Top in Class Card Changes Benefits

“MBNA’s Smart Cash World rewards program is changing. …”

Up until now, MBNA’s Smart Cash World MasterCard has been one of the most valuable no fee credit cards in Canada.  With no annual fee, the card offers members 1% back on all purchases, and 3% (i.e., 2% extra) on all gas and grocery purchases (on the first $600 spend on those categories combined per month).  What’s more, they even had a special introductory offer where new cardholders received 5% back on their first $600 of gas and grocery purchases per month for the first 6 months of the cards life.  That was all extremely generous from a card with no annual fee, and an especially generous kick-back for groceries.  5% back on $600 meant up to $30 per month!  But it looks like that has all now changed. …

“MBNA’s Smart Cash World rewards program is changing. …”

That’s how the letter of notice starts.  It goes on to say that effective December 1, 2012,  … [the program] is changing. …  Highlights include:

  • … Smart Cash eMall, where you can earn additional bonus cash back (ranging from 2% – 12%) from a broad range of retailers like: Aeropostale, American Eagle, Puma, The Gap, Sony, The Home Depot, PetSmart, FTD and may others.
  • The amount of cash back you can earn on Gas and Groceries Purchases will be reduced from 3% on your first $600 in monthly spend to 2% on you first $400 in monthly spend. …”

The good (and interesting) news is that MBNA (now owned by TD Canada Trust) is offering bonus cash back through retail partners, which means new sources of cash back benefits for MBNA customers (and revenues for MBNA through its participating retail partners).

The bad (and also interesting) news is that MBNA is cutting its cash back benefits – the part of the card that made it one of Canada’s most competitive.  The card will continue to offer 1% back on all purchases, but by cutting the gas and grocery bonus to just 2% (and from $600 of purchases to $400), means a drop from $144 in bonus cash per year to just $48.  That’s a big cut!

Does the introduction of eMall bonus point retail partners mark the beginning of something big and significant with MBNA?  Does the $96 cut in bonus points mark the start of other premium cards cutting their direct benefits too?  Will Scotiabank and CapitalOne do something similar?  And will customers see the value in the eMall opportunities as a net benefit for the card, or will they take a second look at competitors’ cards to see if they now find better deals elsewhere?

We look forward to seeing consumers’ and competitors’ reactions.  Changing program rules is always a gamble.  How might this one play out?


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