood Preferred Rewards card.

In this article, we ask whether its time to drop American Express and consider the alternatives.

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Flexible rewards schemes

American Express may have slashed the points bonus on its cards, but they still have a big advantage.

The problem with most rewards cards is that you can only use the rewards at specific airlines, hotels or supermarkets.

American Express and a couple of other providers, however, offer points that can be converted into several airlines' frequent flyer points and/or used at a variety of retailers.

Plus, their earning ratio is often as good as the dedicated loyalty rewards cards.

American Express Preferred Rewards Gold 

Formerly the American Express Preferred Rewards Gold Charge Card, this now gives you 10,000 bonus Membership Rewards points when you spend £3,000 in your first three months of card membership (which is easier said than done).  

Membership Rewards points can be converted to Avios or Flying Club Miles on a 1:1 basis, or redeemed with shopping, travel and lifestyle partners: 20,000 points, for example, could take you to over 100 destinations in Europe and beyond. 

The annual fee is an eye-watering £140 (representative APR 57.6%), but this is waived for the first year so make sure you cancel before the year is up. You'll also get two complimentary airport lounge visits per year with this card.

There is also a fee-free version of this card: The American Express Rewards Credit Card.

It has 5,000 Membership Points on offer if you spend of £2,000 in the first three months, earns points thereafter and has an APR of 22.9%. Given the high minimum spend, you might be better off considering the dedicated British Airways and Virgin cards below.

American Express Nectar

The American Express Nectar Credit Card (representative APR 28.2%) can help you build up Nectar points. It's not been affected by the bonus change.

You earn two Nectar points for virtually every £1 you spend, which doubles to four points when you shop at Nectar partners. What’s more, spend £2,000 in your first three months with the card and you’ll pocket a bonus 20,000 Nectar points.

The card does cost £25 a year, though American Express is currently waiving the fee for the first year.

Barclaycard Freedom Rewards Visa

The fee-free Barclaycard Freedom Rewards Visa (representative APR 21.9%) offers points for your spending, which you can redeem with dozens of partners.

You earn two points for every £1 spent at supermarkets and petrol stations, and then one point for every £1 spent elsewhere at home and abroad. Unfortunately, the redeem rate is terrible: you'll need 1,750 points to get a £5 voucher.

Airline and hotel reward cards

If you travel on a regular basis, there are plenty of reward credit cards that will help you to earn free flights (just paying fees and charges on top) cabin upgrades or hotel stays.

You can find out more about airline frequent flyer schemes here.

A first class cabin on Emirates Airlines (image: Shutterstock)

British Airways American Express

The fee-free British Airways American Express Credit Card (representative APR 22.9%) offers 5,000 bonus Avios points when you spend £1,000 within your first three months with the card.

It's not been affected by the bonus change.

It allows you to earn one Avios for every £1 you spend and when you spend £20,000 or more within an anniversary year you will get a complimentary companion voucher.

For very high spenders, there is also a British Airways American Express Premium Plus Card available. It has a higher earn rate (1.5 Avios per pound) and a higher bonus (25,000 Avios for £3000 in three months) but also a very high fee of £195 per year, giving it a representative APR of 76%.

Virgin Atlantic Reward Mastercard

New for this year, the Virgin Atlantic Reward Credit Card (representative APR 22.9%) gives you 5,000 Flying Club miles for your first card purchase in three months. As it's a Mastercard, it can be used in more locations than American Express cards, sometimes even for Council Tax.

You can also earn 0.75 Flying Club miles for every £1 you spend and when you spend £20,000 or more within an anniversary year you will get a complimentary companion voucher or premium economy upgrade.

If you're a very high spender, the Virgin Atlantic Reward+ Credit Card (representative APR 63.9%) has a bigger welcome bonus (15,000), a higher earn rate (1.5 miles per pound), free public wifi and a lower bar to get companion tickets, but has a steep £160 annual fee.

IHG Rewards Club Mastercard

The fee-free IHG Rewards Club Credit Card (representative APR 18.9%) offers 10,000 IHG Rewards Club bonus points when you spend £200 within your first three months with the card.

At the same time, you can earn one point for every £1 you spend in the UK, two points at any of the IHG hotels (which includes Crowne Plaza and Holiday Inn hotels) in the UK and two points for every pound you spend abroad. 

The account gives you Gold Elite Status which means you benefit from 10% bonus points when you stay. The card also offers 12 months 0% on balance transfers for a 3% fee. 

If you've got £99 spare for the annual fee, the IHG Rewards Club Premium Credit Card (representative APR 41.5% ) has plenty of extra benefits.

You get Platinum Elite Status which entitles you to 50% extra bonus points, complimentary room upgrades, guaranteed room availability, priority check-in, extended check-out, no blackout dates on Reward Nights and a dedicated customer service line. You get a free hotel night if you spend over £10,000 in a year.

The Premium Card also has double the welcome bonus (20,000 points) and double earnings (at least two points per pound), with the same balance transfer offer. 

Supermarket and shop points

Some supermarkets and shops offer credit cards that allow you to build up points that can be exchanged for rewards, usually at the same supermarket. Bear in mind that a cashback card could prove better value in the long term.

Best reward cards for supermarkets and shopping (image: Shutterstock)

M&S Reward Plus Mastercard

The M&S Bank Reward Plus Credit Card (representative APR 19.9%) gives customers points to spend on M&S shopping.

You'll earn 2,000 M&S points worth £20 if you use your card within the first 90 days as well as double points on all your M&S shopping for the first 12 months.

What's more, the card gives you 0% on purchases for six months as well as 0% on balance transfers for six months. The latter is available for 90 days from account opening, but a 2.9% fee applies (or a minimum of £5). 

In your first year, you'll earn two points for every £1 spent in M&S (one point in subsequent years) and every £5 spent elsewhere.

M&S Shopping Plus Mastercard

With the M&S Shopping Plus Offer Credit Card (representative APR 19.9%), you get 25 months of 0% interest on purchases and there’s also 0% on balance transfers for 25 months (2.9% fee).

You also earn one M&S point for every £1 you spend in-store or for every £5 spent elsewhere. 100 points is worth £1 in M&S vouchers. You get a bonus 500 points worth £5 to spend on food, clothing or home at M&S to get you started with your credit card.

The card offers 25 months of 0% interest on purchases and there’s also 0% on balance transfers for 25 months (2.9% fee).

Sainsbury’s Bank Nectar Purchase Mastercard

If you shop at Sainsbury’s, you might like the Sainsbury’s Dual Offer Credit Card (representative APR 20.9%).

Not only do you get to avoid interest on your spending for 28 months - among the longest 0% offers in the market - you get 28 months interest-free on balance transfers and Nectar points.

You earn two Nectar points for every £1 you spend on Sainsbury's shopping and fuel, and one point for every £5 spent elsewhere.

You'll get a bonus 750 points every time you spend £35 or more on Sainsbury's shopping, up to 10 times in the first two months (7,500 in total).

Sainsbury's excellent Balance Transfer credit card, fee-free Balance Transfer credit cards also earn Nectar points and are eligible for the bonus.

Debenhams Mastercard

The Debenhams Mastercard (representative APR 24.9%) allows you to earn three points for every £1 spent in Debenhams in store or online and one point for every £2 spent elsewhere.

Your points are converted into gift vouchers - read here for why these aren't necessarily a good idea.

You can get 10% off online for a week from account opening and a £5 welcome bonus, free standard delivery and 10% off in Debenhams café and restaurants when you pay with the card.

The card also offers 12 months 0% on balance transfers (2.99% fee).

Given Debenhams' current financial troubles we would advise caution with this card, as your Debenhams points may end up worthless.

John Lewis and Waitrose Partnership Card

With the John Lewis and Waitrose Partnership Card (representative APR 18.9%)  you'll earn points to go towards John Lewis Partnership vouchers every time you spend.

Every 500 points you earn is worth £5 in vouchers. You'll earn one point for every £1 spent in-store or online at John Lewis and Waitrose and one point for every £2 spent at MasterCard outlets elsewhere. 

What's more, you get 0% on balance transfers for 18 months (a 2.9% balance transfer fee applies) and 0% on purchases for nine months.

Tesco Clubcard Mastercard for Purchases

This card gives you 0% interest on purchases for 26 months and interest-free balance transfers for three months (a 2.9% balance transfer fee applies).

The Tesco Clubcard Credit Card for Purchases (representative APR 19.9%) can also collect points, although the earning ratio isn't great. Collect one point for every £4 spent in Tesco and one point for every £8 spent elsewhere.

A final word of warning

Finally, remember, if you’re using a rewards credit card, always ensure you pay off your bill in full each month to avoid being hit with a hefty interest charge which will wipe out the rewards you’ve managed to build up.

An easy way to do this is to set up a direct debit that pays off the balance in full every month, providing you can afford this. 

Prefer cashback? Take a look at The best cashback credit cards

This article is regularly updated


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