Another one bites the dust – HSBC Premier MasterCard cuts its rates (but is still the best Avios card)

The devaluation of loyalty credit cards, at least those with a Visa or MasterCard logo on them, continues.  This is driven by the new EU regulations on interchange fees, which will cap the amount shops can be charged for accepting Visa or MasterCard at a pitiful 0.3%.  These come into force on 9th December.

We have already seen Tesco halve the earnings rate on the Tesco Clubcard MasterCard.  Marriott has also closed its MasterCard to new applicants.  Examples of changes to non-airline cards include NatWest closing Your Points and House of Fraser halving the voucher earning rate on its MasterCard.

HSBC Premier has become the next to fall into line.

HSBC Premier

For spending in the UK, the earning rate will halve on 21st January.  The rate for overseas purchases will remain unchanged, but the card does have a 3% fee on foreign transactions.

Under the new structure, the HSBC Premier rewards scheme will give 1 point for every £1 spent in the UK.

You will be able to transfer your HSBC Premier points into the following airline schemes:

0.5 Avios per point

0.5 Asia Miles (the Cathay Pacific scheme) per point

0.5 Singapore Airlines KrisFlyer miles per point

0.5 Etihad Guest miles per point

The irony is that, even after the earning rate is halved, the HSBC MasterCard will remain the easiest way to earn Avios via a Visa or MasterCard at 0.5 Avios per £1.

The Tesco Clubcard MasterCard now only offers 0.312 miles per £1 (and you actually receive less because of the way it rounds down transactions).  The Lloyds and TSB cards do not offer more than 0.25 Avios per £1.

Here’s the snag ….

The HSBC Premier MasterCard can only be obtained if you have a HSBC Premier bank account.

HSBC Premier has tough eligibility criteria.  See here and click on the Eligibility tab.

As well as opening a HSBC Premier current account, you must ALSO have £50,000 invested with HSBC, either in a savings account or via an investment product.  Alternatively, if you earn over £100,000, you qualify if you just have a HSBC mortgage or any investment or insurance product.

I’m not sure what the minimum investment is in an ‘investment product’ but I’m sure you could find something which would accept £1,000 or so.  They may even treat ISA’s or fixed rate bonds as ‘investment products’ – the definition is not clear online.

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

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Comments

  1. “The irony is that, even after the earning rate is halved”

    That’s not ironic

    • Within the context of the sentence it’s not ironic but within a wider context it is!

  2. Hoping they still do their annual transfer bonus next month

    • I thought the annual bonus happened in October, in previous years? I’m waiting too…

  3. Well that sucks. I expected it, but was hoping it would last longer.

  4. Off topic…

    But an epic use of Amex to collect points readers here might appreciate… http://www.theguardian.com/world/2015/nov/24/billionaire-earns-first-class-travel-for-life-by-putting-modigliani-nude-on-amex

    • I’m impressed Christie’s let him use an Amex, now here’s hoping he knows to transfer them to airline miles and not just use them to get money off his statement or catalogue items – I suspect those might not be quite up to his expensive tastes though 😉

      • He probably paid the fee for using Amex, so why not?

      • Cant compete with that but my OH got Arnold Clark to waive the fee for paying for car purchase on a BA Amex, enough avios for 2 domestic flights sorted. Before anyone pipes up, the balance was promptly paid off!

        • Nice work!! I’ve only ever been able to get a car dealership to put the deposit through on a CC, never the whole amount.

          • Yeah i didnt think it would work either and had been moaning about pushing it too far! There was a lot of umming and calcs on a notepad about how best to pay which i think was frustrating the salesman and he eventually offered to waive the fee – he didn’t realise we were trying to work out the best method of points accrual!

            Also Amex were fine with taking the credit limit from a cancelled SPG card and adding to the BA card to allow the transaction to go through.

          • Hehe even better! Good tip re Amex doing that too.

          • Always what is the maximum deposit you are allowed to pay on the car BEFORE you ask what credit cards they take.

        • In other words its the equivalent of getting a discount or of negotiating more money off the car !

  5. Stuart Evans says:

    I have a sizeable balance of HSBC points. Does this mean I need to transfer them to Avios before the valuation takes place?

    • According to the letter that HSBC sent out, any points that have already been earned will not be affected by the devaluation. It’s only points earned after 21 Jan that will convert at the new lower rate.

  6. Bad news. How long will the BMI MasterCard hold out for!

    • Sebastian says:

      Well the thing with the BMI is that you’ve got to pay £60 a year for it, so it may hold out, as unless you’re doing reasonable amounts of spend on it, they’re probably still making money on it, as the rate they pay for Avios is probably low. Although if they decreased this to 1.5 avios most people would probably still keep it.

      The card I am most worried about is the Hilton, even with the low 0.3p value per point it is currently giving 0.6p per pound spend an additional 2.5k points for your first four stays and a free night for £750 spend. That for me is surely a gonna.

  7. AviosNewbie says:

    The insurance requirement is a good way to get this. I have a life insurance that costs me £6.50 per month and gives me Premier status. If you meet the income criteria and have life insurance elsewhere, it might be a good idea to cancel the other life insurance and move to HSBC.

    • This is useful, thanks

    • Be very careful about cancelling life insurance!! Conditions on a lot of policies may have changed, plus you will be older and health may not be the same as when you took the original out… worth speaking to an independent financial adviser before disturbing a policy!

  8. I missed the news on “House of Fraser halving the voucher earning rate on its MasterCard”. Anyone know when it is effective from / provide a link? Many thanks.

    • You should have had a letter – my wife did. Can’t remember off the top of my head what the effective date will be, if indeed they haven’t already done it.

  9. Insurance definitely the way to go – I applied for HSBC Premier and was told that I had to have an investment though their ‘advised’ service – an execution only Cash or S&S ISA doesn’t count.

  10. Unfortunately the cap isn’t on the maximum shops can be charged. It’s worse than that it’s the maximum visa/MasterCard can charge the banks. The shops , especially small shops, can still be charged a lot more. There is unlikely to be a dramatic saving for most small businesses. Only those large corporate businesses will see the rate reduction passed onto them.

    • Yes, this is what is most frustrating about the whole situation, IMO.
      Not only will we, the end consumer, never see these savings (large shops will not drop prices because of reduced transaction fees), small shops who I might sympathise with on CC fees won’t even get them, it’ll go to the banks.

  11. All Visa and MasterCard cards will go this way sooner or later…. As they use the interchange fee to “buy” rewards for their cardholders.

    Amex will become a dilemma for some merchant as Amex isn’t subject to the interchange caps at the moment, but that also means that accepting a consumer Amex card will be several times more expensive than VI/MC. So whilst consumers who prefer rewards may prefer Amex, for merchants it may increase costs.

    • Although as Neil just pointed out above, the final costs to the shop might not be quite as different as the reduction in interchange fee suggests, which might make it a bit less of a differential.

    • As informed consumers, we can go the other way. Whenever possible, switch to businesses that accept AMEX. Have a meal at a hotel rather than a local place, etc.

  12. O/T How long does the transfer from Heathrow Rewards to BA usually take? Still waiting for mine

  13. OT & also related to Heathrow Rewards. I registered last week using the BA promo code but I can’t find the welcome offer under My offers/rewards section in my account. Is there a way to confirm that I’m registered for the 3000 bonus points promotion?

  14. Duncan Stevenson says:

    Is the £100,000 income household or personal for the HSBC eligibility?

  15. tall trader says:

    just got my letter today. that sucks.
    i guess that makes the amex green not so bad after all in terms of a reward card with optionality to use points…

  16. Does anyone know if there are now any other Mastercard/Visa cards offering better rates for non-BA airline earning? The best feature of the HSBC card has for me always been that I can transfer to airlines other than BA, deciding on which airlines at the time of transfer depending on my plans at the time. I know there are other airline-specific MBNA cards which I believe match but do not better the new rates, but I would prefer to be able to continue to transfer miles to a range of airlines. I suspect HSBC will still be the best option, but if anyone knows different I’d be grateful.