Barclaycard Is On a Roll: More Things They Can Do to Dominate the Travel Reward Credit Card Industry
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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.
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 Rewards Credit Card, other cards such as the Citi 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 (No longer open to new applicants) (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 Plus World Elite Mastercard
Current Bonus: 40,000 bonus miles when you spend $3,000 in 90 days.
Category Spending Bonuses: 2x points on all purchases
Perks: 5% 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
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
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
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,600
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
- 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.