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IHG Rewards Club credit cards closed to new applications – what happens now?

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The two IHG Rewards Club Visa credit cards closed to new applications on 31st March.

No prior notice was given.  The cards have disappeared from the Barclaycard website (both cards were administered by Barclaycard).  They still appear on the IHG website but the linked page no longer contains a link to the application form.

Nothing changes for existing cardholders, at least for now.

It is not clear at this point what will happen.  As far as I know, IHG is not pulling out of the credit card business – the credit card conference I attended recently had a few IHG staffers there – so I would guess that the card will re-emerge at some point with a new issuer.

However, as recent rulings make it clear than American Express co-branded cards are now covered by the 0.3% interchange fee cap, there is no clear incentive for IHG to launch an American Express card.

Ironically, the benefits package on the IHG Premium Visa was to my mind exactly what was needed to survive in the new world of EU interchange fee caps.  Both my wife and I have the IHG Rewards Club Premium Visa.

IHG Rewards Club offered status to everyone who got the cards – Gold status on the free card and Platinum status for the £99 Premium Visa.  They also offered a free night voucher in return for spending £10,000 on the Premium card.  In addition, the points from your spending counted towards earning a higher level of status.

Spending £10,000 per year on the Premium card would earn 20,000 IHG points and a free night potentially worth £200+.  That is a 2% return even after deducting the £99 fee which is excellent for a Visa.

These were all excellent reasons to get the card, retain it year after year and keep it in your wallet and use itwhich is the ultimate goal of all loyalty cards.  The real value for the issuer is in you seeing their logo every time you pay for something.

The Premium card also offered double points for foreign spending – which was a good reason to use it abroad, despite the 3% foreign exchange fee, especially if your employer was reimbursing you.

There was no need for an over-generous sign-up bonus (although it did have good offers from time to time) or indeed a strong earning rate (although that was pretty good as well).  The economics looked as good as you were going to get in the post-EU fee cap world.

However …..

If you look at this Flyertalk thread you will see that many people had problems with the way that Barclays administered the card.  In particular, there were major problems in crediting the bonus points for stays at IHG hotels.  Some people were earning a decent second income via the compensation Barclaycard was paying them every month for their repeated complaints.

I can also imagine that IHG would have been frustrated with the recent change to Barclays policies on issuing cards.  If you held any other Barclaycard, including the Hilton HHonors card, or have had one in the last six months, you would not be accepted for the IHG cards.

It isn’t clear where the IHG credit cards go from here.  IHG seems to ‘get it’, as opposed to:

Hilton HHonors Platinum Visa (review), which has an amazing sign-up bonus – the best bonus in the whole travel loyalty sector, to be honest, and the card doesn’t even have an annual fee – but has little incentive to actually spend on the card.  The one benefit – Gold status for spending £10,000 – has been devalued due to Hilton status matches.  The card also has stupid timing rules – the free night voucher for getting the card only lasts for six months and the £10,000 spend for Gold must be done in a calendar, not card, year.  The sensible thing to do is to cancel it quickly and churn it, which is bad news for Hilton and Barclaycard. 

Marriott Rewards Visa (currently closed to new applicants, possibly because Marriott has no FCA license), which has a weak earnings rate and is only spiced up by giving you free Silver status and 2,000 points per year for keeping the card.  The problem here is that you apply for it but keep it in a drawer unused.

Starwood Preferred Guest American Express (review) which has a ‘too high’ £75 fee and the most insulting benefits package of any UK travel loyalty card.  Spend a ludicrous £25,000 in a year and you get a free night voucher which is, effectively, not valid at anywhere better than a 3-star hotel – because that is obviously where people who spend £25,000 a year on Amex cards like to spend their free time.  The best reason to get this card is if you collect airline miles via one of the 20-odd SPG airline partners who do not have their own UK credit card, eg Flying Blue, Aeroplan, Avianca etc. 

This is what I think you need to offer in the 0.3% interchange fee world:

Some sort of status benefit to encourage you to retain the card and pay the annual fee (annual fees will be the norm going forward whether we like it or not)

An incentive for spending a decent sum on the card – but the amount must be realistic and the reward must have some value (take note, SPG Amex)

Points which count towards status in the loyalty programme

Additional incentives for using the card with the sponsoring hotel / airline

I’d love to think that we’d see more cards doing away with foreign exchange charges.  In a world of 0.3% interchange fees, however, that is highly unlikely to happen.  It is virtually the only way to make any income from those of us who pay our bills promptly each month.

The IHG Rewards Club Premium Visa ticked all of these boxes.  Hopefully, wherever IHG goes next, it will not forget what it has learned about putting together a good package which benefits both them, the issuer and the cardholder over the long term.

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Comments (61)

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

  • Genghis says:

    Great analytical article as always Raffles.

    Now completely OT – does anyone have any recommendations on which of the three lounges I should use in IST with a Priority Pass?

    • KimJoi says:

      Heading to IST end of the month (our first trip to Turkey). Apparently, Primeclass CIP Lounge got better review out of the three.

  • Sandgrounder says:

    The ‘honour all cards’ rule will be scrapped in phase 2, from June. All capped consumer cards will be exempt, but merchants will be free to block other sub-types of card within a brand (those with higher fees). I wonder how widespread this will be- could it kill Curve?

    • Metatone says:

      That sounds like a recipe for trouble at the tills.

      • RIccati says:

        My response at the till will be to cancel and turn away, unless it is the last stale sandwich of the day and there is nowhere else to get it.

        There is enough of that in Central London — dry cleaners and restaurants, including some chains (Hare & Tortoise) reject AMEX explicitly. Now, if they start to reject Mastercard…

        I know it is competitive in retail out there but A LOT of businesses are not that service-oriented — increase the price by 1% and have it smooth at the tills accepting everything. But people don’t increase prices like that, they’ll hike them by 20p at the min (drycleaners example). They don’t look for the better deal on terminal rent/payment processing, etc. I talked with several of them.

        • Sandgrounder says:

          The plan is for new cards issued to be physically marked with type (debit, credit, business, prepaid, business prepaid). Electronic identification needs to be in place by June, but obviously it takes time to issue new cards as old ones expire. Retailers will need to make it clear which type of cards they accept.

          • Alan says:

            Interesting. Could have an impact on Curve if it all gets very transparent like that!

          • RIccati says:

            It’s a bit insane, what about non-UK cards, non-EU cards (like ones from Jersey)?

            When physically presenting a card, particularly for Chip & Pin transaction the merchant does not even get a good sight of it.

            I am personally always unhappy to let a person at the till to inspect the card in detail.

            As to the payment/terminal configuration — even to this day some merchants can’t make a difference between credit and debit card.

          • Sandgrounder says:

            The terminals may need to be upgraded, but all cards will be identifiable electronically. The new HMRC charges by card type are no doubt an early example. I imagine non-EU cards may well be exempt.

        • Imbruce says:

          Slightly O/T but a colleague of mine actually works for a card terminal company that looks at the whole package to save the retailer money.
          Any business that wants to talk to him can email and I will pass their details on to him.

  • James67 says:

    Interesting news, I wasn’t aware of this when I applied for the Hilton card yesterday. It didn’t make Barclays any more willing to approve those, I failed to get an immediate acceptance despite a six figure annual income. It will be interesting to see the outcone of the Barclays lottery this time, they can no longer use two card or six month excuses in my case. I hope the IHG card goes to amex as opposed to mbna where it would become pointless to churn.

  • Joe says:

    I guess the answer will be no, but anyone have any idea how long we’ll still be able to collect points on these for? I’m currently using this as my main card to try and renew Spire status but if earning gets cut off soon I probably won’t earn enough points this year and would be better off moving my spend elsewhere.

    • Rob says:

      No idea, depends what the contract says. You may be forcibly moved to a normal Barclaycard.

      • Nick Burch says:

        Based on the compensation you can get from Barclays for the card for their “normal” mistakes, I don’t see why you wouldn’t be able to get 2-3x the annual fee back if they forced you over to a new card with no benefits. That could pay for quite a few mattress runs towards spire!

  • Swiss says:

    Oh well. Such great news yesterday re HMRC reducing their credit card fee to 0.4%. I spent the whole day thinking about my next IHG card application and the trillions of points my wife and I would earn. Then I wake up and that dream is over (at least for now). Which credit card now to use for tax payments? Any thoughts?

  • Danksy says:

    Good, but depressing piece!

    I cancelled my ihg after having to chase for the bonus points (no different to the hilton card in that regard).

    Hopefully another provider might pick it up as a revenue stream?

  • Andrew says:

    I received a letter yesterday from Creation regarding my Marriott card and the regulatory changes. They’re going to keep the same benefits package but increase their interest rates to deal with it.

    • Alan says:

      I’d love if they all did that as a solution, would be great for those of us on HfP!

  • John says:

    Well, I’m glad barclays agreed to waive my annual fee for the 2nd year.

    I may be leaving the UK soon but I would like to keep several UK cards open for GBP spending, so I hope there will still be some worthwhile cards with no annual fee.

    • Pid says:

      My annual renewal is due in a few days and I was going to see if they would waiver it by saying I was thinking of leaving. Not sure if that strategy will work now!

      • Rob says:

        If you ring to say you believe they will drop you to a no points card at some point, fee may be waived.

      • John says:

        Don’t need to give any reasons, just ask.

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

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