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

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What prompted this article is that Avios has just withdrawn the refer-a-friend bonus it was offering for the Lloyds Avios Rewards cards.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

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 (128)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • HG says:
    10 Jan10 January 07:24

    Quick question, if I use the upgrade voucher earned on this card from spending £7000 to get return flights in Club World, will I get the CW tier points or WTP ones instead?

    • Ruan Hattingh says:
      10 Jan10 January 07:29

      No Tier points, as the upgrade is for a reward ticket booked through the Avios site.

    • Rich says:
      10 Jan10 January 07:30

      Neither, it’s an Avios transaction and so no tier points are awarded.

    • Andrew says:
      10 Jan10 January 07:34

      The upgrade voucher is only for avios redemptions, not cash fares, so no avios or tier points will be earned.

  • vindaloo says:
    10 Jan10 January 08:07

    Clutching at straws a bit, but one could speculate that they’ve stopped the referral scheme because it didn’t work. I’ve tried to refer three people over the past few years. Two never got the referral e-mail (in one case I tried twice, two months apart) and the other waited over a month for it.

    • Alan says:
      10 Jan10 January 08:19

      That’s what I was wondering too, perhaps it was just getting too much hassle for them.

      Seriously hope you’re totally wrong on this one Rob!

      • Rob says:
        10 Jan10 January 08:26

        The referral system worked BUT there were secret rules. A deliberate decision was obviously made to keep these rules secret.

        a) if the person you refer has an Avios account and it is set to ‘no marketing emails’ then the referral is rejected, because technically Avios sent the referral link

        b) if the person you refer was ever a customer of Lloyds, Halifax, Bank of Scotland, Birmingham Midshires or any other Lloyd company, the referral is rejected

        However, on the upside:

        c) if the referral was rejected, but you applied anyway using the same email address, you would still get the bonus! This is because Avios matched up the list of new cardholders against the list of referral requests (including ones eventually rejected)

        • Alan says:
          10 Jan10 January 08:30

          Yes I made use of (c) a number of times!

          Here’s hoping for totally scrapping they’d look at the option of looking at the annual fee.

        • mark2 says:
          10 Jan10 January 08:53

          b) is not always the case. My wife and I have been customers of all of Lloyds, Halifax, Bank of Scotland and Birmingham Midshires and have each successfully applied for the Avios card

          • Rob says:
            10 Jan10 January 09:01

            You can apply. You just won’t receive the refer a friend link if you gave an email address which is linked to your existing Lloyds account.

            The work around was to give a different email – which meant you got the referral email – and then, when Lloyds didn’t award the bonus (since it would work out once it had your address you were a customer) retroclaim it from Avios, who would pay it. As they should, since Lloyds had paid them their sign-up commission.

          • mark2 says:
            10 Jan10 January 09:20

            reply to Rob:
            That is true about the email address, but make sure you change your Avios account email to the address you use and make s you use it on the application. Everything has to match as you imply in the ‘matching up comment’

          • Genghis says:
            10 Jan10 January 09:46

            My wife and I have long standing Halifax accounts. We both applied for the Lloyds card last year and each got the 4.5k referral bonus, despite using the same email addresses used for our Halifax account comms.

        • TGLoyalty says:
          10 Jan10 January 11:07

          Same as Genghis 3 referrals and in all 3 cases using the email address already linked to lloyds account all worked fine.

          the marketing emails is an important one, BOTH accounts must be set up to receive them to get the bonus

          • Andrew says:
            10 Jan10 January 11:23

            I have to agree as a Halifax customer my partner refereed me for the Avios bonus same email etc and I got it. I think it’s just a flip of a coin – heads it works tails it doesn’t.

  • Lux says:
    10 Jan10 January 08:26

    I was going to ask what was meant by this:

    “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.”

    But then I remembered about Lloyds taking over MBNA’s UK business. Is that right?

    • Rob says:
      10 Jan10 January 08:28

      Yes. The point I was making there is that Lloyds / MBNA undermines the Avios cards whenever they run a big bonus on the Virgin cards (and to a lesser extent the other airlines).

  • James67 says:
    10 Jan10 January 08:31

    Great post Rob. I decided to call Lloyds on the back of it to check their attitude to customer retention on a cancellation request. There was no effort at retention to speak of but since I have never cancelled a card with them before I have no idea whether this is normal for them of unusual. I told the agent that there was a report in the media that was speculating that the card was likely to be withdrawn and made a few points about the other card and TSB, mbna etc. My gut feeling is that agent was unsurprised by any of this but just said as far as she knew avios was going nowhere and even if it was we would get notice of the changes. I used that to get out of the cancellation request for the moment and told her I would give it more thought.

    • Alan says:
      10 Jan10 January 08:37

      I’m surprised they didn’t offer to transfer your call to Avios as normally happens with this card 😉

      Generally I’ve found their staff pretty poorly informed and not sure I’d read too much into this, or them not trying to retain you – I’ve found in the past year its happened less and less with any company (compared to IHG Barclaycard a few years back that we’re actively paying cash for me to stay and downgrade to the free card!)

  • Gavin says:
    10 Jan10 January 08:49

    Annoying for me as I’ve found it very useful for earning Avios abroad. From the 0% FX rate, last years voucher, 18 months 0% and the double Avios this card has been very good for me.

    About 3.8k into the next Voucher earning, but have stopped spending on it for a while. Haven’t got enough Avios to use it long haul at present so no great loss if I don’t end up triggering the voucher

  • pazza2000 says:
    10 Jan10 January 08:54

    I wonder if it’s worth applying for this card now then or should existing card holders expect it to not last as it is for long!?

  • Kip says:
    10 Jan10 January 08:56

    What’s the Amex ‘wide-ranging credit card deal with IAG’? Is that just an extension of the current offering or is there something new and exciting in the pipeline?

    The sign-up bonuses in the UK are pitiful compared to other countries. Yesterday I saw a headline offer of 75k Qantas points for a new card on an Aussie travel blog site. Not sure if QF translates at 1:1 to Avios but it’s a big number.

    • Rob says:
      10 Jan10 January 08:59

      An extension in the UK and new products elsewhere I believe.

    • Ro says:
      10 Jan10 January 09:57

      Qantas redemptions are similar to BA but a bit better imo. And less surcharges. East coast aus to the uk costs 150k avios in business i think, or 129k qantas for emirates business or 139k for qatar/cathay. All better experiences than club world.

      Some cards in aus even go up to 100k sign up bonuses. Downside is you can only churn once a year rather than once every 6 months.

      • Louie says:
        10 Jan10 January 12:13

        18m now for Amex in Oz I believe.

        • Ro says:
          10 Jan10 January 22:40

          yeah I think you’re right actually Louie. but lots of the banks are still at 12month. whats great about mot of the bank cards is that they usually provide an amex plus a visa incase the amex isn’t accepted.

  • Alex W says:
    10 Jan10 January 09:01

    It is less than 6 months since I cancelled the £140 premier Lloyds card. If I apply now for the £24 version will I still get 0% on purchases and double Avios for 6 months on the Amex?

    • Rob says:
      10 Jan10 January 09:03

      No-one has ever told me that they didn’t get these benefits when reapplying, let’s put it that way. I think they are hard-baked into the card and Lloyds cannot remove them for specific people.

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