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A couple of weeks ago, the 100,000 Avios welcome bonus was brought back on the British Airways Visa Signature® Card. This bonus has the potential to be extremely lucrative, though earning the full 100,000 Avios does require a significant amount of spend. The breakdown of the bonus on this $95 annual fee card is as follows:
- 50,000 bonus Avios after you spend $3,000 on purchases within the first three months from account opening
- 25,000 additional bonus Avios after you spend $10,000 total on purchases within your first year from account opening
- 25,000 additional bonus Avios after you spend $20,000 total on purchases within your first year from account opening
I picked up the British Airways Visa Signature® Card last year during a similar promotion. This card isn’t subjected to 5/24, and it’s available to those who currently don’t have the card and haven’t received a new cardmember bonus on this card in the past 24 months. So even if you’ve had this card in the past, you’re potentially eligible for it again.
Crunching the numbers: earn 50K, 75K, or 100K?
If you wanted to, you could look at this as the choice between three different sign-up bonuses — you can choose between a 50K bonus, 75K bonus, and 100K bonus. Acquiring the British Airways Visa Signature® Card for any of those levels could make sense, since not everyone can realistically spend $20,000 on a credit card per year. For example, at the $3,000 spend level we don’t really see bigger bonuses than 50,000 Avios, so that’s as good as you’ll do at that level.
Assuming you’re able to spend a significant amount on credit cards in non-bonused categories, how does the math on this card work out? Let’s break it down and see how many incremental Avios you’re earning for spending $3,000, $10,000, and $20,000 (this includes the one Avios per dollar spent that you usually earn):
- If you spend $3,000, you’re earning ~17.7 Avios per dollar spent (53,000 Avios for $3,000 of spend)
- If you spend $10,000, you’re earning an incremental ~4.6 Avios per dollar spent (32,000 Avios for $7,000 of spend)
- If you spend $20,000, you’re earning an incremental 3.5 Avios per dollar spent (35,000 Avios for $10,000 of spend)
Personally I value Avios at ~1.3 cents each (see this post for some tips on fun ways to redeem Avios), meaning that you’re earning the following return on spend:
- $1-3,000 gets you a return of ~23%
- $3,001-10,000 gets you a return of ~6%
- $10,001-20,000 gets you a return of ~4.6%
I’d consider those to be excellent returns on spend in all three ranges, though obviously the greatest return is for the first $3,000 of spend, and the incremental return decreases after that.
The opportunity cost of spend
As you can see, you can earn a return of ~4.6-23% on spend on the card, at least according to my valuation. That sounds great, though how does that compare to the best options otherwise?
Ideally you’d be using this card for spend that doesn’t otherwise qualify for bonus categories, since the opportunity cost of that spend is the lowest.
For everyday, non-bonused spend, what’s the best you can do otherwise?
- The Chase Freedom Unlimited® offers 1.5x points on everyday purchases, and in conjunction with a card like the Chase Sapphire Preferred® Card, Chase Sapphire Reserve® Card, or Ink Business Preferred℠ Credit Card, those points can be converted into Ultimate Rewards points; I value Ultimate Rewards points at ~1.7 cents each, so to me that’s a return of ~2.55%
- This isn’t really an apples-to-apples comparison since one is a business card and one is a personal card, but The Blue Business℠ Plus Credit Card from American Express offers 2x Membership Rewards points on the first $50,000 spent annually; I value Membership Rewards points at ~1.7 cents each, so to me that’s a return of ~3.4%
While those cards have great returns, as you can see the incremental bonuses on the British Airways Visa Signature® Card are even better. The major restriction to keep in mind is that you only achieve the above returns if you actually spend at least $3,000, $10,000, or $20,000. In other words, spending $2,000, $9,000, or $19,000 won’t be nearly as rewarding.
Redeem Avios for travel in Cathay Pacific business class
The British Airways Visa Signature® Card has a big sign-up bonus and isn’t subjected to Chase’s 5/24 rule, so it’s a card that many people are eligible for. Even if you only have the ability to spend $3,000 within three months, this can still be a worthwhile sign-up bonus. While the minimum spend requirement to maximize the bonus is big, I think it’s well worth it if you can swing it.
Just make sure you crunch the numbers, and that as much as possible you’re spending in non-bonused categories to keep the opportunity cost of spend down.