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Update: This offer for Barclaycard Arrival Plus™ World Elite MasterCard® is expired, but there’s currently an opportunity to earn 50,000 miles after spending $3,000 within first 90 days of having the card. Learn more about the special offer here.
UPDATE: The offers and terms of the Barclaycard Arrival & Arrival Plus have changed. You can find the best current offers here.
The Fidelity Investment Rewards American Express Card is one of the most lucrative cash back cards out there. It offers a flat 2% cash back on purchases without an annual fee. That’s a pretty darn good return for a no annual fee card, and makes it a “keeper.” The two major downsides are that the card doesn’t have a sign-up bonus and also has foreign transaction fees. So if you get it, it should definitely be with the long term value proposition in mind.
So how does it compare with the Barclaycard Arrival Plus™ World Elite MasterCard®? As a refresher, it offers:
- 40,000 miles after spending $3,000 within first 90 days
- Two miles per dollar spent on all purchases
- You get a 10% refund on miles when you redeem them
- Each mile can redeemed for one cent towards the cost of travel, meaning you’re getting a return of ~2.22 cents per dollar spent
Cash back towards travel is the same as cash back to me
A lot of people would say actual cash back is more valuable than cash back towards travel. For me that’s not the case, and I am guessing for most people reading this blog, that’s not the case either. Unless you spend less on travel than you’d earn in rewards, it’s the same thing. And that’s simply to say that the same amount of cash back would be equally valuable to me regardless of which form it came in.
The Barclaycard Arrival Plus™ World Elite MasterCard® has a better return the first year
You’re essentially earning ~2.22% cash back towards travel, while with the Fidelity Investment Rewards American Express Card you’d be earning 2% cash back. The Barclaycard Arrival Plus Card doesn’t have an annual fee the first year either, so you do come out ahead with it, by ~0.22% per dollar spent.
After the first year, the “breakeven” point is ~$40,500 of spend per year
The annual fee on the Barclaycard Arrival Plus Card is $89 after the first year. So how much do you need to spend on the Barclaycard Arrival Plus to get a better return than on the Fidelity American Express once you factor in the $89 annual fee?
Well, when you divide the $89 annual fee by the difference between the return (~0.22%), you’d need to spend ~$40,500 to get the same return. That’s a lot of spend in a non-bonused category.
There’s a lot of merit to the Fidelity American Express
The Fidelity American Express is unarguably a great card. 2% cash back with no annual fee is amazing, and makes it one of the best no annual fee cards for everyday spend. Most people won’t spend more than $40,000+ on the Barclaycard Arrival Plus in a non-bonused category, in which case the card might not be worth keeping past the first year if you can’t get some sort of retention bonus. I do think that depending on your card portfolio, there’s additional value in having the Barclaycard Arrival Plus Card, given the waived foreign transaction fees and Chip + PIN technology.
But if you’re someone that finds all these cards too confusing and just want a good return on your everyday spend, the Fidelity American Express should be a contender.
Why don’t I yet have the Fidelity American Express Card?
So why haven’t I applied for a card that’s worth keeping long term? There are two reasons:
- I have a hard time applying for a card without a sign-up bonus
- I achieve a better return on another card where I don’t account for the annual fee
First let me explain that I take a more conservative approach than some when it comes to applying for cards. I don’t keep applying until I’m on the verge of being denied. I live in hotels full time, and may want to buy a place at some point, so I’m not living on the “credit score edge.”
With that in mind, let me explain why I have a hard time applying for a card without a sign-up bonus. Just to give an example, I have several Alaska Airlines Visa Cards and have yet to be denied. The card frequently has a 30,000 mile sign-up bonus upon approval, and I value those miles at two cents each. So that’s $600 in “rewards” just for applying. Given my approach of not “living on the edge” when it comes to applying for cards, the direct opportunity cost to applying for the Fidelity American Express Card is $600. I’d need to spend $30,000 on a card to earn $600 in rewards, and that doesn’t account for the points I could earn by putting that spend on another card. In other words, I’d need to spend a lot of money before I recouped the lack of a sign-up bonus.
But beyond that, I also have the Starwood Preferred Guest® Credit Card from American Express. It has a reasonable $65 annual fee, and that’s a card I continue to keep for no other reason than that it offers two elite stay credits and five elite night credits towards status with Starwood annually. To me that recoups the annual fee and then some. But beyond that on everyday spend I earn one Starpoint per dollar spent, which I value at well over two cents per point.
That’s just my situation, though everyone’s situation will vary, of course.
The Fidelity Investment Rewards American Express Card is a great card. Unless you value the lack of foreign transaction fees, Chip + PIN technology, or spend more than $40,000 in non-bonused categories per year, the Barclaycard Arrival Plus™ World Elite MasterCard® probably isn’t worth keeping long term. But at the same time applying for a card without a sign-up bonus is pretty painful, in my opinion.