Barclaycard Is On a Roll: More Things They Can Do to Dominate the Travel Reward Credit Card Industry

by on May 15, 2013 · 26 comments

in Barclays, Credit Cards

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While there are numerous credit card companies, only a handful offer really valuable travel rewards credit cards. For years American Express was the premier issuer of valuable, transferable points. They still are a major force, but Chase has doubled down in the past five years and offers a huge portfolio of some of the best rewards cards- poaching not only senior executives from Amex, but also valuable transfer partners like United, Southwest and Priority Club.

Barclaycard has started fielding an impressive array of cards.

Barclaycard has started fielding an impressive array of cards.

This increased competition benefits consumers because credit card companies know they need to be competitive and offer lucrative sign-up bonuses to acquire new cardholders. Especially in the post-credit crisis environment where most issuers are seeking high-income, excellent credit consumers, we’ve seen the sign-up bonuses increase from the old standard of around 25,000 all the way up to 75,000-100,000. And it isn’t just about the sign-up bonuses- spend category bonuses and valuable perks have been added to many cards- even some with no annual fees.

Barclaycard Focuses on the US
One of the newest players trying to capture the lucrative travel credit card market is Barclaycard, which is owned by Barclays, a British powerhouse bank. As their consumer credit card division, Barclaycard is currently the largest issuer of credit cards in Europe. In the US, they acquired Juniper Bank in 2004, which then issued the US Airways co-branded credit card (which I had and remember vividly when they offered a 50 cent flight promo in 2006, which was awesome considering I got nearly free flights to Paris and Tampa). Since then they’ve been inking partnerships with a bunch of different travel providers, like:
Airlines: Aer Lingus, China Airlines, Frontier Airlines, Iceland Air, Lufthansa, US Airways, Virgin America
Hotels: Best Western Rewards, Choice Privilege, Wyndham Rewards
Cruises: Carnival Cruises, Holland America Line, Princess Cruises

However, if Barclaycard wants to compete with the likes of Amex and Chase, I have several suggestions they should do to become a true powerhouse in this sphere.

1. Create More US Focused Airline and Hotel Co-Branded Cards: Most important would be to keep that US Airways Mastercard and win the post-merger airline’s credit card business. While it may be difficult to oust the credit card partnership from Citi, which currently has millions of longterm holders, no official announcement has been made and crazier things have happened. This is the airline industry after all and money talks- if Barclaycard can make a more lucrative offer than Citi, they could potentially secure the contract which would be huge.

On the hotel side of things, although many of the larger chains are already spoken for by Amex (Hilton, Starwood), Chase (Hyatt, Marriott, Priority Club, Fairmont), Citi (Hilton) and even US Bank (Club Carlson), there are still a ton of other chains out there with loyalty programs that could get a real jumpstart with a great credit card product. Barclaycard does already partner with some of the more budget-minded chains, but it would be nice to balance that out with a hotel group from the luxury side of the spectrum with a respectable worldwide footprint like Four Seasons (which plans to launch a loyalty program in the near future) or Shangri-La – perhaps even creating a loyalty program specifically for cardholders like Fairmont did with Chase – and possibly also a high-end domestic brand such as Kimpton, which enjoys a popular and loyal following with its InTouch program.

Scoring some high-profile and high-traffic US-based (or at least very present in the US market) partners like that could really push Barclaycard to the next level.

2. Create a Transferable Points Program: Transferable points like Amex Membership Rewards, Chase Ultimate Rewards and Starwood Preferred Guest Points are the most valuable type of travel points because they give you the flexibility to transfer points or miles to any number of airline, hotel or other travel partners when you need them. You can use them either to top up your loyalty program account, or to redeem the entire cost of an award when you need them for the award you want, and this makes them extra valuable for premium redemptions that might not be in reach otherwise. To be truly a major force on the travel credit card scene Barclaycard should create its own transferable points program – perhaps starting with the airline, hotel and cruise partners that it already has – so that more and more of the affluent consumers who take advantage of these transferable points credit cards start opening accounts with Barclaycard instead of its competitors.

3. Better Non-Travel Redemptions: Although the Arrival Card with the annual fee of $89 (waived the first year) is one of the best fixed-value points credit card options out there because it earns 2X miles per $1 on all purchases, and you can redeem those miles at 1 cent apiece for travel expenses plus get a 10% refund of miles from your redemption, you end up getting a 2.2% return on your spending when redeeming for travel. However, when redeeming miles for cash back statement credits, gift cards and merchandise, redemptions for statement credits  start at 2,500 miles  for just $12.50 in value and gift card redemptions start at 5,000 miles for $25. So you’re just getting a value of 0.5 cents per mile and bringing your return on spending to just 1% with the annual fee card and potentially just 0.5% on the no annual fee card, which earns 2X miles on travel and dining purchases but only 1X mile per dollar on all other purchases.

While that redemption rate is in line with the fixed-value programs of other cards whose points are all redeemable for statement credits at a value of 0.5 cents each, such as the Capital One Venture, other cards such as the Citi ThankYou Premier  let cardholders redeem points in bundles of 2,500 for $25 gift cards, as do the US Bank FlexPerks Visa and even no-fee cards like the Chase Freedom (and if you max out the quarterly rotating 5X spending categories, you’re getting essentially getting 5% cash back). American Express’s Blue Sky Preferred (Update: This offer is no longer available) earns 2X points at US restaurants, hotels and car rentals, 1X on other purchases that you can then redeem as follows: for every 7,500 points you redeem for travel expenses, you get a $100 cash-back statement credit, so you’re getting 1.33 cents per point. The same is true with the no-fee version of the is card, the Blue Sky (Update: This offer no longer exists), though it only earns 1X point per $1 on all purchases. In order to bring the Arrival in line with the other options out there, cash back and merchandise redemptions should be pegged at the 1 cent per mile mark.

Barclaycard has definitely stepped up and joined the travel credit cards game in a serious way recently, but if it hopes to become one of the dominant issuers, there are still a few things it can do to make its credit cards more competitive and more attractive to consumers. Let’s hope they decide to take action on at least some of these points, because the more competition the better for consumers.

Here are my picks for the Top 3 Barclaycard travel credit card offers of the moment:

Barclaycard Arrival
Current Bonus: 40,000 bonus miles when you spend $3,000 in 90 days.
Category Spending Bonuses: 2x points on all purchases
Perks: 10% miles refund on redemptions; no foreign transaction fees; free year-long TripIt Pro membership World Mastercard benefits.
Annual Fee: $0 first year then $89

US Airways Premier World Mastercard
Type: Personal
Current Bonus: 35,000 miles with first purchase, up to 10,000 more miles with a balance transfer within 90 days.
Category Spending Bonuses: 2X miles on US Airways purchases
Perks: 5,000-mile discount on award tickets, annual $99 companion ticket, 10,000 Preferred miles for spending $25,000 in a calendar year, 10,000 anniversary bonus miles
Annual Fee: $89

The Premier Miles & MoreWorld Mastercard
Type: Personal
Current Bonus: 50,000 miles – 20,000 with first purchase or balance transfer and 30,000 when you spend $5,000 in the first 90 days.
Category Spending Bonuses: 2X miles on Lufthansa purchases
Perks: Annual companion ticket
Annual Fee: $79


Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Miles To The Wild

    If Barclays really wants to play with the big boys they need to start
    being more customer friendly. Stop pulling 3 credit bureaus. Stop
    denying because “sufficient credit already exists”. No more bait and
    switch. Allow credit lines to be swapped like Chase does.

  • wtfci

    The annual fee should be waived if a customer spends a certain amount of credit.

  • Ryan

    I agree. Denied for Arrivals because I had $24k US Airways card not being used (when I use it, I use it for $10k-$15k single purchases). Their solution was to deny my arrivals (never pulled credit report) due to sufficient credit existing and then they automatically raised my US Air card to $26k and 2 weeks later $28k rather than give me a new card.

  • DWT

    I used to have the Travelocity Amex from Barclaycard– and while the rewards were arguably better than most cards (I think it was an effective 4% back on dining, gas and groceries, 10% back on airfare purchased through Travelocity and 2% back on everything else, all when redeemed for Travelocity air tickets or hotels), the customer service was so terrible (as in, the worst customer service I have encountered from a credit card company, period), I ended up closing my card for that reason alone. (The issue was that redemptions were often buggy, so you HAD to call customer service.)

  • DWT

    I guess my point is, Barclays will never be a big player here in the US unless they dramatically improve their customer service.

  • Andrew

    Maybe they are going for quality and not quantity. They may not be interested in the get the card, make the spending requirement, get the bonus, move on to the next card crowd. Chase is going after this crowd (I.e. all of us) and we hope others card issuers have the same strategy.

  • Guest

    You said you had 5 suggestions. I see 3.

  • elteetrav

    Agreed. Barclays is not a player that is worth my time. I have a USAirways card with them, and I hope they don’t get the business after the merger. Citi is much better at having category bonuses, allowing multiple cards, etc.

  • William C

    Put this in another way: I’d like to see AmEx get back in the game. I’d like to see AmEx offer a card linked with ACCOR’s hotels in Europe. You can’t walk around a European city of any size without walking past a Mercure, Novotel, Sofitel, Pullman or Ibis hotel, right where you’d build a hotel if you were in the hotel business. If AmEx worked with ACCOR to create a card like U.S. Bank’s Club Carlson Visa, with a big sign-up bonus, 5 (or 3) points per dollar spent, and a respectable annual renewal bonus — AmEx’s ACCOR card customers would remain with them year after year, even if the card charged an annual fee.

  • sheldonbeswift

    Did you really delete my comment noting that the current bonus for the US Airways Premier World Mastercard is up to 50,000 (40,000 Bonus Miles after your first purchase + Earn up to 10,000 Bonus Miles when you transfer a balance within 90 days of account opening)? I hope not…in the past it seemed you were always most interested in teaching others how to get biggest and best offers available, not just the best offers your affiliates will give you.

  • Charlie

    Barclays, I hope you are reading this. Not all credit card customers are the use once or just hit the minimum spend type users. I spend over $150,000 per year going 75% Chase, 15% Citi, 10% Amex. Because they take good care of me! Most of those miles are only 1x or 1.5x after spend bonuses are reached. If you take better care of ALL spenders you will get bigger ones as well. With better bait you will catch bigger fish! Same 4 complaints as Miles stated above.

  • thepointsguy

    I didn’t delete any comments. Thanks for pointing this out, I had been searching for a higher offer but the best I can find with explicitly stated, verifiable bonus terms is for 35k. If you have a link to share, I can definitely put it in the post.

  • Disclosurewanted

    These cards suck. Cashback is at 50% of the other cards. Until they are giving at least $1.00 per 100 points, they are a non-starter. Don’s understand why TPG is pumping them unless he has a GOOOOOD referral deal. How about some disclosure here!!

  • jason

    More credit card app links….lately, that is the way to blog!

  • thepointsguy

    And FYI the 35k is not my affiliate link

  • thepointsguy

    And FYI the 35k is not my affiliate link

  • thepointsguy

    And FYI the 35k is not my affiliate link

  • thepointsguy

    Pumping them? I made that same exact point that they should increase cash back ratio.

  • Flying Larry

    I had the personal US Air and Frontier cards and wanted the business US Air. When they told me I had already been given enough credit, I simply asked them to reduce the Frontier line and give me the US Air business, a request that they granted after a ten minute hold. Ask them nicely and give a sensible reason. What do you have to lose?

  • ck

    I’ve had a BA BarclayCard Visa in Germany for more than three years now. While the deal itself is good (for Germany, all the juicy offers almost never apply to Germany, mostly US/UK only), Barclay sucks because of their so-called security. It happens all the time – I check into my hotel, take a cab a few hours later, card declined. After calling the German number from the US (which is really expensive) you find out that their system thought that the hotel transaction was “suspicious” and deactivated the card for safety purposes. You also have to inform them of your travel plans, let them know where and when you’re going, otherwise the card won’t work at all abroad. It’s a nightmare and I’m cancelling the card because of these recurring issues, I’ve brought them up multiple times with them and they can’t do anything about it. Maybe they have different security for their US customers, but for us in Europe it’s a major pain in the ass.

  • LlamaOfDoom

    In the US it’s worse- they block your card if you so much as leave the state you’re resident in.

  • studd

    i really love to call the outsourced, genderless csr… the answer tree answers they give are priceless.

  • studd

    oh and ever call their csr about denied credit cards or bonus issues, love those answer tree responses,
    no thanks…

  • BH

    Shill much?

  • Pingback: Evaluating When to Get the Top BarclayCard Offers: Arrival vs. Lufthansa vs. US Airways | The Points Guy()

  • luci

    why do you have an annual fee. i dont have one. i dont want any credit card with an annual fee.

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