Credit Card Reviews 2014 (26): Virgin Flying Club Black American Express and Visa

(EDIT:  This review was updated in September 2014 to reflect the current bonus offer)

This is the 26th (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 overviews can be found here.

Link: Virgin Atlantic Black cards official page

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, Emirates, Etihad and Lufthansa credit cards, amongst others. This may impact your ability to get the Virgin card if you already hold an existing MBNA product.

The representative APR is 52.1% variable, including the annual fee, based on a notional £1,200 credit limit.

What is the sign-up bonus?

The current bonus offer is 25,000 miles.  This is a special offer which runs until 31st October 2014.  After that it will revert to the standard bonus of 18,500 miles.

The bonus miles are posted in two chunks – 18,500 miles after your first purchase and the remaining 6,500 miles when you spend £2,000 within 90 days.

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 if you work for yourself or would value access to airline-style lounges in city centres around the world.

Virgin Black

Is there an annual fee?

Yes, £140 per year.

Unlike Amex-issued cards, you do NOT receive a pro-rata fee refund if you cancel.

What do I earn per £1 spent on the card?

The earnings rate on the cards is very good.

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 free 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?

The best cashback card on the market which offers a) a MasterCard or Visa, b) no annual fee and c) unlimited cashback is the Asda card, which pays 0.5%.  The best ‘pseudo cashback’ card is the House of Fraser MasterCard, which offers 1% of your spend in House of Fraser gift 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.

How else can you earn Virgin miles from a credit card?

There are three options worth a look, one of which is initially free:

The American Express Preferred Rewards Gold charge card offers 20,000 Membership Rewards points for signing up and is free for the first year.  These convert to 20,000 Virgin miles.

The American Express Platinum charge card offers 30,000 Membership Rewards points for signing up.  These convert to 30,000 Virgin miles.  It has a £450 fee, refunded pro-rata if you cancel.

The Starwood Preferred Guest American Express credit card offers 10,000 Starwood Preferred Guest points for signing up.  These convert to 10,000 Virgin miles.  It has a £75 fee, refunded pro-rata if you cancel.

The Head for Points Verdict:

Score for the sign-up bonus – 9/10.  25,000 miles is a good 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 or MasterCards offering 1 mile per £1 – except the exclusive HSBC Premier – although even at that level it is not hugely better value than a 1% cashback card.

(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.)

Tesco Travel Store closes down (and no-one notices)
Is the new Avios Multi-Currency Cash Passport worth a look?
About Head for Points

We help business and leisure travellers maximise their Avios, airline miles and hotel points. Visit every day for three new articles (two in August) or sign up for our emails via the box to your right.

Comments

  1. James67 says:

    A lot of time and effort has very obviously gone into this series Rob. I am sure I speak for many of us in saying thanks for that, it is very useful and much appreciated.

  2. Paul Irving says:

    So to get my premium upgrade vouchers, would I end up paying 2 annual fees? 1 when I sign up, and 1 when the new year rolls round?

    • Not necessarily, if you do your 10k spend after say 10-11 months, phone up and ask about cancellation explaining the situation, they should advise to phone and cancel as soon as you see the vouchers posted on your card anniversary date and they either waive the 2nd year fee or refund it retrospectively.

      Hope that helps! :-)

      • Paul Irving says:

        So when I ring up to cancel, they will advise to keep the card but make a note when the vouchers appear? Then cancel when they appear and because they have the note, the will understand?

        • Jon Connell says:

          The upgrade vouchers are applied to your Flying Club account, so once you have them they’re yours to use until they expire and not tied to your credit card.

  3. Its worth emphasising that the PE Upgrade vouchers are then valid for 12 months but your flight dates can be booked from 11 months from date of booking, 1/2 price miles sales come up during the year, have a search on http://www.v-flyer.com for prev sale periods…

    Using upgrade vouchers in this method I got Orlando rtn for £374+25k miles in PE last year, great value! :-)

    • So this means as long as you book within 12 months they are valid even if you fly 11 months after booking i.e you have 23 months to use them, 12 months to book and 11 to fly after that?

  4. If my maths is correct….for spending £140 card fee and assuming you hit the £3k target on the Amex, you receive 36000. This equates to 4.8 (call it 4) round trips to man, edi or Abz. At £35 per redemption, the total is £280 for 4 RT domestic flights. I do not normally fly domestically so do not know what prices are normal but on the whole, it looks like a good deal?

    • Avoiding last minute bookings the price for MAN -LHR is around £93 return

      • And ‘last minute’ means really last minute on Virgin. They were still selling £38 tickets Manchester to London last Friday for flights this Wednesday – I know because I booked one!

    • Yes, you will get around 1p of value, the same as long-haul. It is a decent deal – and no problem with availability on Little Red given their terrible loads!

  5. wetboy1uk says:

    A general query on sign up bonuses. WHy is it that US citizens get significantly better sign up bonuses than those in the UK. For example BA credit card sign up bonus in US is 50,000 for a $2,000 spend compared to 9,000 for a £1,000 spend in the UK. Considering this is a UK company I am seriously considering not using their credit card any more. We seem to get treated like crap in the UK. Same for Marriott and Hilton credit cards

    • Partly competition, partly because I think the card companies charge more to shops in the US.

      Remember that this is still the 2nd best country in the world for sign-up deals. Try complaining to a Canadian, Frenchman, German etc and they’d probably punch you as they get very very little.

  6. Jonathan says:

    Do you know if you still get your upgrade vouchers if you meet the qualifying spend but cancel your card prior to the card anniversary (to avoid another years worth of fees?)?

    Thanks

    • Jonathan, read the first few comments, cancel once the vouchers appear on your VFC a/c, get them to refund any fee that may of been charged for the next year.

      • Paul Irving says:

        But I thought the Virgin fee was non refundable?

        • It is if you notifiy your intention to cancel before your next year has started

          • Paul Irving says:

            But if you don’t get the vouchers until then, I don’t see his this will work.

            • It does work – I speak from experience, phone up and cancel on the anniversary date of your card, this should also match when the vouchers are visible in your VFC a/c.