Changes To MBNA Smart Cash Rewards Explained

The MBNA Smart Cash Platinum MasterCard has been one of the best cash back credit cards in Canada for a few years, but when TD bought MBNA’s Canadian credit card business last December, we knew changes would be coming.

That belief was confirmed earlier this week when MBNA, Canada’s fourth largest credit card issuer, announced changes to the Smart Cash rewards program that significantly reduces your ability to earn cash back.

MBNA Smart Cash Changes Explained:

Effective December 1^st, 2012, the amount of cash back you can earn on gas and grocery purchases will be reduced from 3% on your first $600 in monthly spending to 2% on your first $400 in monthly spending.

You’ll continue to earn 1% cash back on all other purchases, including gas and groceries over and above $400 a month, but MBNA Smart Cash Platinum cardholders will have their 1% cash back earnings capped at the first $1,250 in monthly spending.

If you’ve been upgraded to the Smart Cash World MasterCard, there’s no cash back earn limit, but the other reductions still apply.

For new customers, these changes take effect immediately.

MBNA Canada has sent out letters to existing customers advising them of the changes to their rewards program.

The majority of MBNA’s Smart Cash customers currently have the Smart Cash Platinum card, which has been in market for a few years now.  Last year, MBNA introduced the Smart Cash World MasterCard.

Smart Cash Platinum cardholders with personal income of $60,000 or greater or total household income of $100,000 or greater can request an upgrade to Smart Cash World.

By upgrading, you’ll again receive up to 5% cash back on gas and grocery purchases for the introductory six months.

When I spoke with MBNA, they wouldn’t say why they were making these changes, but said they regularly review their products and will make changes to improve their business while trying to remain competitive in the market.

“We still feel the Smart Cash World MasterCard is one of the best no-fee cash back credit cards on the market,” said Cathy Velasquez, Media Relations at MBNA Canada.

But a closer look at the numbers reveals a steep decline in potential cash back earnings with the new Smart Cash credit card.

Before these changes, when you spent $1,000 a month and took full advantage of the gas and grocery spending bonus ($600 a month) you could earn $336 in the first year and $264 in subsequent years.

Now, when you spend $1,000 a month, and max out the gas and grocery multiplier, you’ll earn just $240 in the first year and $168 in subsequent years.  That’s a decline of 29% in the first year, and 36% thereafter.

Final Thoughts

If you’re an existing Smart Cash cardholder, you might be evaluating your need for a new cash back credit card.

The Capital One Aspire Cash World MasterCard might be your best option, depending on how much you spend each month.

At $1,000 a month spending with Capital One Aspire Cash, you’ll get $280 back in the first year and $180 back in subsequent years.

The RBC Cash Back MasterCard is also worth a look.  You’ll get 2% cash back on groceries and up to 1% back on all other purchases.

The bottom line: MBNA Smart Cash used to be the undisputed cash back king in Canada, but these changes from MBNA will take a big bite out of your rewards.