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The internet panned it, but that reaction was wrong. The card wasn’t the silver bullet some hoped for when word came out Barclays would enter the transferable points space. But it’s much better than most people gave credit for. What’s interesting to me is why it’s gotten a bad wrap.
A Good Value Proposition
Any card that earns a 2% rebate to spend on travel is a ‘good’ card, whether or not it has a place in your wallet. And where this card is a player is in reward for continued spend. You earn 2 miles on everything. And then $15,000 spend in a year earns 15,000 bonus miles, $25,000 (i.e. an additional $10,000 spend) spend earns an additional 10,000 bonus miles.
If you spend exactly $15,000 or $25,000 you’ve earned 3 miles per dollar. Those miles are worth a penny apiece towards travel, or can be transferred to airline frequent flyer programs at a ratio of 1.4 to 1 with most programs and 1.7 to 1 with JAL.
|Program Name||Conversion Ratio
(Premier Points : Points)
|Air France and KLM Flying Blue||1.4 : 1|
|Aeromexico Club Premier||1.4 : 1|
|China Eastern Airlines Eastern Miles||1.4 : 1|
|Etihad Guest||1.4 : 1|
|EVA Air Infinity MileageLands||1.4 : 1|
|JAL Mileage Bank||1.7 : 1|
|Jet Airways JetPrivilege||1.4 : 1|
|Malaysia Airlines Enrich||1.4 : 1|
|Qantas Frequent Flyer||1.4 : 1|
Etihad A380 First Apartment
Cards that earn more than one point per dollar on all spend are generally considered good rewards cards. Here are the terms and conditions for the card.
Anchoring to the Old Arrival Plus
The old Arrival Plus frequently offered a 50,000 point signup bonus, 2 points per dollar on all spend, and a 5% rebate when spending points for travel. So it was a 2.1% rebate card for travel. This card is a 2% (or 3%) rebate card.
Arrival Premier has a $150 annual fee. (Update 7/6/18: annual fee is now $0 the first year) That’s higher than the old Arrival Plus and higher than competitors with a similar value proposition. It’s hard to pay more for a card that’s similar.
The add-on here is airline miles transfers, but in terms of sheer points-accumulation the old value proposition — that came less expensively — seemed better. If you spend $25,000 on Arrival Premier you earn 75,000 points. But spending $25,000 on the old card in the first year with a 50,000 point initial bonus netted 100,000 points. You have to spend $25,000 on the card two years in a row before you ‘break even’ in terms of total points earned, because the new card doesn’t have a signup bonus.
Never mind that these are better points because they’re more flexible points, the gap in number of points creates a messaging problem.
The Wrong Narrative
Barclays no doubt feels like it’s hard to make back the initial investment acquiring a customer with a big signup bonus. When they’re spending almost as much as they make on each transaction rewarding customers it’s hard to ever turn the product profitable, making back the cost of the signup bonus.
And a big signup bonus is likely to attract people more interest in the bonus than the card itself, so the theory may be that customers getting the card without a bonus will commit to the card long-term. These aren’t people chasing bonuses.
However there’s a few things wrong with this thinking.
- You need to catch a consumer’s attention. A big initial bonus makes a card focal. Even a good value proposition may not get someone to apply, since even if they’re convinced the card is good it’s something to do later. How do you get them to pay attention and take action now? A big bonus is motivating, a limited-time offer is even more motivating because the customer feels they may lose out if they don’t act now. No signup bonus makes it hard to acquire customers.
- It takes a long time to earn enough points for a big reward without a bonus. Cardmembers will heavily discount the future when calculating the benefit of the card, the bonus lets a customer see that they’ll earn a reward quickly, commit to the card, see the benefit and then keep spending.
What’s more they focused on earning a lot of points — two points per dollar on all spending, and up to three points per dollar if you hit specific spend thresholds. That’s actually heavily rewarding. But their model has points worth a penny apiece, and to make themselves indifferent whether you redeem those points for travel directly or transfer them to miles (which are costing more than a penny) they didn’t offer one-to-one transfers.
It’s still a good miles-earning card: you earn a minimum of 1.4 miles per dollar with a variety of airlines. And this includes Japan Airlines, the card is the best way in the U.S. to earn Japan Airlines miles — and these are some of the best miles, with the fewest points required for roundtrip Europe business class or first class from the US East Coast to Southeast Asia (and on top products including Emirates).
Emirates A380 First Class Shower
But not having a 1:1 ratio, but awarding more points, give the card a great value that looks like it isn’t as good.
Arrival Premier In a Nutshell
This is a card that’s in the top quartile of products for sure, it’s not the very best for most use cases but it’s ‘good’ and should be viewed as higher status than many frequent flyers have accorded it.
The marketing on the product is off. The annual fee is too high, it should be $95 and not $150. And they should have saved some money on things like airport lounge access (where they’re not covering the cost of visits, just paying for the card) and Global Entry reimbursement and put that into the acquisition bonus. And they probably should have reduced the number of points earned and increased the value of each point so that they could offer mileage transfers at 1:1.
Ultimately the problem Barclays faces is the same one other issuers are facing, several cards are cutting costs where they can because the market has gotten so competitive issuers are spending more than they’re taking in to attract customers and encourage their spend. They need to make money on a product, but a product that makes money on each transaction is one that’s hard to convince consumers to get and use.