MBNA wrote to holders of the Lufthansa Miles & More credit card on Wednesday to tell them that it is closing on 28th July.
This is the last of the MBNA airline credit cards to receive ‘the letter’. Quite a few of you may have these cards as holding and using the Miles & More credit card stopped your miles expiring. There is no other way, unless you have Lufthansa status, to stop your Miles & More miles expiring three years after you earn them.
Today I thought I would run through the options if you still want to collect Miles & More miles from a credit card, or want an interesting alternative from another airline.
Please note that even though there are other ways of earning Miles & More miles from a credit card, they will NOT stop your miles from expiring. Only an official Lufthansa credit card can do that.
Why did this happen?
You should NOT assume that these cards will return under a new issuer.
Two linked events caused this. The core driver was the European Union cap on interchange fees. This restricted the fee that payment processors could charge retailers for accepting credit cards to 0.3%. It is very difficult to run a successful mileage card on this basis.
The second driver was American Express being caught up in the 0.3% cap, even though it was originally expected to be exempt. American Express decided to pull all of its licensed cards from the market, which means that MBNA, Lloyds, TSB and Barclays had to stop issuing Amex-branded products such as the Miles & More cards.
What is your best alternative to the Miles & More UK credit cards?
There are a number of ways of looking at this. Let’s run through them.
Scenario 1: You want a card which still lets you earn Miles & More miles at a decent rate
The good news is that there are still ways to earn Miles & More miles from a credit or charge card in the UK. The earning rate is OK too.
The highest miles earning option is the Starwood Preferred Guest American Express credit card. You earn 3 points per £1 spent, and these convert at 3:1 into Miles & More miles. If you convert in chunks of 60,000 points you get a 5,000 mile bonus, meaning that you are actually getting 1.25 Lufthansa miles per £1 spent.
It isn’t as generous as the MBNA credit card, which gave 1.5 miles per £1 on the American Express element and had no annual fee, but it isn’t bad.
The annual fee on the SPG card is £75 and you get a sign-up bonus of 30,000 points (10,000 Miles & More miles). This makes the card well worth getting for the first year at least.
Lufthansa is not an American Express Membership Rewards partner. This means that getting one of the two Membership Rewards cards – either American Express Preferred Rewards Gold or American Express Platinum – is not hugely attractive.
These cards give you 1 Membership Rewards point per £1 spent. You would need to convert them to Starwood Preferred Guest at the weak rate of 2:1 and then onwards to Miles & More. This means that you are only getting 0.5 Miles & More miles for every £1 spent on Amex Gold or Amex Platinum.
These cards do, however, come with good sign-up bonuses. Amex Gold comes with 20,000 points for signing up, whilst Amex Platinum comes with 30,000 points. Amex Gold is free for the first year.
Whilst I do NOT recommend this as the best way of earning Lufthansa miles long term (the SPG card is the way to go), taking out a ‘free for a year’ American Express Preferred Rewards Gold, moving the 20,000 bonus points to Starwood and converting them to 10,000 Miles & More miles is worth considering.
Scenario 2: You specifically want a Visa or Mastercard to collect Miles & More miles
Earning Lufthansa miles from a Mastercard or Visa now is trickier and less lucrative. You can’t get anywhere near the 0.75 mile per £1 that the free MBNA Miles & More Visa card offered.
The only slightly decent Visa / Mastercard option is via the IHG Rewards Club Mastercard (0.2 miles per £1, assuming you convert 10,000 IHG points into 2,000 airline miles) or, with the £99 IHG Rewards Club Premium Mastercard, 0.4 miles per £1.
There is a sign-up bonus on these cards. The free IHG Mastercard comes with 10,000 IHG points, worth 2,000 Miles & More miles. The £99 Premium card comes with 20,000 IHG points, worth 4,000 Miles & More miles.
Scenario 3: You want a high-earning Visa or Mastercard and are willing to move away from Miles & More
Without a doubt, the two Virgin Atlantic Mastercards are the most generous Visa or Mastercard products available – either the Virgin Reward Mastercard (free, 5000 miles bonus) or Virgin Reward+ Mastercard (£160, 15000 miles bonus).
You get 0.75 miles per £1 on the free card and 1.5 miles per £1 on the paid card. This is FAR better than any Avios or hotel card. The free Virgin Atlantic card equals, at 0.75 miles per £1, what you were getting for non-Amex spend from your old free Miles & More credit card. You also get a 2-4-1 or upgrade redemption voucher for hitting spending targets. The only downside is that, with no short haul routes, you are unlikely to earn enough miles purely from the credit card to get a good redemption so the cards are best suited to regular Virgin flyers.
The best long-term cards for an Avios / Asia Miles / Etihad Guest / Singapore Krisflyer collector (if you have a high income) are the HSBC Premier Mastercard or HSBC Premier World Elite Mastercard. There earn 0.5 miles per £1 on the free card and 1 mile per £1 on the £195 World Elite card. You need to open a HSBC Premier current account and meet their strict income and investment criteria, however.
If you simply want a free Visa or Mastercard and collect Avios, the best option is the Tesco Clubcard Mastercard. You get 1 Clubcard point per £8 spent which translates into 0.3 Avios per £1. However Tesco rounds down each transaction to the nearest £8 which means your actual earning rate is lower. You get extra value because Clubcard points have many uses – as well as Avios, you could send them to Virgin Flying Club or a totally different Clubcard partner altogether, such as Uber or hotels.com.
Scenario 4: You want a credit card which allows you to collect a different sort of Star Alliance miles
I ran through these options yesterday in my article on the United Airlines card. Rather than repeat it all again, I suggest you click here and read that article.
Put simply, by using either the Starwood Amex or Amex Gold or Amex Platinum you can earn 1 Star Alliance per £1 spent with the following airlines: Aegean, Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, SAS, Singapore Airlines, Thai Airways and United Airlines.
Reviews and to apply
Here are my reviews of the cards mentioned above, which also explain the sign-up bonuses available:
Please read this important interest rate information:
Starwood Preferred Guest American Express – representative APR 39.7% variable including fee based on a notional £1200 credit limit
American Express Preferred Rewards Gold – representative APR 57.6% variable including the annual fee (free in year 1) based on a notional £1,200 credit limit, interest rate on purchases 22.9% APR variable.
HSBC Premier Mastercard – representative APR 18.9% variable
HSBC Premier World Elite Mastercard – representative APR 59.3% variable including fee based on a notional £1200 credit limit
IHG Rewards Club Mastercard – representative APR 18.9% variable
IHG Rewards Club Premium Mastercard – representative APR 41.5% variable including fee based on a notional £1200 credit limit
Virgin Atlantic Reward Mastercard – representative APR 22.9% on purchases
Virgin Atlantic Reward+ Mastercard – representative APR of 63.9% including the fee, assuming a £1200 credit limit
Tesco Clubcard Mastercard – representative APR 18.9% variable
(Want to earn more miles and points from credit cards? Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)
Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.