In the US we’ve seen all the major credit card issuers add restrictions in order to encourage profitable behavior from consumers. This has come in many forms, and it’s something that seems to evolve over time.
The US is the most lucrative credit card market in the world, and that’s both due to how widely accepted credit cards are, and due to the lack of caps on interchange fees. This creates a market where credit cards can be mutually beneficial for consumers and banks (if used correctly).
It’s interesting at times to look at how credit cards in other countries differ. The UK, for example, is a country with high credit card usage, but it has caps on interchange fees, so the credit card market isn’t nearly as lucrative. In other words, issuers have to rely more heavily on annual fees and other fees in order to make the economics of cards work.
With that in mind, Amex UK has just made some massive changes to how they award welcome bonuses, and this is something that will impact a lot of consumers. First note that this doesn’t impact whether or not you’ll be approved for a card, but rather only impacts whether or not you’re eligible for the bonus on a card.
Head for Points has the rundown on the changes. To summarize, previously Amex grouped cards into families (Amex Membership Rewards, British Airways Avios, Marriott Bonvoy, etc.), and your eligibility for a bonus depended on whether or not you had a card in the same “family” of cards. You were only eligible for the welcome bonus on a card if you didn’t have a card in that family open within the past six months.
With the new rules, you’re generally not eligible for the welcome bonus on a personal American Express card if you’ve had any personal American Express card within the past 24 months. We’re not even talking about having opened or closed a card in that period, but even just having it.
So for example, if you’ve had a Marriott Amex in the past 24 months, you generally wouldn’t be eligible for a British Airways Amex welcome bonus.
Just to give an example of the American Express Preferred Rewards Gold Card in the UK, the bonus restrictions are as follows:
The 20,000 Membership Rewards bonus points will be awarded onto your Account once you have been approved and you have spent and charged £2,000 within the first three months of Cardmembership. Cardmembership begins from Card approval. All introductory offers are subject to change, can be withdrawn at any time and are not available if you currently hold or have held any personal American Express Card in the past 24 months.
There are a few specific exceptions to this rule, but it is interesting to see restrictions this severe.
Bottom line
The UK credit card market has never been as lucrative as the US market, as there’s not as much upside for credit card issuers. So I wouldn’t at all take changes in the UK to mean that we’ll see similar changes in the US.
But that doesn’t make it any less interesting to compare practices in different markets.
Will this likely dissuade some people from applying for some credit cards in the UK? Yes. But I guess Amex has decided that it’s a worthwhile tradeoff.
To readers in the UK — will you be impacted by these changes?
I’m a US citizen living in the UK, and the miles world has dried up. A year ago (?) MBNA pulled all its airline co-branded cards from the market, so that killed off quite a bit. I’ve got the BA Am Ex for the 2-for-1 yearly Avios redemption and the IHG Premium, but generally now only do US Cards.
@The nice Paul - Thanks for the clarification, I get what you're saying however would be amazed if that is the case here. I'm sure there's a source online somewhere that would detail the number of credit cards in circulation vs the number of current accounts, but I can't really be bothered to go Googling that :-)
Perhaps one of the more erudite contributors could furnish us with such.
@mckol
Sloppy wording on my part. I meant that the bank which holds a person’s cheque account is also likely to be their credit card issuer (your cheque account is with HSBC? You’ll likely have HSBC credit cards. Etc). It’s a marketing link, not a link from a credit card direct to a cheque account. Sorry for creating confusion.
I guess my fairly banal point was the same as that now made by done other posters: the UK market is utterly different to the US market.
This actually my hobby pretty much destroyed. As someone on average income and who doesn't get to travel for work, it is going to be extremely difficult to get the miles required now to get the worthwhile awards in premium cabins...
@mkcol opps, as my daughter will confirm I'm stuck in the 90's haha. I was not aware it was originally a UK inspired idea that was implemented EU-wide. Interesting!
The main point being that EU card schemes receive a much smaller cut of every transaction than they do in the USA, therefore hampering their ability to offer points / bonuses / cash back offers etc.
Overall I think it aids transparency for the end user...
@mkcol opps, as my daughter will confirm I'm stuck in the 90's haha. I was not aware it was originally a UK inspired idea that was implemented EU-wide. Interesting!
The main point being that EU card schemes receive a much smaller cut of every transaction than they do in the USA, therefore hampering their ability to offer points / bonuses / cash back offers etc.
Overall I think it aids transparency for the end user and reduces the cost of doing business for everyone. Most folks don't realise that they are ultimately paying for their points through increased charges to merchants who pass that on in higher prices to the end consumer.
Already the Platinum in UK is uncompetitive to the US eg huge foreign exchange fees.
@Stephen King The EEC? What Century are you in?!
For clarity the cap on interchange fees was an idea brought by the UK to the European Commission, and implemented EU-wide.
As a small business man that accepts credit card payments here in the UK I can confirm the big changes to interchange fees.
Where as 2 years ago we were paying the credit card issuers 2% or more in fees, we now pay just half of one percent.
This is due to an EEC ruling that was designed to cut merchant fees on credit cards in exchange for a percentage based fee for debit card...
As a small business man that accepts credit card payments here in the UK I can confirm the big changes to interchange fees.
Where as 2 years ago we were paying the credit card issuers 2% or more in fees, we now pay just half of one percent.
This is due to an EEC ruling that was designed to cut merchant fees on credit cards in exchange for a percentage based fee for debit card transactions. Previously a merchant paid a fixed fee of say 20p to take a debit card payment. Now he is charged around 0.2%.
The ultimate aim of this scheme was to encourage use of 'tap and pay' technology for small transactions that would have previously been made by cash.
Amex is a slightly different kettle of fish in that it still charges merchants a far higher fee than Visa or Mastercard but still much reduced from 2 years ago.
This definitely affects me since AMEX had some reasonable bonuses in the UK. Reasonable for the UK market, at least. It's nothing compared to the US.
@Howard I've been wondering about James' absence too!
This is already the rule for Amex in Australia. Maybe it will rolled out worldwide.
"If you think you have it bad in the UK, try living in Belgium…we don’t even have multiple cards to churn through!"
The German-speaking countries are also dreadful... and of course Miles + More is the most notoriously horrible program for accumulating miles.
@Lucky There is no Marriott AMEX in the UK.
@The Nice Paul It's highly unusual for a credit card to be linked to a current/checking account in the UK. They are almost universally standalone, to the extent I cannot think of any which are.
Euro market doesn’t use as much credit cards for payment as US market. Also merchant account processing fees are high in US what makes large profit for cc issuers. To put it all in perspective all business class travel originating in US is 30-60% more expensive then in EU. We in US get higher incentives to sign up for cc but burn them fast to get the premium cabin. Once hooked on premium product we pony up astronomical price.
This is almost the same in the Australian market:
American Express Card Members who currently hold or who have previously held any Consumer or Small Business Card product in the previous 18 month period are ineligible for Welcome offers. This includes Consumer Charge, Consumer Credit and Small Business Cards.
I got lucky during a few weeks where you could get a signup bonus for a credit card and a signup bonus for a charge card,...
This is almost the same in the Australian market:
American Express Card Members who currently hold or who have previously held any Consumer or Small Business Card product in the previous 18 month period are ineligible for Welcome offers. This includes Consumer Charge, Consumer Credit and Small Business Cards.
I got lucky during a few weeks where you could get a signup bonus for a credit card and a signup bonus for a charge card, but that "loophole" was closed really quickly.
I wonder what the fallout will be if AMEX pushes this wording to the US market as well?
If you think you have it bad in the UK, try living in Belgium...we don't even have multiple cards to churn through! Lufthansa Miles & More Amex or bust. I think my sign-up bonus was a whopping 12k miles or something like that.
Doesn't make sense to me.
The whole point of having bonus is to get you to hold more cards not just having ONE card.
Having the lifetime limit should effecttively shut out churners.
As a young lad growing up in the UK, I used to read the Head for Points blog, and then when comparing it to the US blogs about points, it was like Angela's Ashes to collect the strewn coal / points where ever you could find them.
Now living in the States, I've coerced my husband into the whole points game - and First Class Champagne has never tasted as good.
There's literally no...
As a young lad growing up in the UK, I used to read the Head for Points blog, and then when comparing it to the US blogs about points, it was like Angela's Ashes to collect the strewn coal / points where ever you could find them.
Now living in the States, I've coerced my husband into the whole points game - and First Class Champagne has never tasted as good.
There's literally no comparison to the markets and the opportunities for this whole points game in the USA vs. UK.
@ J
Yes, I’m aware of that. My comment was a general one about the UK market.
@The nice Paul.
Those free credit cards you mention don't earn travel points. It's the cards that earn travel and hotel points which have been impacted.
"In other words, issuers have to rely more heavily on annual fees and other fees in order to make the economics of cards work."
My understanding of the UK market - but I'm happy to be proved wrong - is that the vast majority of UK credit cards are issued as fee-free cards, usually (but not always) connected to the individual's bank cheque account (or, for you, "check account").
So this change may not much make difference.
@WP “Unrelated but we have a casualty in the 737 debacle.”
In case you hadn’t noticed, there had already been several hundred HUMAN casualties.
Unrelated but we have a casualty in the 737 debacle. GA has formally cancelled an order for 49 jets it seems.
https://translate.googleusercontent.com/translate_c?depth=1&nv=1&rurl=translate.google.com&sl=auto&sp=nmt4&tl=en&u=https://m.detik.com/finance/industri/d-4478072/garuda-batalkan-pemesanan-49-unit-boeing-737-max-8%3F_ga%3D2.235938307.364648344.1553183085-1368712748.1553183085&xid=17259,15700002,15700021,15700186,15700191,15700248,15700253&usg=ALkJrhhgGLKsFNKAgm_pu_jCiQG
Unrelated but we have a casualty in the 737 debacle. GA has formally cancelled an order for 49 jets it seems.
https://translate.googleusercontent.com/translate_c?depth=1&nv=1&rurl=translate.google.com&sl=auto&sp=nmt4&tl=en&u=https://m.detik.com/finance/industri/d-4478072/garuda-batalkan-pemesanan-49-unit-boeing-737-max-8%3F_ga%3D2.235938307.364648344.1553183085-1368712748.1553183085&xid=17259,15700002,15700021,15700186,15700191,15700248,15700253&usg=ALkJrhhgGLKsFNKAgm_pu_jCiQG
Lucky, unrelated, but we have our first Boeing casualty in the Boeing 737 MAX debacle. It appears Garuda has formally cancelled an order for 49 737 MAX 8 jets.
https://translate.googleusercontent.com/translate_c?depth=1&nv=1&rurl=translate.google.com&sl=auto&sp=nmt4&tl=en&u=https://m.detik.com/finance/industri/d-4478072/garuda-batalkan-pemesanan-49-unit-boeing-737-max-8%3F_ga%3D2.235938307.364648344.1553183085-1368712748.1553183085&xid=17259,15700002,15700021,15700186,15700191,15700248,15700253&usg=ALkJrhhgGLKsFNKAgm_pu_jCiQG
Lucky, unrelated, but we have our first Boeing casualty in the Boeing 737 MAX debacle. It appears Garuda has formally cancelled an order for 49 737 MAX 8 jets.
https://translate.googleusercontent.com/translate_c?depth=1&nv=1&rurl=translate.google.com&sl=auto&sp=nmt4&tl=en&u=https://m.detik.com/finance/industri/d-4478072/garuda-batalkan-pemesanan-49-unit-boeing-737-max-8%3F_ga%3D2.235938307.364648344.1553183085-1368712748.1553183085&xid=17259,15700002,15700021,15700186,15700191,15700248,15700253&usg=ALkJrhhgGLKsFNKAgm_pu_jCiQG
What happened to James?
But interesting for those of us in the United States in the long run. Several powerful US merchants are pushing (through various channels) for interchange fee limitations. If that profit center becomes restrained in the future, those who swipe but never pay interest may become less valuable/desirable to card issuers. That’s one of the reasons I don’t pass on great offers to wait for 5/24. The points and miles landscape might might look a lot...
But interesting for those of us in the United States in the long run. Several powerful US merchants are pushing (through various channels) for interchange fee limitations. If that profit center becomes restrained in the future, those who swipe but never pay interest may become less valuable/desirable to card issuers. That’s one of the reasons I don’t pass on great offers to wait for 5/24. The points and miles landscape might might look a lot different in the US a few years from now.
@ John W. Yes you are rather. The sign up bonuses in the UK are massively smaller than in the UK, between say 10000 to 30000 tops. Therefore it has been common practice to "churn" on a six monthly cycle. This is now no longer possible. It is a dramatic change for some of us in the UK who collect points. It has no real effect on US readers and I'm slightly surprised Ben has...
@ John W. Yes you are rather. The sign up bonuses in the UK are massively smaller than in the UK, between say 10000 to 30000 tops. Therefore it has been common practice to "churn" on a six monthly cycle. This is now no longer possible. It is a dramatic change for some of us in the UK who collect points. It has no real effect on US readers and I'm slightly surprised Ben has even bothered to produce such a short article. For you I suppose it might mean there is less competition from the UK for reward seats. That's about it. So dramatic for us not for you.
I guess AMEX wants to streamline their products over the European Union. Because for me as a Dutch citizen, I was always only allowed to have one AMEX card to be eligble for the sign up bonus. I think this is the same for the other countries in the EU, I guess the UK was a somewhat more unique market then.
The 800$ (700 euro) a year AMEX platinum card gives a 15K membership...
I guess AMEX wants to streamline their products over the European Union. Because for me as a Dutch citizen, I was always only allowed to have one AMEX card to be eligble for the sign up bonus. I think this is the same for the other countries in the EU, I guess the UK was a somewhat more unique market then.
The 800$ (700 euro) a year AMEX platinum card gives a 15K membership rewards points signup bonus in the Netherlands. So I guess there is not really a reason to have multiple creditcards just for the purpose of sign up bonuses anyway on this side of the world.
@John W
Yes you are missing something. First of all these changes are in the UK... :)
Secondly... just reread the article :)
In that scenario you wouldn't even get the once in a lifetime bonus unless you closed all your Amex cards, waited 2 years and then applied. Seems odd that it provides an incentive to leave Amex completely for 2 years!
Hi Lucky,
Am I missing something? In the US, per my understanding, I thought we are only eligible for the bonus once per lifetime. So why is this considered a dramatic change?
Am I missing something?
@ John W -- In the US, it's once per lifetime per card. These new restrictions limit you from getting the bonus on most Amex UK products if you have any other open Amex cards at all, or have had one open in the past 24 months, regardless of when you received the bonus.