Recently, I came across yet another post by a prominent blogger exhorting readers to pay their $89 annual fees to renew their Barclaycard Arrival Plus Mastercards. For most people, this is simply bad advice, and so I thought it appropriate to write a post here explaining what’s wrong with the card and what alternatives one should be using instead. If written properly, this post should also guarantee that Barclaycard will never want to do any business with me. Oh well. The truth hurts sometimes.
Quick Summary
The Fidelity Rewards Visa Signature card and the Citi Double Cash card both offer 2% cash back with no annual fee. If you have enough assets that you are willing to transfer to Bank of America or Merrill Edge, the BankAmericard Travel Rewards card is even better and offers 2.25% or 2.625% cash back for $50,000 or $100,000 in assets, respectively.
Also, it’s perfectly fine if you want to get the Barclaycard Arrival Plus Mastercard for the $400 signup bonus – there’s just no reason to keep it beyond the first year.
Anyway, let’s dig into what’s wrong with the card, and why these other cards will be better for most people…
Problem #1 – The Annual Fee ($89)
Unsurprisingly, this is my main issue. Many bloggers will be quick to point out that the Arrival card offers a 5% rebate on all redeemed points, meaning your effective cash back is higher than 2%. Without getting too much into the math, solving the geometric series yields an effective 2.10526% cash back with this card. That’s a pretty good rate of return, but let’s compare it to three cards that have no annual fee:
- Fidelity Rewards Visa Signature Card: 2% cash back
- Citi Double Cash Card: 2% cash back (1% when purchase is made + 1% when bill is paid)
- BankAmericard Travel Rewards Card: 1.5%/2.25% ($50,000 in assets)/2.625% ($100,000 in assets) cash back depending on total assets with Bank of America & Merrill Edge
And now for a little math. The asset tiers required to earn 2.25% or better with the BankAmericard Travel Rewards card start at $50,000, so if you have at least that much in assets that you can transfer over, the travel Rewards card is the clear winner, period. Many people do not have that much, so let’s consider the other 2% cards as alternatives.
The Arrival card, as mentioned earlier, works out to 2.10526% cash back, but remember that beyond the first year, you need to pay $89 to get that extra 0.10526%. Is it worth $89 for an extra 0.10526% in earnings? Just to break even on that annual fee, you would need to spend $89 / 0.0010526 = $84,552.54 per year, or just over $7,000 a month. And that amount of spending doesn’t include your mortgage, rent, student loans, or anything else that you cannot pay with a credit card. Any other cards you sign up for throughout the year will presumably come with their own minimum spend requirements, so charges made to meet another card’s minimum spend won’t land on your Arrival card either. And, lastly, you might have other credit cards with useful bonus categories such as 3x points on travel or gas. Does it make sense to put a charge on your Arrival card if you can get triple points with another? Nope.
So for the Arrival card to make sense, you would have to have less than $50,000 in assets (otherwise you’d want the Travel Rewards card) and still be spending over $7,000 a month after stripping out mortgage, rent, loans, minimum spend on other cards, category bonus spending, etc. Is this you, or even the average blog reader? Probably not. Quite frankly, I don’t know anyone with a profile even remotely close to this.
(I will acknowledge that there are some people very heavily into Manufactured Spending who are willing to take the time to MS with a 2% cash back card and who can potentially fit this profile. You’ll know if that’s you. For everyone else, this card and its annual fee are a waste of money.)
Problem #2 – Minimum Redemption Amount ($100)
Problem #3 – How Rewards are Redeemed at 2% (Travel only)
Next, it’s worth pointing out that the Arrival card’s 2.10526% cash back doesn’t come in the form of actual cash. While Barclaycard does offer options to receive cash or gift cards, these options cut the earnings potential of the Arrival card down to just 1%, which is a poor rate of return for a credit card with an annual fee. The only way to receive the 2.10526% cash back rate is to redeem your rewards as a statement credit against a travel purchase over $100, and you must have made that purchase within the last 120 days. Barclays’ travel category includes airfare, hotels, car rentals, etc. – nothing out of the ordinary, really. But keep in mind that expenses like taxis, unless you’re traveling very far, will usually cost under $100. So even though they do count as travel, you won’t be able to redeem your rewards against them.
Conversely, the Citi Double Cash card does give you cash back, and you can start making redemptions at $25. The Fidelity Rewards Visa Signature card does as well, but you can only redeem at $25 if you have a Fidelity account (it’s free to open one). Otherwise, you have to wait until you have $250 before you can request a check. This would take just over a year if you were charging $1,000 per month to the card.
Lastly, the BankAmericard Travel Rewards card is similar to the Arrival card in that you need to redeem rewards as statement credits against travel to receive the highest cash back rate, but the purchases can be of any size, and they only need to have been made within the past year rather than past 120 days. Also, BoA’s travel category is far more inclusive and includes items such as tourist attractions, amusement parks, museums, zoos, and even parking. They maintain a full list of eligible charges here on pages 3 and 4. It’s worth mentioning that there is still a minimum redemption amount of $25, so while you can redeem against a lot of small purchases, the sum total must be over $25 when you do it.
Problem #4 – The Card is Churnable
There is one good thing about the Arrival card that requires mention, which is the signup bonus of 40,000 points, worth $400 in travel. This is a fantastic bonus, and none of the other cards I’ve mentioned can compete (the BankAmericard Travel Rewards card is closest with a $200 bonus).
However, during your first year you should have already earned and redeemed your bonus, so why would you want to renew the card for $89? Furthermore, it’s possible to get this card with the same signup bonus all over again, but amusingly enough, Barclays will not approve you if you leave your first card open. So if you want another $400, you have to cancel your account.
Argument In Favor – No Foreign Transaction Fees
Finally, I’ll leave you with one minor argument in favor of having the card, which is that it has no foreign transaction fees. Of the alternative cards I’ve listed, only the BankAmericard Travel Rewards Card doesn’t charge you for foreign purchases. Though as I mentioned earlier, if you have $50,000 or $100,000 in assets with Bank of America & Merrill Edge, this card earns 2.25% or 2.625% cash back, respectively, and it beats the Arrival card hands down with no further discussion necessary.
But what if you don’t have $50,000 in assets? Then, the Travel Rewards card only earns 1.5% cash back, and the Arrival card’s 2.10526% is higher. We can make a similar calculation to the one before and divide $89 by the extra 0.60526% you earn with the Arrival card to see that you need to spend over $14,704.42 in foreign transactions to make up for the annual fee. $14,704.42 is still a lot in foreign transactions, but I’m willing to accept that some people do spend that much overseas in a year, although I personally never have.
If you are spending that much abroad on an annual basis, and you don’t have $50,000 in assets, should you have the Arrival card then? Perhaps. Without going into too much detail, I’ll mention that either the Citi ThankYou Premier Card or Chase Sapphire Preferred Card can work out better for most. Though both cards also come with an annual fee ($95), their strength lies in their bonus categories (travel, gas, dining, and entertainment for the Premier; travel and dining for the Sapphire), which probably line up with the majority of your foreign spending anyway. If you find value in TYP or UR, chances are you’ll prefer to earn multiples of these points rather than 2.10526% cash back with the Arrival card.
Personally, I use the Travel Rewards card because I earn 2.625% cash back, but my second favorite option before a trip is to apply for a new credit card with no foreign transaction fee + first year annual fee waived (there’s a ton of these) and to use the new card abroad while working away at the minimum spend requirement.
Conclusion
Is the Barclay Arrival Plus MasterCard worth the $89 annual fee? For most people, the answer is a resolute no, and if someone tells you otherwise, ask yourself whether they might have an ulterior motive for doing so.