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Lufthansa launches a new UK Miles & More charge card – partly as a Diners Club (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.


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Comments (87)

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

  • Jon says:

    I’m in the “everyone else” category. And you’re right, it’s not worth it for me unfortunately. Although I kind of want to get it just to say that I have a diners club card!

  • Jing says:

    O/T – Does anyone know when do the BA double avios post?; took a LHR-SFO flight after registering for the offer. This has now posted on my BAEC but only as base points.

  • Charles Paumelle says:

    Being a prepaid card, does it means it will be considered as a DEBIT card for payment of goods or services (e.g could be used to pay VAT bill on HMRC online payments site ) or a CREDIT card?

    • Rob says:

      Not clear.

    • Ian M says:

      I’m also wondering this! I’m guessing the answer is no, but I’m very much hoping its yes!

    • Chris says:

      I’d guess not – prepaid is distinct from debit, there’s no reason to assume it’ll necessarily be accepted as anything other than prepaid (which amongst other things will make life complex for Diners when you preauth a big chunk when checking in to a decent hotel or rent a car)

      Can see this going a bit Curve-in-the-first-few-weeks!

      • Shoestring says:

        There’s a fair bit of history where prepaid MC theoretically credit card has been treated as a debit card at point of payment.

        You HMRC lot might be pleasantly surprised.

        Was it also 3V MC that worked this way?

        • Shoestring says:

          See for example thread comments here https://headforpoints.com/2014/08/08/amazon-tesco-3v-virtual-visa-cards/

          You could definitely pay eg council tax and wouldn’t get charged the credit card fee. Ie it was treated as a debit card (perhaps not by all).

        • Chris says:

          I think thats not quite correct -they were treated as a prepaid card, it’s just they were willing to accept prepaid cards.

          By definition theres no such thing as a prepaid credit card, that’s an oxymoron

        • Shoestring says:

          @Chris – that’s the point, surely? There’s no S75 protection on the Lufthansa Miles & More credit card – because it ISN’T a credit card. They’ll probably disable the payments to financial services functionality (same as 3V did in the end) but that doesn’t mean you won’t be able to pay (say) council tax without getting charged a credit card fee.

          Not that I would do that, because I pay CT on my Amex instead 🙂

          And Lufthansa might not get its act together for a few weeks, so you might have a window of opportunity to pay HMRC .

        • Genghis says:

          No fees on using credit cards since Jan…

        • Shoestring says:

          Fair point 🙂

          Adjust to read: but that doesn’t mean you won’t be able to pay (say) council tax and they treat it as a debit card

  • Cat says:

    Hey, just for anyone stuck for ideas on building up a high enough M&M balance, I will be doing my first redemption (in F) with Lufthansa from Zurich to Mexico City via Frankfurt next summer (this way I get to enjoy the Swiss F lounge as well as the FCT in Frankfurt). I needed 95,000 M&M miles for a one way redemption (obvs returning with Iberia), and it’s really easy to find availability to Mexico City. I got my miles from my MBNA card (ongoing earnings and the sign-up bonus), the offer with The Economist which pops up fairly regularly, the occasional independent hotel stay booked via them when they offered bonus miles, the Hilton offer earlier this year and Heathrow rewards, as well as the odd Star Alliance flight. I think I collected for about 3 years to get enough, not as easy as Avios admittedly, but from what I hear it’s very much worth it!

    • Rob says:

      It is, it is a great experience – probably by favourite First Class service, despite the old seat.

      • Cat says:

        I’m absurdly excited about my flights next year, CX too!
        Bring on the caviar…

  • BS says:

    I take it there is no section 75 of the consumer credit act protection?

    Is this affected because the MasterCard is officially a prepaid card?

    • Rob says:

      No credit, no S75. But will Diners offer it voluntarily as Amex does on Plat?

      • Sundar says:

        Rob – Is the S75 protection only on Plat ? What about the old Gold Charge card ? Never used it so far but curious to know…

        • Shoestring says:

          S75 doesn’t apply to Amex charge cards – but yes, it would apply to (say) the new Gold Credit card.

          Instead of S75 on their charge cards, Amex voluntarily offer a similar chargeback scheme.

        • Sundar says:

          Thanks Shoestring

  • meta says:

    I only have 100k M&M, so will be applying for this card just to extend the vaildity of my miles for another 6-9 months so I can use them up. Otherwise I am not convinced it’s worth keeping especially as Mastercard might prove to be useless as it might get declined oftendue to this weird structure. Also don’t think the annual fee is worth mileage protection. They should have offered an annual bonus.

  • Ian M says:

    Very impressed they’ve got a new card to market so quickly with such a good earning rate! Very very good! As has been asked above, as it’s not a credit card, is it possible we can use it to make payments to HMRC?

    I would have applied for this straight away, however I applied for the Virgin Atlantic Reward+ card yesterday and was turned down for the first time in my life, I was very surprised. I seem to remember quite a few people having this problem when it first launched. Is it worth appealing?

    • Jason K says:

      I had the same issue Ian, as did my wife. Also appealed both times and made no difference. Weird as we’ve also never been turned down. Some people have had success with appealing though, you have nothing to lose.

    • Rob says:

      Yes, write to them (Jubilee House address, google it) with a couple of paras on your income and lack of debts. Usually works.

    • Mr. AC says:

      I think there might be some sort of a calculation happening that’s not directly related to credit scores with some of these rewards card.

      Recent personal example: had an AMEX BAPP card and pretty happy with it, decided to apply for Amex Gold. Denied! Appealed, put a bunch of proof of income into the letter (Premium banking physical statement, etc) – appeal rejected. Applied for an SPG Amex next month – granted with over 10k credit limit. I assume that an extra month of credit history couldn’t have impacted their decision…

      Arcane and unfathomable for mere mortals their scoring models are!

  • HAM76 says:

    The MasterCard won’t work with offline authorization, which means like Revolut or Curve, you should expect to see problems with buy on board or gas stations.

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