Maximise your Avios, air miles and hotel points

Lloyds buys MBNA and its airline credit cards ….. good news or bad?

Links on Head for Points may pay us an affiliate commission. A list of partners is here.

Lloyds Bank announced yesterday that it was the winner of the auction to acquire the UK operations of credit card group MBNA from Bank of America.  It paid £1.9bn as well as taking over MBNA’s existing debt book.

MBNA is the leading UK player in so-called ‘affinity’ credit cards.  In the travel space, it runs cards for Etihad, Emirates, American, Lufthansa, United and Virgin.

Etihad credit cards

It isn’t clear at this point what Lloyds intends to do with the business.  This BBC report contains a few clues.

Apparently the MBNA brand will remain, as it is now little used outside the UK and Bank of America is not concerned about any future reputational issues infecting its remaining credit card operations.

£100m of cost savings are anticipated.  This would require MBNA to cut a huge 33% from its cost base – a staggering amount, given that a lot of costs are fixed and that cutting, say, the marketing budget would have a direct impact on future growth.

Virgin card

It isn’t clear what will happen to MBNA’s operational centre in Chester.  In a perfect world, I would like to see MBNA take over the existing Lloyds credit cards.  Anyone who has ever dealt with the Lloyds credit card people will know that they are a complete and utter shambles, and if they can be pulled up to MBNA’s levels of service then this would be great news.

Unfortunately, there is a risk that it works in reverse and that the existing MBNA operation is merged into the current Lloyds network.

Emirates Elite cards

It is not a surprise that the two credit card companies in the UK which offer high levels of service are those which are focussed exclusively on credit cards – ie American Express and MBNA.  For Lloyds and Barclays, their credit card operations are a modest part of what they do and cost cutting is generally given a higher priority than customer satisfaction.

We’ll see.  The deal will take some time to close and it will be a number of years before there are any noticeable changes in how MBNA operates.  MBNA has already cut back on, although not stopped, aggressive sign-up promotions following the caps on interchange fees this year.  It must be losing money on some of its current travel card contracts given the generous mileage benefits paid out.  It’s not as if Head for Points readers are likely to be paying interest on their balances.

Comments (46)

  • Barks says:

    I signed up for the Lloyds AVIOS Amex and they are utterly useless. Assigned a pathetic credit limit of £1K and I had to go through a formal complaints procedure to get them to raise it in line with all my other credit card providers. Either they are extremely risk averse in terms of providing credit or just utterly incompetent. Also took them a month to send out my PIN and internet banking login details which meant I wasn’t able to take advantage of 0% FX whilst on holiday (reason why I took out the card 2 weeks prior to this). Waste of time and energy.

    • Andrew says:

      I think Lloyds have a fairly standard policy of a small initial credit limit, then they choose who gets more. Most people seem to start on somewhere between £1k and £1.5k. Officially they say they will consider a limit increase after 6 months, but some have been offered earlier.

      I think that’s fair, it makes sense to start people on a low limit and validate whether they are a good customer before increasing potential risk, especialy if there is no prior relationship to work from.

      • Genghis says:

        My wife and I as new customers to Lloyds (though not LBG as we had existing relationship with Halifax) got initial limits much greater than what you state.

      • Kathy says:

        My limit has been 6k from the start. The application form I completed online asked what a useful limit would be and I got what I requested.

  • linda says:

    Touch wood had no problems with my Lloyds duo Avios cards. As we bank with Lloyds and have done for over 40 years , although as now retired do not have a large balance with them. I was given £8500 credit limit and hubby was given £10,000. We do not even have a large retirement income coming in and also have several other cc, plus a large mortgage go figure?

  • bill says:

    Interestingly IM postcodes are classed as being outside the UK so Lloyds wont accept applicartions whereas no such problems with MBNA. This could reulst in customers in the channel islands and IOM being unable to apply for any mbna cards or even having existing accounts closed

    • North says:

      They’re not wrong in classifying IoM outside the UK – “As a Crown dependency, the Isle of Man is not part of the United Kingdom or European Union. The Tynwald passes its own legislation with the assent of the Crown granted in the Privy Council”.
      Source – http://www.bbc.co.uk/news/world-europe-18251379

      It is part of the British Isles but not UK. Evidently MBNA didn’t mind that but Lloyds are correct in this case.

      Although Lloyds are still rubbish! I had no end of problems getting my Avios credited and it took 8 months for it to be done properly. I’ve never been able to use chip and pin though. I’ve had numerous resets and spoken to the fraud team who said a block had been put on it but they had removed that block… I’ve given up and just cross my fingers that I can sign for transactions overseas.

      • Guesswho2000 says:

        Also, MBNA currently, specifically state that you can keep their cards if you reside outside the UK (although not apply for them) – I’ve got AA and Etihad, and I live in Australia, so we’ll see what happens with them. There’s no AA or SPG card here, and I use it to keep my AAdvantage balance alive, so I hope they let me keep it!

  • Isabel Friedlander says:

    Interestingly I recently used a 0% balance transfer offer through the AA which is an MBNA card. and offered a long 0% period, as long as one didn’t spend on it, so why not!? When an error was made concerning the fee (which should not have been charged), the Bank of Ireland were the contact point. It will be interesting to see how this shapes with LLoyds?

  • Roger says:

    OT- but CC related.

    Has anyone received both tranches of 20K nectar points (from Amex and Nectar themselves) for spending 2K on card opened in OCT?

    I have only received Amex and not Nectar. How long does it take for Nectar to credit after Amex has credited Nectar points? Hope one does not need to chase up for the point credit.

    • Crafty says:

      I have received both, without any need for customer service contact, within a few days of each other.

    • Alan says:

      20k from Amex posted then the 20k from Nectar arrived 4 days later, with no intervention from CS (although they were saying it wouldn’t be until the 3rd card statement)

  • Jake says:

    Slightly OT, but has anyone had any experience of MBNA not awarding the Virgin Premium upgrade vouchers if cancelling the card at the end of the year?

    My renewal date for the card is 4th March 17. I’ve been told by MBNA that if i cancel before then – even on the 3rd March which is effectively the last day of this year’s membership – I will not be entitled to receive the upgrade vouchers. Only if I cancel after the 4th March, but after I’ve paid another £140 annual fee will i be entitled to receive the vouchers.

    Cant see any mention of this policy in T&Cs, has this happened to anyone before? It seems to defy logic that to retain benefits for the previous year’s membership, I need to renew for a further year.

    Thanks

    • Alan says:

      Let the new membership year start, upgrade will be issued, don’t use the card at all in the new year then call to cancel and get refund of fee. If any issues then the ombudsman would take a strong stance.

      • Jake says:

        Thanks Alan. I did ask MBNA about refunding the annual fee but they said it would be non-refundable.

        • Rob says:

          If you have not used the card post the renewal date they have no grounds to not refund you and many HFP readers have been refunded under this scenario. A quick FCA complaint that they were effectively holding you hostage to paying the fee in order to get your voucher would see a refund come very quickly I’m sure.

  • AH says:

    I fully expect Lloyds to slash the miles collected on Virgin Atlantic Cards.
    Especially with Virgin miles redemption changing.
    Would not be surprised to see something like 1 mile for every £4 on the non Amex card.