Is the new Avios earning British Airways Prepaid Mastercard worth the monthly fee?
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We’re big fans of Avios-earning credit cards here at TPG UK, so how does a prepaid debit card compare?
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The card comes with no foreign exchange fees, no pre-application credit check, and no monthly fee for the first six months. After that, it will cost you £2.99 per month (so around £36 per year).
In return, it will award you 1 Avios for every £2, €2 or $2 you spend on it. And, if you can spend £500, $500, or €500 within the first 90 days, British Airways will gift you a 1,500 Avios-point bonus. Plus, you also get three free international cash withdrawals of up to £300 per month.
Unlike a credit card, using a prepaid debit card means you won’t pay interest on your borrowing as it’s your money spending. In other words, no APR on late repayments, you just top up as you go.
How do I apply?
To be eligible for the card you must be 18 years of age, a U.K. resident, a member of the BA Executive Club and hold a valid debit card registered to a U.K. bank account. If you tick these boxes you simple need to…
- Download or open the British Airways Executive Club Rewards app in the App Store or Google Play. Then log in to your British Airways Executive Club account.
- Apply for your Prepaid Mastercard by selecting the Mastercard icon in the navigation bar at the bottom of the British Airways Executive Club Rewards app.
- Follow the instructions and wait for the card to be delivered. Once it arrives you’ll need to link the card to your Executive Club account and can then transfer money to it and use immediately.
Who is this card for?
- If you don’t already have a travel card that comes with no foreign exchange fees
- If you don’t want a credit card but would still like a card that earns you Avios
- If you aren’t eligible for a credit card but want to earn Avios on purchases — as this is a debit there are no pre-application credit checks
In terms of earning points using this card, you will earn 1 Avios per £2 on eligible purchases (Avios are calculated on the amount of the transaction and then rounded up to the nearest full Avios e.g. an £11.99 purchase would earn 6 Avios rather than 5.).
There are however restrictions on what purchases will earn you Avios, as follows.
You cannot collect Avios:
- On your monthly card fee
- On any means of digital electronic payment method (including but not limited to Bitcoin or casino money)
- On payments of rent for residential or business premises
- On Payments for Court Costs, including Alimony and Child Support
- On Payment of Fine;
- On Bail and Bond Payments
- On Tax Payments to the HMRC
To get the 1,500-point welcome bonus, you’ll need to spend £500 using the card within 90 days. Broken down across three months this works out at £166.67 per month for the first three months.
How do the numbers break down?
The card comes with a monthly £2.99 fee but the first six months are free, meaning you’ll only pay £17.94 for the first year, then £35.88 per year thereafter.
That means, in the first year, if you only paid for the monthly card fee and spent enough to earn the 1,500 welcome bonus and nothing else, you would spend. £517.94. Depending on your purchases this could earn you a maximum of 1,750 Avios (1,500 Avios welcome bonus and 250 Avios from the £500 spend).
Based on our current Avios valuations, in this example, 1,750 Avios is worth approximately £19.25 — this would be £1.31 more than you paid in card fees for the year. Obviously, if you spent more than £500 in the first year you would stand to earn more Avios and further increase the value you’re getting against the monthly fee.
For the second year, in order to ensure that your Avios earnings are at least equal to what you’d spend annually on the £2.99 per month card fee, you would need to spend at least £6,522, which — depending on your purchases — would give you a maximum or 3,261 Avios, which we’d value at approximately £35.87.
This might seem like a lot to spend if you’re not using the card regularly but should be achievable across 12 months if you use the card for strategic everyday purchases or high one-off purchases. If, however, you only plan to use the card as a travel card and don’t travel regularly you may struggle to hit this amount, and not earn a great Avios return on your monthly fee.
How can I increase my Avios earnings with this card?
Due to digital electronic payment methods not being eligible for Avios earnings you wouldn’t be able to ‘stack’ points earnings by using online shopping portals.
You could, however, earn additional Avios by using Executive Club’s Collect on Card feature which allows you to link a debit or credit card to your account and take advantage of in-store purchases at certain shops or food venues. You can link your British Airways Prepaid Mastercard through the Executive Club app.
Current Collect on Card offers range from five to 25 Avios per pound spent instore and include among others: 25 Avios per £1 on food at Benitos, 8 Avios per £1 at Harvey Nichols, 15 Avios per £1 at Patisserie Valerie, 7 Avios per £1 Browns.
What about other features?
If the Avios earnings seem somewhat low to you it’s worth also considering what else that card offers in return for its monthly fee.
No foreign exchange fees
Your card has 3 different e-wallet currencies GBP, EUR and USD which can be accessed through the Executive Club app. Provided you have a balance in any of these e-wallet currencies you won’t be charged any foreign exchange fees on transactions in these currencies. If you don’t have a balance in these currencies or you use the card in a different currency you’ll be charged a 1.5% fee.
You can only top up the card using GBP, but once you’ve done that you can easily transfer the money back and forth between the other e-wallets at the current exchange rate. The app will show the current exchange rate before you confirm the transfer.
Use ATMs abroad
The card will allow you 3 x free monthly international cash withdrawals up to £300. After this, you will be charged a 2% fee, if you don’t have a balance in the currency you wish to withdraw you will be charged an additional 1.5% fee.
Use it in the UK
The card can be used in the U.K. as well as abroad which is useful in allowing you to increase your Avios earnings if you are not travelling regularly. However, it is worth noting that you should only use the Executive Club app to check your balance, using an ATM machine will charge a 50p fee.
How does it compare to other travel cards on the market?
Put simply the British Airways Prepaid Mastercard can be broken down as follows:
- Annual fee: £17.94 for the first year, then £35.88 per year thereafter.
- Welcome bonus: 1,500 bonus Avios after spending £500 in the first three months.
- Points rate: Collect 1 Avios for every £2 you spend on eligible purchases.
- Other perks: no foreign exchange fees, no pre-application credit check and no monthly fee for the first six months
If this doesn’t quite tickle your fancy as a travel debit card you might also consider:
You may have seen Monzo’s eye-catching bright fluorescent orange cards around the U.K.
The basics of the product are:
- Monzo is an online bank with a debit Mastercard issued for purchases and cash withdrawals.
- There are no fees for purchases in any currency, and Monzo uses the Mastercard exchange rate.
- There are no account keeping fees.
- You can withdraw up to £200 from foreign ATMs every 30 days, with a 3% fee for any withdrawals over that limit.
- You can earn 1% interest each year, paid monthly for amounts kept in ‘saving pots’.
- Monzo has a comprehensive app, which has a simple application process and tracks spending habits.
Monzo is available here by downloading the app to get started.
The basics of the product are the same as Monzo with the following differences/benefits:
- You will earn interest on the money you keep in your Starling account in the following amounts: 0.5% AER on balances up to £2,000 and 0.25% on balances above £2,000 up to £85,000.
- There are no limits on how much you can withdraw for free from foreign ATMs each month.
- Starling allows easy money transfers to bank accounts in 19 different currencies to 37 different countries.
- The Starling app also has the ability to lock your card from the app if you misplace it.
Starling accounts are available here.
N26 works in the same way as Monzo and Starling, although it offers three different products.
- N26 is a free card that offers fee-free purchases in any currency, but does not allow free ATM withdrawals worldwide.
- N26 Black costs £4.90 per month and allows unlimited ATM withdrawals worldwide as well as the ability to keep the money in your N26 account in 10 different ‘spaces’ to more easily track and reach savings targets.
- N26 Metal costs £14.90 a month and has all the features of the N26 Black card as well as a LoungeKey membership with discounted airport lounge visits at £15 per person, as well as travel insurance and purchase protection. The card is available in three different metal finishes.
You can apply for any of the N26 products here.
Like N26, Revolut has three different card types. It offers the same basic features of Monzo and Starling, but also has a euro currency IBAN account. The different card types are as follows:
- Standard is a free card that offers fee-free purchases in more than 150 currencies, and allows up to £200 per month in ATM withdrawals, 2% after.
- Premium costs £6.99 per month and allows up to £400 per month in ATM withdrawals (2% after), medical insurance, delayed baggage and delayed flight insurance. There’s also a LoungeKey membership with one entry free and a fee of £25 for each entry after and a choice of three card colours.
- Metal costs £12.99 per month with all the above features but allows up to £600 per month in ATM withdrawals, a metal card, 0.1% cashback within Europe and 1% outside Europe on all card payments and an ‘exclusive concierge service’.
You can apply for Revolut products here.
What about credit cards for travel?
This card is designed for those who fly Virgin Atlantic (or would like to) and want a high-earning card to earn Virgin Points to use on Virgin Atlantic or its airline partners like KLM, Delta and Air France.
- Annual fee: £160
- Welcome bonus: 30,000 Virgin Points if you apply by 6 June 2022 and spend £3,000 on the card in your first 90 days.
- Rewards rate: 3 points for each £1 spent on the card with Virgin Atlantic or Virgin Holidays and 1.5 points per £1 spend on all other purchases.
- Representative rate: 63.9% APR variable and a purchase rate of 22.9% variable with an assumed credit limit of £1,200.
- Pros: Excellent reward rate; no foreign transaction fee if you are making a purchase in sterling, euro, Swedish kronor or Romanian lei.
- Cons: International purchases made outside of the European Economic Area (EEA) charged a 2.99% fee; relatively high representative APR if you don’t keep up with your payments, and credit checks will apply.
This card is squarely aimed at high-net-worth individuals who likely already have some serious money invested with HSBC.
- Annual fee: None
- Foreign transaction fee: 2.99%
- Welcome bonus: None
- Rewards rate: 4 HSBC Reward Points per £1 spent in foreign currencies. These points can be converted to several points currencies at a rate of 2 to 1.
- Representative rate: 59.3% APR variable and a purchase rate of 18.9% p.a. variable with an assumed credit limit of £1,200.
- Pros: It offers members a fantastic convertible reward rate on foreign spending — 4 HSBC Reward Points per £1 spent in foreign currencies.
- Cons: You need a minimum of £50,000 held with HSBC; or a ‘mortgage, investment, life insurance or protection product’ with HSBC and a minimum annual income of £75,000. Also, it charges a foreign transaction fee.
While the Avios earnings might not seem as impressive as what you can get on everyday spend credit cards the British Airways Prepaid Mastercard is a great way to earn Avios for anyone who doesn’t already have a travel card that comes with zero foreign transaction fees, or for those who don’t want -— or can’t get — a credit card.
There are other cards with higher reward returns on the market, but few are quite as cheap and this is also the only card out there that offers both Avios on transactions and no foreign transaction fees when you use it abroad.
Additional reporting Ben Smithson.
Featured image courtesy of BritishAirways.com.
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