US vs. UK Credit Cards: A Tale of Two Reward Systems

The stark difference in rewards offered by credit cards between the US and UK, exemplified by the American Express Platinum Card, primarily stems from varying credit card regulations, specifically interchange fees. In the US, cards like the Amex Platinum provide over $3,200 in annual statement credits, hotel status, travel insurance, and substantial sign-up bonuses (e.g., 175,000 points). In contrast, the UK version offers a more modest £400 restaurant credit and 50,000 points.

Interchange fees, a portion of each credit card transaction paid by the merchant to the card issuer, are the primary funding source for these rewards. US interchange fees average around 1.8%, with premium cards exceeding 2%, allowing issuers to fund lucrative benefits. However, the 2015 EU Interchange Fee Regulation capped these fees at 0.3% for credit cards and 0.2% for debit cards across member states, including the UK. This cap drastically reduced issuer revenue, as the previous UK average was 0.8%.

The regulation led to significant negative consequences for the UK reward card market. Many popular co-brand cards, including those from Virgin Atlantic (MBNA), Emirates, Lufthansa, American Airlines, and Avios cards from Lloyds and TSB, were withdrawn. Rewards on retailer cards (e.g., John Lewis, M&S) plummeted to as low as 0.1%. Banks shifted their focus from high-spending, balance-paying customers to those who accumulate interest or incur foreign exchange fees, as these became more profitable. Some new UK cards, like Virgin Atlantic's relaunch and Barclaycard Avios, operate through unique joint ventures or as loss-leaders to attract new customers, often penalizing big spenders with earning limits due to low interchange fee profitability.

Despite these challenges, green shoots are emerging. Fintechs like Currensea are innovating with reward debit cards, such as Hilton-branded offerings providing status. Business and corporate cards, which are exempt from interchange regulations, are also gaining traction, with examples like British Airways Accelerating Business Amex and Capital on Tap. While the UK market slowly recovers, the future of rewarding cards may lie in creative partnerships, risk-sharing, and viewing cards as marketing expenses rather than pure profit centers, especially from new tech-driven issuers with lower overheads. The US, meanwhile, faces potential similar legislation like the Credit Card Competition Act.

(Source: https://www.headforpoints.com/2025/10/19/why-are-uk-credit-cards-less-rewarding/)