The BA Amex interest rate goes up, and why I hope you couldn’t care less

If you have a British Airways or British Airways Premium Plus American Express card, you should have received a letter in recent weeks informing you that the interest rate on purchases was increasing to 22.9% APR variable.

As of yesterday, this rate is also being applied to new applications.  On the free BA card, the rate has jumped by a whopping 7% from 15.9% to 22.9%.

(The sign-up bonus on the cards has also increased, but I want to cover that tomorrow in a separate article.)

The headline rate on the Premium Plus card is now a whopping 60.7% APR variable, because credit regulations mean that Amex has to factor the £150 annual fee into the calculation.

I am hoping that you couldn’t care less about this change!

Credit cards

If you pay interest on your credit card, you should NOT be using a ‘miles and points’ card for your spending.  These cards are good for sign-up bonuses and are good for rewarding your on-going spending, but in general they do not offer a good deal on interest rates.

A quick look at Moneyfacts shows a long list of credit cards which offer 0% interest deals on purchases.  At the time of writing, there is a 24-month interest free deal from Virgin Money which tops the list.  If you are paying interest on your credit card balance, this is a far better deal for you than earning a few miles but paying 22.9% interest for the privilege.

There is only one ‘miles earning’ card that I know of which offers 0% on new purchases.

(EDIT:  I was wrong!  There are actually two cards which offer a 0% on new purchases deal.  The Lloyds Avios Rewards card offers 0% on purchases for the first 12 months.)

This version of the Tesco Clubcard MasterCard (click) offers 0% interest for 28 months on new purchases.  The interest rate is 18.9% variable after 28 months.

You would also earn 1 Clubcard point for every £4 you spend.  This equates to 2.4 Avios per £4 spent if you convert your Clubcard points across to British Airways.

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. By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated ‘Credit Cards’ page or use the link in the menu bar at the top of the page.)

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Comments

  1. Sage advice Rob.
    Two golden rules of miles collecting:
    ALWAYS pay your card in full
    NEVER buy something you wouldn’t have otherwise bought just to get miles

    • cheekychappie says:

      My new method to churn the £s to hit spend targets involves precisely this. You buy something & sell it on. Perfectly legal & all in the cloud (ie no physical goods). Seems fairly easy to turn a small profit as well.

      Still testing it out though, to work out a few sensible ground rules.

  2. When did you get your FSA authorisation? That’s new!

    • Jordan D says:

      Was thinking the very same – new line on the disclaimer …

      • cheekychappie says:

        Hmmm…

        Probably sensible precaution/ just covering his back to deflect some future idiot from suing.

        Or is it more worrisome?

        • Let me explain,

          Under FCA regulations it is ILLEGAL to link to a credit card website if you do not have a credit licence. I know this sounds mad but it is true. It is IMMATERIAL whether or not you have a commercial relationship with that card company.

          The bottom line is this:

          You can say ‘The Emirates credit card is great’ and that is OK. But, if you have a hyperlink under the words ‘Emirates credit card’ then I am, technically, introducing you to the Emirates card. And that is illegal unless you are licenced. Even though MBNA does not pay anyone, let alone me, for referrals. This is why the personal finance sections of newspaper websites do not directly link to the companies they mention.

          Because I have a long list of financial services qualifications, was FSA regulated in my old job for 16 years, have held a board level position with a major FSA regulated company and am one of the very few people to be a Fellow of the Chartered Institute for Securities & Investment, the FCA cut me some slack for a time. (Weirdly, I was qualified to advise Amex on taking over Visa but not qualified to advise my Mum on getting an Amex card.) However, they eventually said that I had to get a licence or, alternatively, pull every credit card hyperlink from the site.

          So, voila, £600 and 12 months later I now have a credit broking licence and I am now legally allowed to give opinions and advice on credit cards. Nothing changes except the small print and the fact I now have to give the FCA a chunk of the site revenue! You may have spotted that I had already changed the card articles to meet guidelines on highlighting the APR clearly.

          • I hope the £600 outlay may keep the wolves that grudge you your commissions and referals at bay for a while.

          • I got another FCA bill for £259 yesterday! I genuinely have no idea how they work out the ongoing fees – I can’t do much about it so I just pay them. At some point I will also be getting a visit from an FCA inspector – presumably at my office in the Kings Road Pret or, as I am at the moment, a cafe in Notting Hill – to check my disaster recovery plan, that my client records are secure (don’t have any, obviously!) etc!

          • :) .

          • cheekychappie says:

            Thanks. Hard luck on the fees and to an outsider seems a bit unfair but at least you’re covered.

          • When doing an Amex referral via the amex website, Amex further provides you with automated systems to share to facebook, google+ etc. If it is “illegal to link to a credit card website if you do not have a credit licence”, it seems strange that Amex would encourage, promote and provide the tools to do so.

          • cheekychappie says:

            Best to cover arse. Multiple is not equal to one-off.

          • I had this very discussion with the FCA. They went away for a think and never did answer the question.

            You may not have noticed, but for 3 months there were no card links on the HFP ‘Credit Cards’ page until the last bit of my licence was finalised. This was done at the insistence of the FCA who would not issue the licence whilst I was technically in breach.

            They also asked for the refer a friend references to be removed. I challenged this on the identical grounds you mentioned and they did not respond (although they acknowledged receipt of my challenge) and neither did they repeat the request for the references to be removed – so they stayed.

            In theory, refer a friend is meant to be for personal use. It is the equivalent of me recommending my credit card to my mate in the pub, which clearly is not illegal. Amex does NOT encourage you to put refer a friend links on websites. Sending email referrals is fine as that is a private thing between two friends. The grey area is Facebook where you can post a refer a friend invite on a page which is publicly visible – at some point the FCA may ask Amex to withdraw that option. If they do you can probably blame me.

          • cheekychappie says:

            So did Amex contemplate taking over Visa?

          • Er, no. That was just an example!

          • Lee Thornton says:

            But what about all the websites which have hyperlinks to credit cards through advertisements (such as banner ads)? Wouldn’t this also be illegal under the FCA logic outlined here?

          • No, because the ad is placed by the card issuer who is already authorised.

            In general, regulatory thinking has not moved on to cope with the times. Take the Virgin, Etihad or Emirates credit cards. Virgin, Etihad and Emirates are credit brokers on behalf of MBNA. If I link to the Virgin Atlantic website page for the credit cards, which I do, I am linking to a credit broker and NOT the issuer. Do I really need to be a broker just to link to another broker?!

          • Wally1976 says:

            I hope the FCA accept pay.com cards 😉

          • Good point, didn’t try!

    • Love it, lol, please just give them the adress without spelling out it’s a pret or whatever! If the costs get out of hand can you not just get around it by spelling out the link without the hyprrlink? More messy but Im sure readers would understand as only the financial products would be affected.

    • FSA is the Food Standard Agency

  3. I’m about to hit the £10,000 241 on the premium card. After I hit it can I cancel the card? Will the 241 voucher stay on my BAEC account for 2 years regardless?

    • MattChaps says:

      I was recommended to just trade down to the free BA Amex card in case there are any issues when you redeem the voucher, or if you need to change the booking at some point.

    • Don’t cancel it just downgrade to the free card to be safe

    • Yes it will remain on your account after you cancel. You will need another Amex card to pay the taxes when using the voucher.

    • Many thanks for the advice although some is conflicting. If I downgrade to the free card until I use the 241 it means that I cannot reapply and collect the bonus for a long time.

    • You must pay with an amex card (amex issued I assume) – technically in your name. I’ve completely cancelled mine, and paid using a supplementary card in my name on my partners amex account – no issue at all.

  4. Good post Rob, particularly to curb possible overenrhusiasm of new readers of HfP who are also new to the points and miles game. Might be worth adding a small additional paragraph warning of the dangers of the interest trap on balance transfers and spending which is easy to fall into, particularly with the mbna cards. Sa.e issues apy with cards such as Etihad which offer interest free period on flight purchases.

    • What’s the interest trap with balance transfers? 2 weeks before the 0% ends, apply for a new 0% card and transfer the balance. If unsuccessful, pay it off.

      You need to be organised with your money before you even start thinking about miles and points. Maybe someone should make an app for stoozing similar to Awardwallet

      • If you spend on the card tve balance transfer or the flight spend on the card is no longer interest free unless tvere is also an interesr free period for spending.

  5. Why don’t more companies offer products like Amex’s charge cards which earn points but aren’t really associated with borrowing? Or to rephrase, why do you need to spend someone else’s money in order for merchants to be charged fees and you to earn rewards?

    • I’m glad they don’t as Amex have refused to help me with a merchant dispute in the past based on the fact it was paid with a charge card not a credit card!

  6. http://www.lloydsbank.com/credit-cards/avios-rewards.asp

    This advert for the Lloyds card suggest 0% on balance transfers (28 months) and purchases (12 months)

  7. Dammit, applied only yesterday for the card with the normal 18k bonus…if only I had waited a day.

    • Apparently, if you ring up Amex to complain they will credit you with the extra points. Someone told me today that they had successfully done this yesterday.

      • Wow, good to know. That’s big of them, seeing as how they’re presumably not under any obligation to help out. I’ll give it a go, thanks!

  8. A word of warning for people taking out a new BA Amex.

    Signed up in June. First statement was mid-July. Paid off the full balance (around £2,500) except £16 which I was expecting a refund for. My next statement was issued before that £16 had been refunded.

    The next statement showed an interest charge of around £40. Rang them up, and Amex explained that they charge interest on the FULL AMOUNT (in this insance £2,500) if the full amount isn’t paid off. I was expecting interest on the £16, not £2,500. Even if youpay a penny short, you pay interest on the full amount.

    I’m fairly certain this isn’t the case for other credit cards (had a Lloyds duo card for years and never encountered this, as well as other cards over the last 20 years), but maybe I just didn’t notice, or always paid the balance (I always pay the full balance except in rare circumstances such as this).

    • Not unique to BA AmEx! It’s a pretty standard condition with credit cards – always pay the FULL balance to avoid interest.

      I guess if you’ve seen the anticipated credit in your online account, it’s OK to net the balance. But for a £16 credit, potentially costing £40 interest, it hardly seems worth the risk.

      • Had no idea as it’s never happened to me in 20 years of owning a credit card. They agreed to waive the interest as a gesture of goodwill. Won’t be making that mistake again!!

    • The_Real_A says:

      Standard on all cards. You pay interest on the full balance if you do not pay off your statement in FULL.

    • To reiterate the above points, basically refunds don’t count as a “payment” to your account. If the refund goes through before the statement gets generated, then you won’t have to pay it, otherwise you do.

  9. James Alexander says:

    Raising credit rates on Airline sign up cards … All will have been coolly calculated by some overpaid actuary – all proving there’s no such thing as “free”, someone somewhere will pay for this “free” sign up miles. We’ve been duped if we invest in or promote hyper consumerism of such crap.

    • Seriously you have no idea what us “overpaid actuaries” actually do, but believe me it’s nothing as stupid as “coolly calculating” how to raise sign up bonuses and interest rates on credit cards. Ordinary finance plebs can do that

    • This is actually a sign of a well functioning card market. You want low APR? There are cards for that. You want no fee? There are cards for that. You want good rewards? There are cards for that. You want a balance transfer deal? There are cards for that.

      One card can clearly not score on all of these points though.

  10. Note that the American Airlines MBNA card offers 0% APR on AA flights for 12 months after the card is opened. https://www.americanairlines.co.uk/i18n/specialOffers/mbna.jsp?locale=en_GB

  11. Rob, I really wish you mentioned about this before now. I’ve signed up for 94 credit cards this year all based on your advice and pay it all back at 50p a month. Unfortunately the interest got out of control, so I now pay off it off a monthly basis with a combination of Wonga loans, begging and stealing from family and friends and drug trafficking. I was lonely before starting to read your website, yet now I get regular visits from my new friends. Sure, they turn up and threaten to murder me if I don’t pay them back, but they’re just jokers like that.

    Now does anyone have a fiver they can lend me?

  12. Quick one which I’m not sure of the answer, as I get paid weekly I pay my balance on my ba card back sporadically throughout the month while also using it to buy things. As a result the balance due from the previous statement is paid but there is rarely the total balance at zero as I’ve purchased new things. Will I be charged interest or not? Ive only had the card 2 months and haven’t had my second bill yet

    • cheekychappie says:

      If you pay off the previous month in full, you won’t incur interest charges.

      Obviously the balance will not be nil as you continue to use the card on an ongoing basis.

    • As long as the total you pay before the ‘payment due date’ is greater than what you had outstanding at your last statement cut-off date, you are fine.

      So, if you happened to owe £300 on July 31st when your statement was printed and you ‘payment due’ date for August 25th, and you paid £100 on August 8, 15, 22 and 29, then you would be OK as £300 was paid by the £25th.

      If you paid £100 on August 15, 22 and 29 you would NOT be OK.

      • Thanks for clarifying that. I thought that was how it worked but didn’t want to be gaining about 500-1000 avios a month and paying a fortune in interest.