(EDIT: This article was updated in February 2016)
The majority of the credit card posts on Head for Points are focussed on exploiting sign-up bonuses. Get a card, spend the minimum required to trigger the bonus, cancel the card, move on. After a couple of years, you can re-apply for the first card you got and claim the bonus again – it is a virtuous circle!
However, if you are a high to medium spender then the few thousand pounds of card spend required each year to hit your sign-up bonus targets will not be a stretch. You need to consider where to put the rest of your annual spend.
In an effort to cut down on card churn, many issuers are now offering incentives for spending £10,000+ per year on their cards. The value of these perks is often underestimated – they are often worth far more than the points for your normal spend.
In order of value, lets take a look at what is out there. This analysis ignores the value of any sign-up bonus or ‘first year free’ deal – I am looking for the best long-term solution.
The results summary is (based on spending just enough to trigger the relevant long-term bonus):
- BA Amex Premium Plus – 10.1% back on first £10,000
- BA Amex – 6.1% back on first £20,000
- Lloyds Avios Rewards Amex & Visa – 4.9% (if all Amex spend) on first £7,000
- Lloyds Avios Premier Rewards Amex & Visa – 3.7% (if all Amex spend) on first £12,000
- Virgin Atlantic Black Amex & Visa – 3.1% back (if all Amex spend) on first £10,000
- IHG Rewards Club Premium Visa – 2.5% back on first £10,000
- Hilton HHonors Visa – 2.25% back on first £10,000
- TSB Premier Amex & Visa – 1.6% back (if all Amex spend) on first £15,000
- ASDA MasterCard – 0.5% cashback paid on all spend
I will explain the basis of my calculations below.
Our base comparison – The ASDA MasterCard
This is the best free Visa or MasterCard cashback card currently available against which I am comparing the others. If a loyalty card can’t beat the best (pseudo) cashback card, you should take the cashback and book your flights and hotels directly! It pays back 0.5% of your spend in cash.
The winner – British Airways American Express Premium Plus card
This is not exactly a surprise. Spend £10,000 on this card and you get a voucher which gives you 2 Avios redemptions (on BA planes, ex-UK only) for the miles of one. On an average redemption (2 Club World tickets to San Francisco on a peak day, say), this saves you 150,000 Avios points!
Based on my 0.75p per Avios point valuation, the 2-4-1 voucher is ‘worth’ £1,100. You also earn 15,000 Avios for spending £10,000 (worth £110 assuming 0.75p per Avios) with an annual fee of £150. The net benefit for spending £10,000 = £1,060 (£1,100 + £110 – £150) or 10.1% of spend.
Runner-up – British Airways American Express card
The standard, free, British Airways Amex gives you a 2-4-1 voucher when you spend £20,000, and a lower 1 mile per £1 on your spending. Using the same maths as above, £20,000 of spend gets you £1,100 of 2-4-1 benefit plus 20,000 Avios for your £20,000 of spending, worth £150. There is no fee. The net benefit for spending £20,000 = £1,250 or 6.1% of spend.
However, if you plan to earn the 2-4-1, the British Airways Premium Plus Amex is more attractive. The card has a higher earnings rate and the 2-4-1 voucher lasts for two years instead of one.
Honourable mention, airline category – Lloyds Avios Rewards Avios American Express and MasterCard
This is a tricky one to value. You earn 1.25 Avios per £1 on the American Express but only 0.25 Avios per £1 on the MasterCard, so your spending mix is key. There is a £24 annual fee.
The Lloyds Avios Rewards card comes with an upgrade voucher when you spend £7,000. This allows one person to upgrade a return Avios reward flight by one class. I am assuming that the upgrade voucher is used to upgrade a World Traveller Plus ticket to New York to Club World on a peak day, saving 40,000 Avios.
You would earn 8,750 Avios, worth £65, for the £7,000 spend.
That means you will receive 40,000 Avios of value from the upgrade (£300 value) plus £65 of Avios for spending £7,000 on the American Express card. Deduct the £24 annual fee and the benefits are worth £341 on £7,000 of spending, or 4.9%.
Honourable mention, airline category – Lloyds Avios Premier Rewards Avios American Express and MasterCard
The ‘other’ Lloyds card has a higher earnings rate of 1.5 Avios per £1 on the Amex and 0.3 Avios per £1 on the MasterCard. There is a £140 annual fee.
When you spend £12,000 across both cards, you receive a 2-4-1 voucher. However, unlike the BA Amex voucher, this 2-4-1 voucher is only valid on economy redemptions and is NOT refundable if you cancel your flights after booking. It is hard to value Avios when used for economy flights – they are almost worthless on long-haul flights due to the taxes, but Reward Flight Saver flights can be an excellent deal. The voucher can also be used on Eurostar and some other Avios partner airlines, but again only in economy.
I will assume you achieve the spend entirely on the Amex, and use the 2-4-1 voucher for an economy flight to Marrakech. You would save 20,000 Avios by using the voucher, worth £150.
The Lloyds Avios Premier Rewards card also comes with an upgrade voucher when you spend £5,000 (this is £2,000 lower than the target on the £24 Lloyds card). This allows one person to upgrade a return Avios reward flight by one class. I am assuming that the upgrade voucher is used to upgrade a World Traveller Plus ticket to New York to Club World on a peak day, saving another 40,000 Avios.
You would earn 18,000 Avios, worth £135, for the £12,000 spend required to trigger both the 2-4-1 and the upgrade voucher.
That means, using my sample destinations, you will receive the equivalent of 60,000 bonus Avios (£300 value – 40,000 from the upgrade voucher and 20,000 from the 2-4-1) plus 18,000 Avios for spending £12,000 on the American Express card. That is a total of 78,000 Avios which I value at 0.75p. Deduct the £140 annual fee and the benefits are worth £445 on £12,000 of spending, or 3.7%.
Honourable mention, hotel category – IHG Rewards Club Premium Visa card
The premium version of the IHG Rewards Club card gives you a voucher when you spend £10,000 for a free night in ANY IHG Rewards Club property. I am assuming you use this somewhere expensive, such as the InterContinental in London, Paris, Hong Kong, New York etc for a £250 room. (I used my last one at the InterContinental New York Times Square.)
In addition, you would have earned 20,000 points from your £10,000 of spend which I value at £100. The card fee is £99. The net benefit for spending £10,000 = £250 or 2.5% of spend.
Honourable mention, hotel category – Hilton HHonors Platinum Visa
This one really depends on your hotel stay pattern. Spend £10,000 on the card in a calendar year and you are given Hilton Gold staus for a year. Hilton Gold gets you free breakfast and a guaranteed upgrade, but this is still achievable for free via occasional promotions. And, fundamentally, if you stay enough at Hilton properties to get real value from this then you probably stay enough to earn a Gold card.
Assuming that you and your partner spent 5 nights a year at a Hilton then the breakfast benefit is worth £125+. Add in £100 of value from the 20,000 Hilton points earned from your £10,000 spend to achieve Gold and the £0 card fee, and you’d have a net benefit of £225 or 2.25% of spend. This is VERY dependent on your Hilton stay pattern, though.
Honourable mention, airline category – Virgin Atlantic Black American Express and Visa cards
The Virgin Black card comes with two benefits which may or may not work for you. The one I do not value is the ‘free companion ticket’ voucher for spending £7,500. This voucher is ONLY valid when the other person buys a full (or almost full) fare flight for cash. It is generally only beneficial to someone travelling on business on a refundable ticket who wants to take their partner along. Very few people will have the flexibility or lifestyle to do this.
The other benefit does have value. For spending £5,000 you receive a voucher for an upgrade to Premium Economy when you book an Economy redemption flight. A 2nd voucher comes at £10,000, which you would need if not travelling alone.
On a route such as UK-Los Angeles, the miles saving (based on the cost of Premium Economy versus Economy) would be 22,500 miles per ticket. Assuming you can find availability (and Premium Economy is a small cabin), the value you get for £10,000 of spend is 45,000 miles which I value at £300.
You would also earn 20,000 Virgin miles for your £10,000 spend if it was on the Black Amex, worth £150. The card fee is £140, so the net gain is £310 or 3.1% of your spend.
Of value only to heavy spenders on non-Amex cards – TSB Premier Avios American Express and MasterCard
This offers an identical 2-4-1 voucher to the Lloyds card above, but is triggered at £15,000 rather than £12,000. You earn 1.25 Avios per £1 on the Amex but only 0.25 Avios per £1 on the MasterCard.
I am assuming that the 2-4-1 voucher saves you 20,000 Avios (same calculation as per the Lloyds card). You would earn 18,750 Avios, worth £140, for the £15k spend on the Amex. Netting off the card fee, the net benefit for spending £15,000 is £240 or 1.6% of spend. This is not great.
If all the spend went on the MasterCard, your return on £15,000 would be 3,750 Avios (worth £28) plus £150 for the voucher, so £178 of value less £50 fee. This is a very poor 0.86% of spend – you may prefer 0.5% in cash from ASDA.
I also considered the value of the long-term spend bonuses on these other cards, but dismissed them as poor value:
Starwood American Express – upgrade to SPG Gold status for spending £15,000 and free weekend night for spending £25,000. SPG Gold has only modest benefits and is often available for free, eg as an Amex Platinum benefit. The free weekend night is valid only at Category 1-4 hotels, which limits its use considerably, and the value of such a free night (generally sub £100) is a small reward for such substantial expenditure. The card has a £75 fee.
Virgin Atlantic White American Express & MasterCard – free economy to PE upgrade for spending £10,000 and a companion ticket for spending £15,000. The high spend level required does not reflect the modest value of the rewards. The ‘Economy to Premium Economy’ upgrade voucher on a redemption IS good but the Black card has a stronger benefit of two upgrade vouchers for spending £10,000 (and one for spending £5,000).
American Express Preferred Rewards Gold – 10,000 Membership Rewards points when you spend £15,000, paid when you next renew. I would value the 10,000 points at £75 (assuming you transfer to airline miles and achieve 0.75p of value). You also receive two additional Lounge Club vouchers with each renewal. Given the £140 annual fee after the first year, your net return is low.
Emirates Skywards Elite American Express & Visa – free companion ticket when you spend £10,000. However, you need to buy a full-fare ticket to receive your companion ticket, and even then there must be reward availability on the flight. Unless you regularly buy full-fare tickets you would not be able to benefit from this.
I am happy to hear arguments for and against my views here – many of these rewards are subjectively valued, dependant on your travel patterns.
Representative APR rates for the cards above can be found on our ‘Credit Cards Update’ page.
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.
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