File this one into the category of "nobody saw this one coming"- well until we were notified about two weeks ago and then when the details were leaked onto Red Flag Deals a few days ago. The next bank to be making some major changes this week is TD's subsidiary MBNA. Today they are officially announcing changes to their premium proprietary rewards card product the MBNA Rewards World Elite® Mastercard®. There are also some slight changes happening to this card's entry level partner the MBNA Rewards Platinum Plus® Mastercard® which I'll touch upon towards the end of the article.
Welcome Bonus
The amount of welcome bonus points stays the same with the revamped cards. For the MBNA Rewards World Elite Mastercard that is up to 30,000 points which is worth $300 towards travel or about $245 in cash back rewards.
New Earn rates
Up until today this card had a nice simple earn rate of 2 points per eligible dollar spent. That meant a 2% return towards travel or about a 1.67% return for cash back (statement credits). This was one of the strongest flat earn rates in our market but as we have seen from most issuers now the one earn rate across the board doesn't fit the bill anymore when competing against other cards. Now you have to have accelerator categories and a lower everyday earn rate and that's exactly what MBNA has done with the MBNA World Elite Mastercard.
The new earn rates for this card are as follows:
- Earn 5 points‡ for every $1 spent on eligible
restaurant, grocery, digital media, membership, and household utility
purchases until $50,000 is spent annually in the applicable category.
- Earn 1 point‡ for every $1 on all other eligible purchases
I commend MBNA for keeping relatively simple - they have two earn rates, the accelerated earn rate for those select categories listed above and then your base earn rate for everything else. No 1 point this, 2 percent that, 4 percent on this. Just 1 and 5. Makes it a little easier to keep track of.
The new 5 points accelerated earn rate definitely seems to be becoming more popular in Canada now! First instituted on American Express Cobalt Card late in 2017 we've seen more cards come out over the last few years with such an earn rate like the Scotiabank Gold American Express Card, BMO Eclipse Visas and the BMO CashBack World Elite Mastercard just to name a few. You do have to be careful with 5x points earn rates however as they are not all created equal - I would recommend reading our post When earning 5x points isn't the same as earning 5x points - a loyalty lesson. This is partially the case with MBNA - you get the full value of the points if you redeem for travel however if you redeem for cash back your return will be lower.
The 5x points is awesome considering it covers some great categories, in particular groceries and dining! Those are two big spending categories for Canadians so to get 5x points there is awesome. The additional categories are also decent with digital media, membership (we're guessing things like fitness memberships) and household utilities. Those latter categories however tend not to be huge spend categories - when you think about digital media running $5-$20 per month and even if you have five subscriptions that's only about $1,200 in spending a year. Still nice to get 5x points on it though!
The not so good news in these changes is the new everyday base earn rate of 1 point per dollar. That's a 1% return towards travel or a 0.83% return for cash back. That's on the lower end for the premium card market (though not as low as BMO's Eclipse cards) but still this will hurt those who spend heavily outside of the accelerated categories - and that includes a big one here, Costco. For sometime now the MBNA Rewards World Elite Mastercard has been the best card to use at Costco but that unfortunately changes now. There is one new addition to this card however that partially makes up for this lower everyday earn rate and that's the Birthday Bonus Points which we cover in the next section.
Recommended reading: The Top 5 Mastercard Cards to use at Costco Canada
Also note these new earns rate have some of the highest annual caps in Canada. You can earn the accelerated earn rates on $50,000 in annual spending for each category - that is $250,000 in total if you like!
Birthday Bonus Points
They took the BMO idea of adding 10% cumulative bonus points but made it slightly better - with BMO you only get the 10% bonus for adding a supplementary card whereas with the MBNA card you'll get the 10% bonus in the cardholder's birthday month of all the spending made during the 12 months prior - whether or not you have a supplementary card. The maximum amount of points you can earn with the Birthday Bonus is 15,000 points per year. What this means is that you are actually earn 5.5 points per dollar spent in the accelerated categories and 1.1 points for all other spending. That translates to 5.5% and 1.1% value towards travel and 4.58% and 0.92% for cash back. At 5.5% towards any travel this card now beats the competition including the Cobalt card which is 5% towards any travel - with a major caveat however - the Cobalt card has more options for travel that easily push that 5% to higher numbers that even exceed 10% and 20%. On top of that the Cobalt's cash back rate is better. No matter that, I think an ultimate combination would be to have the MBNA World Elite and Cobalt card in your wallet to maximize your 5x points earning!
Additional Insurance Benefits
One area that MBNA has not been that strong in on all their cards is insurance benefits. That changes with today's update as they have added some more insurance coverage to the MBNA World Elite Mastercard:
The card now adds 21 day travel medical insurance (AKA Out of province medical insurance) with coverage of up to $2,000,000 for those under the age of 65 (if you depart just before your 65th birthday you'll be covered for the duration of your trip)
Previously one of the only benefits the card had was Trip Interruption insurance but now Flight and Trip Delay coverage has also been added. This insurance will provide up to $500 in reasonable expenses should your flight be delayed by four or more hours. I like that they made it four hours as many cards now seem to be going with six hours.
Next up is delayed and lost baggage insurance. The coverage here is $1,000 per person for delayed or lost luggage. The policy does not state how long the luggage has to be delayed before you can make a claim so I assume that if it is long enough that you have to leave the airport you can make a claim for those essential items required until your luggage arrives.
The final new insurance benefit that has been added is Mobile Device Insurance. This provides coverage of to $1,000 and includes your typical deductible and sliding depreciation rules as seen with this type of insurance.
Redemption
When it comes to redeeming points on the MBNA Rewards Cards the redemption rates have not changed. The letter that is being sent out to existing cardholders about the card update states there is a devaluation in the cash back rate which is a bit confusing as they sent out a letter announcing the same rate changes a few years ago... (Read about that here). Unless existing cardholders were grandfathered the old cash back rate? Nonetheless it also states existing cardholders will receive a 20% bonus on their existing balance on August 31 to make up for that difference.
The redemption value for travel is 100 points per $1, while cash and charity donations are 120 points per $1. Although mentioned above, this means you have a 1% to 5% return on your 5x points category spending when you redeem for travel (1.1 to 5.5% if you include the Birthday Bonus) and a 0.83 to 4.15% return for cash back (0.92 to 4.58% with the Birthday Bonus).
Do note that there is one big drawback to MBNA's travel rewards bookings. You have to book via MBNA Rewards which means you can't shop around for the best prices in the market and they may be charging more for flights and hotels. Plus you can only redeem points for full value at time of booking - many of this card's competitors offer the option to book any travel via any provider in any way you like and then you can redeem the points against the charge (some cards give you up to 12 months after) MBNA does not have this unless you go for the cash back redemption route to which you would be losing some value. For some of you this isn't a big deal at all so you can ignore this note.
MBNA Rewards Platinum Plus Rewards Mastercard changes
This card has a slight change in it accelerated earn rate categories. They have removed gas station purchases and added the digital media, membership, and household utility
purchases that we also see on the World Elite card. That means you'll earn 4 points per dollar in each of those categories for the first 90 days you have the card and then 2 points per dollar after that. The card has a $10,000 annual cap in each category. Good news is MBNA is also adding the Birthday Bonus to this card where you will earn a 10% bonus earned on all spending in a year. This bonus is capped at 10,000 points. Finally the card also gets Mobile Device Insurance added to its benefits package.
Wrapping it up
Like I said at the start of this post when we were advised of these changes they came as a bit of surprise. We weren't expecting MBNA to change their card offerings anytime soon as they were already relatively strong but I'm sure the way the market has been evolving they saw the need to change as well to be able to compete on that new 5x points level. No matter the reason behind it, for most this is a welcome change thanks to the accelerated category earn rates and better insurance offering. The only people who will be taking a hit are those who don't spend much in those specific categories and if that's the case for you it's a big hit on the World Elite card going from 2 points per dollar to 1 point per dollar. Overall though I feel most MBNA cardholders will be happy with these changes!
You can learn more about and/or apply for the cards via these links:
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