Maximise your Avios, air miles and hotel points

Hey big spender ….. we don’t want your credit card business

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There are very few businesses which actively try to discourage their customers from spending more, especially in the consumer field.

If you are running a B2B company, of course, you may be keen to diversify your income (an issue we had with HFP in the early years) so you are not reliant on a small number of large contracts.  Most consumer facing companies, on the other hand, would love you to spend more.

With one exception ….. credit card companies.

Why big spenders cannot get credit cards

Since interchange fees (roughly speaking, the fee that credit card companies can charge retailers) were capped at 0.3% on consumer credit cards, issuers of rewards credit cards have been on the back foot.

It is likely that the interchange revenue they are now receiving does not cover the cost of the rewards.  There are other sources of income, of course (FX fees, interest, annual fees) but often not enough to make a difference.

This is a particular problem with fee based cards.  Let’s take the two Virgin Money credit cards for example:

the free card (12,000 miles sign-up bonus until 30th June) earns 0.75 miles per £1

the £160 card (30,000 miles sign-up bonus until 30th June) earns 1.5 miles per £1

In this case, the additional miles you earn on Reward+ are partially funded by the £160 fee.  This only holds to a certain level of spending, however.  Beyond this the issuer can be on the hook very aggressively.

If you take the Virgin cards as an example …. if Virgin Money is paying Virgin Atlantic 0.8p per mile, which is conservative, then the £160 fee is eaten up in extra payments once you hit £20,000 of spending per year.  In reality, because the annual fee is split between the airline and the issuer, the cut off point where the fee no longer covers the extra miles being bought is even lower.

A new sort of credit card customer has appeared in recent years, and many of them read HFP.  You may not know that Google and Facebook advertising can be paid by credit card.  There are many companies, often very small private ones, which are spending £2,000 to £10,000+ per week on online ads – and charging it all to a credit card.  Great for the credit card holder, bad news for the issuer.

Why no-one wants high spending credit card customers any longer

Your card account may be at risk!

I had lunch last week with two credit card consultants (yes, it’s a thing).  One was someone I had known for a few years and the other was a colleague who had wanted to meet me.  It was a fascinating session.

One story that came out is that one credit card issuer active in the loyalty space is looking at its legal options for closing down the accounts of heavy spenders.

Under fairness rules, you cannot simply close down a card account, irrespective of what the terms say.  If bills are being paid and there is no deterioration of the underlying credit position of the cardholder, there is – apparently – not much you can do as an issuer, however much money you are losing in funding rewards.

(I know the name of this issuer but do not want to repeat it here, since it is clearly third party heresay.)

The other consultant was convinced that fee-based loyalty credit cards will eventually start to restrict rewards to the first £50,000 of annual spend.  The sweet spot is less than that, but the limit has to be high enough not to put off too many people who would otherwise be profitable.  This will be bad news for those HFP readers charging thousands of pounds of Google and Facebook ad spend each week.

Who does want your business?

The only card company which should be queueing up to accept high-roller business is American Express.  Unbranded American Express cards (Green, Gold, Platinum, Centurion, Amex Rewards) are not subject to the interchange fee cap.  They can still charge 1.5%+ to retailers.

And yet, and yet …. The Platinum Card has an exceptionally weak rewards scheme, earning just 1 Membership Rewards point per £1 despite the £575 fee.

Preferred Rewards Gold is better, as you get double points on airline transactions, double points on foreign currency transactions and 10,000 bonus points for spending £15,000 per year.  It is still nowhere near as generous as the Virgin Flying Club Reward+ Mastercard (1.5 miles per £1, £160 fee) or the Lufthansa Miles & More Mastercard (1.25 miles per £1, £79 fee) for high spenders.

We still haven’t seen the full impact of the interchange fee caps due to the long-term contracts which were already in place.  As these deals come up for renewal, expect earning caps on fee-based cards with high mileage rates, and potentially some more aggressive ‘points per £1’ deals from American Express to mop up the big spenders.


Want to earn more points from credit cards? – December 2020 update

If you are looking to apply for a new credit or charge card, here are our December 2020 recommendations based on the current sign-up bonus

You can see our full directory of all UK cards which earn airline or hotel points here.

British Airways American Express card

British Airways American Express

5,000 Avios for signing up, no annual and a companion voucher for spending £20,000 Read our full review

BA Premium Plus American Express card BAPP

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

Nectar American Express

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

15,000 points bonus and the most generous non-Amex for day to day spending Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these:

American Express Business Gold card

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

Earn both Avios and BA On Business points with your business spending Read our full review

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

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.

Comments (147)

  • Sandgrounder says:

    I am surprised that issuers can’t just close accounts for whatever reason they wish. Banks & B/S certainly can, Nationwide shut my current sccount down for paying in too much cash, and as far as the Ombudsman was concerned, they could do as they liked.

    • Andrew says:

      How much was too much?

      Nationwide is still a Building Society, and their counters have never had a high cash turnover.

    • Lady London says:

      Did they think you were a drug dealer then?

      • Sandgrounder says:

        I passed 50k, that triggered a review. I think they just like to get rid of people who actually use the branches.

  • Mark says:

    OT… Does anyone know if you can clear a miles&more/dinersclub balance before the month ends and start again or do u have to wait for the direct debit to go through to get a zero balance again?

    • MardusManx says:

      Yes you can do a bank transfer. Sometimes takes a couple of days to show though and it will not alter your direct debit if that happens to leave around that time. Diners Club should be listed under “Payee Lookup” under most current accounts.

      You then use your account reference number (found top right of statement) as the payment reference.

      Although it isn not advertised if you ring the number on the back of the card they will confirm the sort code and account number just to be on the safe side.

    • Rob says:

      I know people who have called and made a debit card payment.

      • inY says:

        The Lufthansa Mastercard from Diners Club is technically a prepaid debit card. Can it be used to pay the Diners Club bill?!

  • Sam Collins says:

    Company Google Adwords spend pays for my family summer holiday flights via Membership Rewards & Avios. Glad to hear that’s not at risk…

  • Jonathan says:

    Is there anything specific in the prominent card issuers T&C’s preventing you from legitimately using consumer credit cards for B2B transactions?

  • Michael says:

    OT…I hold the Amex Platinum and will most likely hold it perpetually as I’m able to get a decent value from it. I’ve recently referred my wife for the Platinum (not supplementary card) and she’s now activated the sign-up bonus.

    We have no need for two Platinum cards so will either transfer her membership points or downgrade her to Gold/Green.

    If we downgraded to Gold do we:
    1) Receive a refund pro-rata for Platinum less the Gold annual fee? Assuming Gold only free in first year with direct application
    2) Are we eligible for the 10k points bonus for £15k spend?

    Many thanks in advance

    • Shoestring says:

      1 – yes pro rata refund on the Plat but liable immediately for the £140 on the Gold
      2 – yes

      So you might not want to downgrade – you could cancel the Plat and take out a new Gold card for your wife, giving her a free first year. She wouldn’t get a spend bonus but you could get a referral bonus

    • Liam says:

      If you downgrade from Platinum to Gold, do you get the Gold charge card or credit card?

      • Shoestring says:

        you couldn’t downgrade from Plat charge to Gold credit

        but if you never had Gold charge before upgrading to Plat charge, pretty sure you wouldn’t be allowed to downgrade to Gold charge

        • Waddle says:

          I’ve never held the Gold charge but have been offered a downgrade to the Gold charge from Plat.

  • Jason says:

    Does anyone know if Miles & More Mastercard/DC is planning to allow us having supplementary cardholders? We are in 2019…

  • Heran says:

    “you cannot simply close down a card account”
    But you can transfer the account to a different type, like what Lloyds and MBNA have done?

    • Shoestring says:

      That’s not what happened IIRC.
      1. MBNA closed the a/cs.
      2. Virgin offered the ex-accountholders the chance to apply and (if successful) take out a Virgin credit card.

      ie a/cs didn’t continue, in any sense

      • TGLoyalty says:

        The old MBNA accounts continued as Horizon cards unless you closed your account

        • Mark2 says:

          Likewise Lloyds replaced the old Amex/MC combination with a new MC card with FX charges but no annual fee.

  • AYellowBelly says:

    Does this apply to the Amex credit cards (SPG, BA) in that they might cancel the card (hopefully not the entire account?!) if there’s a significant monthly spend?