(This post was updated in April 2014 and all the information is still correct.)
This is the 19th (and last!) of my series of posts looking at the major UK loyalty credit cards and discussing whether of not they are worth applying for. These posts will be linked to the relevant sections of the ‘Credit Cards Update‘ page. My other UK airline and hotel credit card reviews can be found here.
About the card
The Virgin Atlantic Black credit cards – issued by MBNA (Bank of America) – come as a double-pack of an American Express and a Visa card. This has become a trend in recent years, with card issuers wanting to benefit from Amex’s higher merchant fees whilst at the same time not wanting to put off anyone who is concerned about limited Amex acceptance.
MBNA also issues the United, American Airlines and Lufthansa credit cards, amongst others. This may impact your ability to get the Virgin card if you already hold an existing MBNA product.
What is the sign-up bonus?
The current bonus is an impressive 30,000 Virgin miles. This is as high as it has ever been, and this offer is only available until 30 June 2014.
After that, I would expect it to drop back to the usual 6,000 miles.
Any other benefits?
Yes. The Virgin credit cards, both free and paid, come with two interesting bonuses:
When you spend £5,000 on the Black American Express card, you will receive an upgrade to Premium Economy (for one person) when you redeem your Flying Club miles for an Economy class redemption. A 2nd voucher is available when you spend £10,000. These vouchers are issued at the END of your card year, not when you pass the spend target.
Spend £7,500 on the Black American Express card and you will receive a free ticket for a companion (taxes apply) when you purchase a full fare cash flight. This voucher is issued as soon as you pass the spend threshold.
As I wrote yesterday about the White card, these offers are less interesting than you think. The Premium Economy upgrade is OK, but only covers one person per voucher. The free companion ticket is fundamentally useless, since very few people buy full fare cash tickets.
Note, too, that Visa spend does not count towards the vouchers.
Holders of the Black card also receive free Regus Businessworld Gold membership. I rate Regus Businessworld Gold very highly, although there are other ways of getting a Gold card for free without spending the £140 annual fee required via this card.
Is there an annual fee?
Yes, £140 per year.
What do I earn per £1 spent on the card?
The earnings rate on the cards is excellent.
You earn 2 miles per £1 spent on the Amex card and 1 miles on the Visa. This is an excellent return – there are no Avios cards which reward you so well, even the paid ones.
Bookings with Virgin Atlantic or Virgin Holidays earn double miles. However, the Virgin Atlantic website charges a whopping 1.5% fee with no cap for using credit cards, and this is NOT waived when using the Virgin card – although you may find that earning 4 miles per £1 outweighs the 1.5% charge.
What is a Virgin Flying Club mile worth?
I covered this in my review of the White card yesterday.
To recap: Virgin has a lot of partners now. You can earn miles by converting Tesco Clubcard points as well as Heathrow Rewards and American Express Membership Rewards points. Even if you never fly with Virgin, you could easily top up your credit miles with Tesco points to reach enough for an award. They also have particularly good earning rates with Hertz. There is also this on-going deal for 5,000 miles for opening a Virgin Money ISA.
The launch of Little Red domestic services has also made small number of miles more useful. A return flight to London from Manchester, Aberdeen or Edinburgh is just 7,500 miles plus £35 of taxes.
As with BA, long haul economy redemptions are often poor value due to the taxes and fuel surcharges. However, Virgin has recently reduced its taxes on economy redemptions and they are now up to £120 per person lower than BA would charge. Long-haul premium cabin redemptions are in line with BA in terms of mileage and taxes.
You can also transfer Virgin miles to Hilton HHonors at a 1 : 1.5 ratio, which puts a floor under their value. You can also transfer to IHG Rewards Club at 1 : 1.
I would therefore be happy to value Virgin miles at 0.75p – 1p each, in line with Avios.
How does this compare to a cashback credit card?
There are currently no cashback cards on the market which offer a) a MasterCard or Visa, b) no annual fee and c) unlimited cashback. The best ‘pseudo cashback’ card is probably the Amazon MasterCard, which offers 1% of your spending back in Amazon vouchers.
Whilst this card does carry an annual fee, the earnings rate is still excellent. Even on the Visa card, 1 mile per £1 offers a decent return if you use the miles wisely.
The Head for Points Verdict:
Score for the sign-up bonus – 9/10. 30,000 miles is a great deal, even with the £140 fee. However, remember that (unlike an Amex-issued card) you cannot get a partial refund of your annual fee if you cancel during the year.
Score for on-going earning – 10/10 on the Amex, 8/10 on the Visa. These are outstanding earnings rates. No other card (except for ones no longer available to new applicants) earns 2 airline miles per £1. There are also no other Visa cards offering 1 mile per £1, although even at that level it is not hugely better value than the 1% cashback on the Amazon MasterCard.
(Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.)