Is the Lloyds Avios Rewards credit card about to be dropped?

(EDIT:  Even though I have it in writing from Lloyds that the refer-a-friend scheme has been terminated, the website has been updated this morning following my article – by Avios – to show a new closing date of 31st December 2017.   That said, I know that no referrals have been processed for at least two weeks, so who knows?!)

For clarity, this is a purely speculative article – but the smoke signals seem to be there.

When the Lloyds Avios Rewards credit cards were launched, I was initially sceptical – apart from the hugely generous offer of no FX fees on foreign spending.  Over time I came to appreciate the package, especially the way that the upgrade voucher benefits solo travellers who get no value from the BA Amex 241 voucher.

Feedback about Lloyds customer service was shocking.  It has not improved in the last four years.  My own experiences were just as bad – after I paid my wife’s bill from my bank account (a not uncommon thing, you might think) her cards were frozen for ‘suspected money laundering’.  They would only be unlocked when I went to a Lloyds branch and showed them a statement from my HSBC account showing the money going out – but my next HSBC statement wasn’t due for 3 weeks and they would not accept a print from an in-branch machine.

What prompted this article is that Avios has just withdrawn the refer-a-friend bonus it was offering for the Lloyds Avios Rewards cards.

This scheme has run for the last three years.  For Avios and Lloyds it was a very cheap way of recruiting new customers – and because Lloyds does not allow ‘churning’, they were likely to be long term customers too.

Why would Avios and Lloyds do this?  Potentially because the cards are about to be scrapped.

Lloyds Avios Rewards 2

Here are some more reasons why the cards may be on the way out:

Over the last few months we have seen Lloyds scrap the £140 Premier Avios card.  TSB has also scrapped its two Avios cards having dropped the ‘refer a friend’ scheme a few months earlier.  To be fair, these products were all stinkers.

I understand that American Express is cancelling all of its licensing agreements.  Lloyds, MBNA and Barclays will have to stop offering Amex cards in the medium term.  This means that the Lloyds Avios Rewards card would become a pure MasterCard package.

At 0.25 Avios per £1 on the MasterCard, with no companion Amex, Lloyds is going to struggle to get many people to pay £24 per year for the card

The core selling point of the Lloyds card – no FX fees and earn Avios on foreign spending – is not sustainable.  In a world of 0.3% interchange fees there are only three ways to make money with a credit card.  One is the annual fee (not sustainable as a pure MasterCard paying 0.25 Avios per £1), the second is interest charges (which are minimal on loyalty cards with a high income professional card base) and the third is the 3% fee on foreign spending (which Lloyds has voluntarily given up).

We know that American Express has agreed a wide-ranging credit card deal across IAG.  I understand this includes options for Ireland and a Vueling card for Spain.  The Lloyds card gets in the way of this.

We know from the recent Investor Presentation that all of the Avios schemes are to be merged onto the avios.com platform.  Aer Lingus AerClub shows how this works – your AerClub number is also an avios.com number, and when you want to redeem you have to visit avios.com.  When the distinction between avios.com and BAEC disappears, there is no need for both Lloyds and Amex credit cards.

Whilst probably not part of the original reasons why Avios may want to drop Lloyds, the fact that Lloyds will now also be issuing the Virgin, American, United, Lufthansa, Emirates and Etihad cards will not go down well.

As I said at the top of the page, this is pure speculation on my part.  If we’re honest, though, it is difficult to see how these cards could continue to exist in their current form.

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Comments

  1. As a former Lloyds Bank customer who was shunted over to TSB, I have the TSB dual Amex/Mastercard Avios card (which they’ve now scrapped) and despite phoning and emailing them for months now, I’ve not received any Avios points for the £14K spend I’ve made on these cards. Anyone else experiencing problems getting their points credited or can offer advice? Sick and tired of being fobbed off by TSB customer services – Avios say it’s an issue with the bank.

    • Just include the words “formal complaint” somewhere and after 8 weeks you can go to the Financial Ombudsman

  2. When does the Lloyds takeover of MBNA take place? I’m quite excited about that option. Would it be farcical to think other airline partnerships might offer upgrade or 2 for 1s?

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