Why Are US Credit Card Rewards So Much Better Than UK Credit Card Rewards?
If you're looking for a credit card that will reward you for your spending, the United States is absolutely the place to be. US credit card companies offer much more generous rewards programs than their UK counterparts for similar fees. Not only are there more options for credit cards in the US, but the options are largely better across the board.
But why is this? How can the same credit card be so much more valuable for the consumer in the US than in the UK? Let’s jump into the reasoning.
Why credit card offers and rewards are so much better in the USA than in the UK
The US credit card market is shockingly different from the UK credit card market, for two main reasons:
1. Size
First, the US credit card market is much larger than the UK market, in terms of both the number of users and the number of companies offering cards. Not only does this mean that there are more individuals looking for cards, but also that there is more competition among credit card companies. In the US, American Express, Chase, Discover, Citi, BILT, Capital One, and more all compete intensely for your business—this competition drives up the value of rewards programs, with each company trying to offer better deals in order to win your business.
2. Regulations
Second, US credit card companies are not subject to the same regulations as UK credit card companies. In particular, the US does not have a cap on the amount that credit card companies can charge merchants for processing payments. This means that US credit card companies have WAY more money to spend on rewards programs in vying for business. Interestingly, American Express has some loopholes around this cap in the UK, allowing them to get a substantially higher return than any other company in the market (and that is why they are one of the only companies in the UK giving credit card rewards). However, for most companies, this processing charge cap drastically limits how profitable the cards are for these companies. As a result, UK companies also tend to charge high APRs.
As a result of these factors, US credit card rewards programs are much more generous than the UK credit card rewards programs. For example, it's not uncommon to find US credit cards that offer >3% or more cash back on different purchase categories and 2% back on all spending. On the other hand, it's very rare to find a UK credit card that offers more than 1% cash back on any category of spending.
An Example — The American Express Gold Card
To demonstrate the effects of these two factors, let’s look at the American Express Gold credit card. While the Gold is offered in both the US and the UK, the two versions of this same card have significantly different terms and rewards:
The American Express Gold card, offered in both the USA and the UK
Despite having roughly a similar annual fee in both of the two countries ($250 for the US version and ~$200 for the UK version), the US version of the Gold offers the following over the UK version:
70k more American Express points for a sign-on bonus (~90k points vs. 20k points). This alone is worth roughly at least $700 in travel value if transferred to travel partners like Delta.
A lower APR (~25% vs. 29%). Lower interest rates mean more money saved.
More points on spending at dining/supermarkets (4x vs. 1x) and flights (3x vs. 2x). Not only are you getting better rewards from the sign-on bonus, but also from your everyday spending!
Hundreds of dollars in credit for Uber and dining. The AmEx Gold offers $120 in Uber credit and $120 in credit for certain dining partners.
As you can see, the US version of the card is VASTLY superior despite only being $50 more expensive! This is all due to the two factors we mentioned earlier: competition and regulation. Many UK banks ignore point systems entirely and focus on cash-back, so you’re more likely to find cash-back cards in the UK.
Unless the UK makes major sweeping changes to its credit system (and essentially “deregulates” the current regulations), US credit rewards will continue to be substantially better for consumers. However, even if this did happen, the UK has developed a substantially different culture around credit cards than the USA (largely due to the comparative lack of consumer benefits), with some not even knowing that credit cards can have these massive rewards elsewhere!
Bottom Line
If you are from the US and are considering moving to the UK, you should aim to get all your credit cards BEFORE you move to the UK in order to take advantage of the good credit card deals in the US.
However, if you live in the UK and are moving to the US, definitely wait until you get to the US if you’re hoping to maximize your points. However, make sure to consider that you won’t have a credit history in the US if you’re an international citizen, as the two countries use completely different credit systems with only very minimal overlapping data.
We hope this article was helpful in explaining why rewards are often so much better in the USA than abroad! If you’re new to credit cards, make sure to check out some of our best tips for getting started and figuring out how many cards you should have.