Annoying quirks with the new IHG and HSBC World Elite credit cards

Two of most interesting travel credit card offers around at the moment come from two newly released cards:

HSBC Premier World Elite Mastercard comes with a bonus of 20,000 Avios points (or Cathay, Etihad or Singapore miles) for spending £2,000 within three months and a further bonus 20,000 points or miles for spending £12,000 within twelve months.  This card is only available to HSBC Premier current account holders.  I am obliged to remind you that the representative APR is 59.3% variable including the £195 fee based on a notional £1200 credit limit.

The relaunched IHG Rewards Club Premium Mastercard comes with a voucher for a free night at any IHG Rewards Club property when you spend £10,000 per year.  You also receive IHG Rewards Club Platinum status for as long as you hold the card and there is a 20,000 IHG Rewards Club points sign-up bonus.  Representative APR 41.5% variable including the £99 fee based on a notional £1200 credit limit.

Because these cards are so new, we are only now beginning to work out how they function in the real world.

And, for both of the cards above, there appears to be a sneaky catch – the 12-month bonus will only be given at the end of your membership year.

This doesn’t make a huge amount of sense in either case.  If you can spend £12,000 on your HSBC card in three months (I know one reader who spent £40,000 in his first month via business expenses) then it seems unfair to make you wait another nine months to get your second batch of 20,000 miles.

With the IHG card, this is actually a backwards step.  When the card was issued by Barclaycard, the free night voucher was issued within a couple of weeks of passing the £10,000 spending target.  Delaying it until the end of your card year simply annoys the cardholder and does nothing to benefit the card issuer.

(Whilst we’re on the topic of the IHG card, another sneaky quirk has emerged.  Creation, the card issuer, is rounding down each transaction to the nearest £1 when calculating the IHG points due.  It is not basing them on your total monthly spending.  If you make a lot of small transactions, especially for £x.99, this loss will add up.)

What other cards behave like this?

To be fair to HSBC and Creation, there are two other examples I can think of where your ‘reward’ is held back from you until the end of your card year:

American Express Gold gives you 10,000 bonus Membership Rewards points if you spend £15,000 in a card year.  This is not paid until a month after your card renewal date.

Virgin Flying Club Black (representative APR 57.4% variable including fee based on a £1200 credit limit) offers upgrade vouchers from Economy to Premium Economy – for miles redemptions – when you spend £5,000 and £10,000 on the American Express card.  These are not issued until the year end.

What happens if I want to cancel my card and not pay for a 2nd year?

This is a common question I get asked and I expect it to become more common given the two cards above.

In general, it appears that if you do not use your credit card after the renewal date, you can cancel it at any point for a refund of your fee.

This seems to be the MBNA policy which applies to Virgin Black.  If you want to ensure you get your upgrade vouchers, stop spending, wait for the vouchers to appear and then cancel the card.  You are, in any event, unlikely to have yet paid the bill which included your renewal fee.

With American Express Gold, you can cancel the card at any point for a pro-rata refund.  Your worst case scenario there is that you cancel after a month when the 10,000 bonus points appear and get 11/12th of your annual fee back.  If you haven’t used the card I would expect to get it all back.

We do not know what the HSBC or Creation policy will be.  I am fairly certain that if you follow the same option – not using the card after the anniversary date – they will not impose the 2nd year fee.  

It is very unlikely that any attempt to make you pay for another year in order to get a benefit you earned in the first year would survive a complaint to the Financial Conduct Authority.

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