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What prompted this article is that Avios has just withdrawn the refer-a-friend bonus it was offering for the Lloyds Avios Rewards cards.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

  • Monopolies commission says:
    10 Jan10 January 04:53

    Well that would be disappointing…I thought 2016 was meant to been the bad year for change, not 2017!

  • Joe Bloggs says:
    10 Jan10 January 05:47

    Well despite the many horror stories, I’ve had no issues at all with the Lloyds Avios cards. But some people are too thick & shouldn’t be allowed near them; for example one user on MSE forums was fuming when Lloyds cancelled both of his cards after he requested that they close down JUST his Avios Mastercard…Duh!! Obviously he/she doesn’t understand the word ‘duo’.

    I’ve noticed the MBNA Amex Everyday card (no fx fees) is no longer available to new customers, I wonder if that’s about to be scrapped? IMHO their Amex is best for overseas cash withdrawals as mbna’s interest rate is only 7.4% compared to 12.9%+ for the Halifax Clarity. MBNA also don’t have daily cash ATM withdrawal limits, provided the ATM supports it.

    • Genghis says:
      10 Jan10 January 06:14

      If you pay off your Clarity on the day of cash withdrawal, no interest is chargeable.

      • Joe Bloggs says:
        10 Jan10 January 07:29

        Not from my experience. Prior to getting the mbna amex card, I always paid off the Halifax Clarity on the same date as the cash wifthdrawal but still got charged interest – ok it was literally pennies but its the principle of trying to pay zero in interest. When i queried this with Halifax they said a minimum of 1 days interest is charged on all cash withdrawals, even if cleared the same day so this pretty much ties in with my own experience.

      • Liz says:
        10 Jan10 January 09:55

        I’ve never taken cash from a credit card (other than via Curve or Supercard) – do you have to pay off the whole balance of your account including purchases if you draw cash or just the cash bit to prevent charges? Is that a dumb question? . We are not planning on taking much cash on our month long USA trip so will need to be able to access some cash when there – in case curve or Supercard fails what do you need to do?

        • Genghis says:
          10 Jan10 January 10:12

          No idea Liz. I don’t make purchases on Clarity so only have ATM withdrawals to clear.

          • Scott says:
            10 Jan10 January 11:04

            I’ve always assumed you have to pay off ANY outstanding balance, including purchases, to avoid interest on cash withdrawals accruing (I think T&C’s might state payment goes toward the oldest transaction first?)
            One thing to note is the final value in sterling isn’t finalised until the transaction moves from pending to cleared, due to exchange rate fluctuations, so you might end up a few pennies out either way. Even if you miss it by a few days though, interest is negligible – 12.9% on a £1k balance is 35p per day.

      • TGLoyalty says:
        10 Jan10 January 11:02

        Same from my lloyds account, any account paying via faster payments should be the same.

        However, 2-3p on £2-3k foreign spend is hardly the end of the earth

  • krys_k says:
    10 Jan10 January 06:15

    Ouch. I’ve got my lady and mother in my avios household account, so this meant three return upgrade trips for £15k, so for me, Lloyds was the best card out there!

    • Genghis says:
      10 Jan10 January 07:33

      “three return upgrade trips for £15k” (spend?). How does that work?

  • polly says:
    10 Jan10 January 06:25

    After finally going through the very painful process to obtain this duo card set…this now might happen. Seem to be big amex changes in the offing. As you say some parts are unsustainable. Handy for our Asia trips..most hotels accept amex. Shame if it’s stopped. U g voucher handy for my oh biz travel if ness. Let’s see what happens. Maybe those who have it can hold onto it.
    just booking our next hel to Hkt trip atm whilst in Nam. Good price. Worth cancelling our ba f 241 to KUL now. Will use avios and voucher to position to hel.

    • krys_k says:
      10 Jan10 January 07:09

      We’ve all got the premier card that is now no longer available. I wonder if having a fee will keep it going.

  • Our_Kid says:
    10 Jan10 January 06:48

    I am happy with the TSB card – I picked one up when my Diamond Club came to an end and have already generated a good Avios pile from it.

    Have to say AMEX only would be a shame – it’s good to have a MasterCard in there for HMRC.

    • Genghis says:
      10 Jan10 January 07:31

      Was TSB card ever any good? I dismissed it at the time for only earning a paltry amount of avios (but for FX where another person is paying).

  • Steve says:
    10 Jan10 January 07:10

    Curious, although a long way off no doubt, could brexit bring an end the interchange fee cap for the UK? For me it’s been a total failure, places still charge fees to use credit cards which means they’re profiteering from it and getting away with it technically!

    • Genghis says:
      10 Jan10 January 07:41

      Unlikely IMO as already in U.K. law/SIs/regs.
      I’m no expert on the interchange cap but wasn’t it just for large cos (who don’t really charge fees)? I thought your corner shop was generally unaffected?

      • Rob says:
        10 Jan10 January 08:21

        Small shops pay disproportionately for the terminals etc – the PIN machine Tesco uses to run up £100,000 per day costs the same to buy or rent as the one your newsagent uses to run up £100 per day. Cutting interchange fees is only a marginal improvement to small retailers.

    • Daz says:
      10 Jan10 January 08:20

      Wasn’t it the UK who championed the idea in the first place?

  • Vish says:
    10 Jan10 January 07:10

    I applied for these cards online once MBNA withdrew their products.

    I got referred by Rob, and eventually got the referral after a month. After which when I applied I got 1 out of 2 email confirmations back from Lloyd’s. I gave it 2 weeks and called them up. They said my application had an error and they would rrsolve it with their IT dept and requested I applied again after another 2 weeks.

    This time I rang them up and they said they error has cleared and I should reapply. I don’t it online again but this time no confirmation email at all. I gave it a week and called them up. Now they had my profile on their systems twice and therefore it got rejected!

    The helpful lady took my through an application on the phone and I was told to wait 2 weeks for the cards.

    3 weeks later no cards, I rang them up and they said my application failed as there were too many records of me on their systems. I was told to go into a branch and book an appointment. I simply gave up!

    • Yuff says:
      10 Jan10 January 07:28

      My wife had a similar problem a few years ago, after 4 wasted visits ( this was when there was a big sign on bonus – 10k I think) they told her to re-apply after paying £135 in compensation.
      Didn’t re-apply then as the bonus had finished, waited for a referral from Rob a couple of years ago.
      Card has worked well apart from buying some Disney tickets off a 3rd party supplier, in the US, and Lloyds kept blocking the transaction saying I was using the supplementary card to book the ticket( but tricky as I had lost the card they said I was using). After about 3 days they sorted it out but it’s worked fine abroad and for using on Etihad and Qatar sales.

  • Markc62 says:
    10 Jan10 January 08:21

    For some, Lloyds bad administration could be beneficial – I triggered two upgrade vouchers in 2016 T’s & C’s state only one per calendar year. Worth using for some of the pricier CE routes.

    • Genghis says:
      10 Jan10 January 09:48

      How did you trigger two upgrade vouchers? Isn’t it one per anniversary year (just badly worded T&Cs)?

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