The Barclaycard Arrival World MasterCard: Raising The Cash-Back Bar To 2.2%

The Barclaycard Arrival World MasterCard has been on my radar screen since it launched in December 2012.  There are two version of the card – one with no annual fee, and one with an $89 annual fee (waived the first year).  The annual-fee version generated some buzz when it was released because it effectively generates a 2.2% cash return on all purchases, but I never found it particularly appealing because there is one cash-back cards — the Fidelity Investment Awards American Express card — that earn 2% cash back on all purchases and has no annual fee.   In order to justify paying $89 for the incremental .2% that the Arrival card generates, I would have to spend nearly $45,000 each year, and that’s not even a remote possibility for me.

The Arrival card doesn’t charge a foreign transaction fee, but if that’s an important factor to you, the Capital One Venture card also has no foreign transaction fee and generates 2% cash back for a $65 annual fee.  Justifying the additional $24 annual fee on the Arrival card requires an annual spend of $12,000, which also wasn’t going to happen for me since I devote a lot of my annual spending to hitting minimum spend requirements for signup bonuses or earning flexible points rather than cash.

Last week, however, Barclays increased the signup bonus on the Arrival card to 40,000 miles (when you spend $1,000 within the first three months of opening your account), and, with this new bonus, I think the Arrival card emerges as the leader of the cash-back pack.  Why?  Because those 40,000 points are worth about $440 (explained below), which covers the card’s annual fee for about six years (one free year, plus 5 years at $89 each).  If you cancel before then (I certainly would), you’re already better off than if you had chosen one of the no-annual-fee 2% cards (neither of which offers a signup bonus), plus you’re raking in an extra .2% on all purchases — not a huge difference, but extra money is extra money, right?

The mechanics of earning and redeeming rewards on the Arrival card are similar to the Venture card.  Like the Venture card, each dollar spent on the card earns 2 “miles” that can be redeemed for a statement credit – at a fixed rate of 1 cent per mile – against travel expenses incurred on the card.  On the Arrival card, however, 10% of miles redeemed for travel expenses are credited back to the cardholder’s account, which accounts for the additional .2% of value.  For example, if you choose to redeem 10,000 miles for a $100 hotel charge, 1,000 miles (10% of 10,000 miles) will be credited back to your account.  So the 40,000-mile signup bonus can be redeemed for a $400 statement credit, which then triggers a 4,000-mile credit, and that 4,000-mile credit is worth another $40 when applied to travel purchases.  And so on.

The redemption policy on the Arrival card is slightly more restrictive than the Venture card, however.  First, miles cannot be redeemed in increments of less than 2,500 miles.  Not a huge problem, but worth mentioning.  Second, per the terms and conditions of the Arrival card, the “travel” purchases that miles can be credited against are limited to “Airlines, Travel Agencies & Tour Operators, Hotels, Motels & Resorts, Cruise Lines, Passenger Railways and Car Rental Agencies.”  Again, not a deal-breaker by any means, but the Venture card’s “travel” category is a bit broader and includes expenses like cab and bus fares.

Update: Barclays now permits partial redemptions, which is great news because you no longer need to collect enough points to completely offset a travel purchase.  Now, every time you accumulate 2,500 miles, you can redeem them for a $25 statement credit against any travel purchase of $25 or more (and receive 250 miles back).

All in all, the Barclaycard Arrival World MasterCard is a great card that ups the ante in the cash-back category, and it’s encouraging to see such a strong offering from an issuer other than Chase and American Express.

In case you’re wondering, the no-annual-fee version of the card earns 2 miles per dollar on travel and dining purchases, but only 1 mile per dollar on all other purchases.  It also comes with a lower signup bonus (20,000 miles after spending $1,000 within three months of account opening).  It’s a respectable choice for travel and dining purchases, but only travel and dining purchases, so I much prefer the annual fee version that generates a 2.2% return across the board and offers a much larger signup bonus.

Key Links:
Barclaycard Arrival World MasterCard ($89 annual fee, waived the first year)
Barclaycard Arrival World MasterCard (no annual fee)

I may receive a referral credit if you choose to apply for the Barclaycard Arrival World Mastercard through the links contained in this post.  I truly appreciate your referral and, as always, my referral links direct you to the best offer that I know of for the card.