Lufthansa launches a new UK charge card – partly as a Diners Club! Should you apply? (Part 2)

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This is part 2 of my review of the new Lufthansa Miles & More charge card in the UK.

Part 1 – click here – looks at ‘the facts’ about the new UK Lufthansa Miles & More credit card (which isn’t a credit card).  This article is my personal view on whether the cards are worth getting.

Let’s face it, this is a weird product

It’s hard to know where to start:

It is a Diners Club card, which virtually no-one accepts

…. and it is a Charge Card, so you can’t pay interest on it – you MUST clear your balance each month

It also comes with a Pre-Paid Mastercard …..

…. which acts like a normal Mastercard, except that you also don’t get any credit period and MUST clear your balance each month

However, let’s be realistic

None of what I wrote above really matters.  What you should do, if you get this card, is:

Put the Diners Club card into a drawer and never look at it again

Treat the Mastercard like any other Mastercard, even though it is technically a Pre-Paid one

It’s a weird structure but it shouldn’t impact your decision on whether to apply.

New Lufthansa UK credit card from Diners Club

Should you get the cards IF you already collect Miles & More miles?

YES.  I think it is clearly good value for the first year:

You are paying a £79 fee but getting a bonus of 10,000 Miles & More miles.  These are worth more than £79 if used well.  There is no spend target with the bonus arriving after your first purchase.

For the rest of the first year you are getting an excellent earnings rate of 1.25 Miles & More miles per £1

Having the card stops your existing Miles & More miles expiring.  A lot of people will (reluctantly) end up paying £79 per year long-term for this card simply to protect their valuable existing stash of miles.  Remember that Miles & More miles usually expire three years after you earn them irrespective of your activity.

I personally have 200,000 Miles & More miles, worth £2000+ of free flights, and paying £79 to safeguard them is a price I will (un)willingly pay.

Should you keep the cards after the first year?

Tricky.  Whilst the earnings rate is excellent, the £79 fee is high.  The more you spend, the better value it is – I run some numbers below.

You may feel you need to keep it just to keep your existing balance from expiring.

New Lufthansa UK credit card Diners Club

Should you get the cards if you DON’T already collect Miles & More miles?

Put another way, is this a good reason to start building up a Miles & More balance?

Lufthansa Miles & More miles get you access to ‘free’ flights on all airlines in Star Alliance.  You can redeem on these carriers: Adria, Aegean, Air Canada, Air China, Air India, Air New Zealand, ANA, Asiana, Austrian, Avianca, Brussels, Copa, Croatia, Egypt, Ethopian, Eva, LOT Polish, Lufthansa, Scandinavian, Shenzen, Singapore, South African, Swiss, TAP Portugal, Thai, Turkish and United.

With a Star Alliance balance alongside an Avios / oneworld balance, you’ll never be short of airlines to redeem with.

The downsides are:

High fuel surcharges

Expensive mileage rates and heavy surcharges on short haul (35,000 miles  + £80 tax for an ECONOMY return from Heathrow to Frankfurt for example!)

The real value is in long-haul Business Class and First Class redemptions.  This means that you need lots of miles, unfortunately.  A relatively modest redemption (UK to Dubai in Business Class) is 70,000 miles return plus £516 in taxes and charges.  This is, admittedly, cheaper than using Avios (100,000 Avios off-peak or 120,000 Avios peak with similar taxes) but is still a lot to earn purely from card spend.

This card is only worth getting if:

You have SUBSTANTIAL monthly credit card – let’s say £5000+ – which would allow you to build up enough for Business or First Class long-haul redemptions over time

or

You collect Miles & More miles from Star Alliance flights and will top up your balance with this card

You cannot earn additional Miles & More miles by converting American Express Membership Rewards points as Lufthansa is not a partner.  The best indirect Membership Rewards route is to transfer to Marriott and onwards to Miles & More which is an effective rate of 0.5 M&M miles per Amex point.  This is not great.

You CAN transfer Marriott / Starwood points earned from the Starwood Preferred Guest American Express card to Miles & More.  You would get 10,000 Miles & More for signing up and converting the 30,000 bonus SPG / Marriott points.  Having the Starwood Amex card does NOT stop your Miles & More miles from expiring though.

You can top up your account in other ways, such as crediting the occasional hotel stay or car hire, or transferring Heathrow Rewards points, but you will struggle to find ways of earning lots of Miles & More miles apart from the card or flying.

You CANNOT form a Household Account unless you live in Germany, Austria or Switzerland.

New Lufthansa UK credit card

How does this card compare with other Visa or Mastercard products?

Let’s do a comparison using the three ‘best’ alternative cards open to new applications:

Lufthansa Miles & More Diners Club / Mastercard – earns 1.25 Miles & More miles per £1 which I value at 1p each.  Annual fee £79.

IHG Rewards Club Premium Mastercard – earns 2 IHG points per £1 which I value at 0.4p each, and you get a free night each year (which I value at £250) if you spend £10,000.  Points count towards status so top-tier Spire Elite is triggered with £37,500 of spending even if you have no IHG stays – this earns you a bonus of 25,000 points which I value at £100.  Annual fee £99.

Virgin Atlantic Reward Mastercard – earns 0.75 Virgin Flying Club miles per £1 which I value at 1p each, comes with a companion or upgrade voucher for spending £20,000 which is hard to value.  No annual fee.

Virgin Atlantic Reward+ Mastercard – earns 1.5 Virgin Flying Club miles per £1 which I value at 1p each, comes with a companion or upgrade voucher for spending £10,000 which is hard to value.  Annual fee £160.

This is what you’d get back:

Annual Visa / Mastercard spend of £10,000:

  • Lufthansa – £125 of miles minus £79 fee = £46 of benefits
  • IHG Premium – £80 of points plus £250 free night minus £99 fee = £231 of benefits
  • Virgin Atlantic Reward – £75 of miles = £75 of benefits
  • Virgin Atlantic Reward+ – £150 of miles minus £160 fee = £(10) of benefits plus any value from the voucher

IHG Rewards Club Premium is the clear winner at £10,000 of annual spend with a 2.3% return.

Annual Visa / Mastercard spend of £20,000:

  • Lufthansa – £250 of miles minus £79 fee = £171 of benefits
  • IHG Premium – £160 of points plus £250 free night minus £99 fee = £311 of benefits
  • Virgin Atlantic Reward – £150 of miles = £150 of benefits plus any value from the voucher
  • Virgin Atlantic Reward+ – £300 of miles minus £160 fee = £140 of benefits plus any value from the voucher

IHG Rewards Club Premium is the clear winner at £20,000 of annual spend with a 1.65% return.

Annual Visa / Mastercard spend of £50,000:

  • Lufthansa – £625 of miles minus £79 fee = £546 of benefits
  • IHG Premium – £400 of points plus £250 free night minus £99 fee = £551 of benefits plus any value from Spire Elite status plus £100 Spire Elite bonus
  • Virgin Atlantic Reward – £375 of miles = £375 of benefits plus any value from the voucher
  • Virgin Atlantic Reward+ – £750 of miles minus £160 fee = £590 of benefits plus any value from the voucher

All three of the paid cards are fairly evenly balanced at £50,000 of annual spending at around 1.1%-1.3% return.

Annual Visa / Mastercard spend of £100,000:

  • Lufthansa – £1250 of miles minus £79 fee = £1171 of benefits
  • IHG Premium – £800 of points plus £250 free night minus £99 fee = £951 of benefits plus any value from Spire Elite status plus £100 Spire Elite bonus
  • Virgin Atlantic Reward – £750 of miles = £750 of benefits plus any value from the voucher
  • Virgin Atlantic Reward+ – £1500 of miles minus £160 fee = £1340 of benefits plus any value from the voucher

At very high levels of spend, the Virgin Atlantic Reward+ card has the edge.  That said, it is close enough to the Miles & More card that I would base my decision on whose flight network I preferred and whether I would use the companion or upgrade voucher from the Virgin Atlantic card.

Conclusion

Will I be getting the new Lufthansa Miles & More charge card?  Yes, I will.  10,000 Miles & More miles for £79 is a no-brainer and it will keep my existing 200,000 miles alive.

Will I keep it long term?  I don’t want to, but I have little choice as long as I have a six-figure mileage balance at risk of expiry.

Should YOU get it?:

Got Miles & More status?  You don’t need this card, unless you have lots of Mastercard spend which cannot be put onto an American Express instead.  The Starwood Amex is a more flexible option with the same earnings rate.  You don’t need the ‘miles no longer expire’ benefit offered by this new card as elite members don’t suffer expiry.

Collect Miles & More miles but don’t have status?  For those with a Miles & More balance, this new card is a good way to top up your account and keep those miles from expiring.  I fall into this category.

For everyone else ….. the answer is “probably not”.  You can only get good value for their miles on long-haul premium redemptions and only a big spender will earn enough purely from card spend.  A better option for a Mastercard or Visa to use alongside – for most HFP readers – a British Airways American Express is the IHG Rewards Club Premium Mastercard or one of the two Virgin Atlantic Reward Mastercards.

You can apply for the new Miles & More cards here.

PS.  In all seriousness, I am impressed by what Lufthansa has done here.  It may be a weird structure, but they have succeeded where Emirates, Etihad, American and United have so far failed and got a new UK card to market – and one with a generous earning rate too.  There will have been some interesting conversations at Avios, Hilton, Emirates, Etihad, American, United etc yesterday.

(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.

Lufthansa launches a new UK charge card – partly as a Diners Club! Should you apply? (Part 1)
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Comments

  1. Neil Holland says:

    What is availability like on Lufthansa redemption flights? Getting this card (to add to c. 15k points from Hilton promo) and playing a (very) long game to get a his-and-hers redemption of the Far East in c. 4 years will be a bit pointless if I can never book a pair of seats in business or first…!

    • Fairly easy. We got 4 SWISS J to Dubai for half term on the day we wanted.

      • Many thanks, do they release 355 days out per BA and are there guarantees about availability on any given flight?

        Ta

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