HfP reader wins case against Virgin Money for not refunding his annual credit card fee
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A Head for Points reader has won his case with the Financial Ombudsman Service (FOS) against Virgin Money, and the way they applied the annual fee on his Reward+ credit card.
For background …. Virgin Atlantic has two Mastercard credit cards, the Reward and Reward+ cards.
Reward (apply here, review here) has no sign-up bonus, is free for life and earns a whopping – by free Mastercard standards – 0.75 Virgin Points per £1 spent.
Reward+ (apply here, review here) has a sign-up bonus of 15,000 Virgin Points, has a £160 annual fee and earns a huge 1.5 Virgin Points per £1 spent.
Both cards also offer an annual 2-4-1 or upgrade voucher valid for two years. The free card triggers a voucher at £20,000 of annual spending whilst the Reward+ card triggers a voucher at £10,000.
Why did our reader need to complain to FOS?
For the first year, it is a no-brainer to go for the £160 paid card. The 15,000 miles bonus offsets the fee, you are earning twice as many Virgin Points per £1 and it is far easier to trigger the voucher.
After the first year, the maths gets trickier. You may decide that it makes more sense to swap to the free card, or even cancel altogether.
Our reader decided to cancel. However, Virgin Money charged his annual fee early – just over 11 months after he opened the card.
The reader was still using his card at this point, albeit less than usual, with a view to stopping a few days before the card anniversary and then cancelling.
When he tried to cancel, Virgin Money refused to refund his £160 annual fee for the second year. This was because he had used the card after the fee had been charged, which counts as ‘accepting’ the fee.
The reader complained that this wasn’t fair
The reader felt that this was unfair. Virgin Money had charged him the new fee a few weeks before his original card year ended.
He had also not been notified of this, so unless he was checking his statement daily he would not have known that the fee had been charged.
Virgin Money claimed that it was in the right
Virgin Money argued that it was in its rights to charge the fee a few weeks before the card anniversary. The terms and conditions state:
“Each subsequent annual card fee will be added to the account on or about the anniversary of the account opening date and will be required to be paid as part of your Minimum Payment”
The Ombudsman did not discuss whether or not Virgin Money was correct in applying the fee three weeks before the card anniversary.
In reaching its decision to make Virgin Money refund the fee for the second year, it looked at the spending pattern of the reader. This showed that he had been spending less in recent weeks which implied that he was planning to close it. The Ombudsman found that Virgin Money was wrong to refuse to refund his fee.
This isn’t all good news for readers, however
Our reader got his £160 refunded in the end. However, this case still leaves a bad taste in the mouth:
- what I didn’t say earlier is the Financial Ombudsman Service initially found in favour of Virgin Money – our reader had to appeal the decision, which sends it to a more experienced member of staff, before he was given his refund
- Virgin Money had originally told the investigation that “They had refunded £40 and this was reasonable.” – even though this was the £40 refund given to EVERY Reward+ cardholder as compensation for being unable to redeem their miles due to covid, and nothing at all to do with this case
- the appeal succeeded only because the reader had been clearly reducing his spending, even though the card was not due for renewal for a few weeks – if he had been spending at his usual rate, intending to stop suddenly in the last few days before his card anniversary, he may have lost
- the decision did not address Virgin Money’s policy of debiting an annual fee weeks before it is due, without informing the cardholder in advance, and then claiming that continued use of the card during the current year for which a fee has already been paid disqualifies the cardholders from a refund
- the Ombudsman did not award any additional compensation for the time and effort he had been forced to spend in making his original claim and subsequent appeal, because it did not believe that Virgin Money had done anything wrong – in effect, their policy is acceptable to FOS, even though it stops cardholders getting the 12 months of benefits they paid for
The lesson from the story is ….
If you have the Virgin Atlantic Reward+ credit card and do not intend to keep it beyond the first year, you should either:
- cancel it after 11 months, even though you have paid for 12 months, or
- start to run down your spending after the 11th month so there is a clear paper trail of your intention to close the card or
- keep a daily watch on your statement once you get into Month 12 and stop spending on the card as soon as the £160 fee for the second year appears
The full judgement should be available on the Financial Ombudsman Service website in a week or so.
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How to earn Virgin Points from UK credit cards (April 2025)
As a reminder, there are various ways of earning Virgin Points from UK credit cards. Many cards also have generous sign-up bonuses.
You can choose from two official Virgin Atlantic credit cards (apply here, the Reward+ card has a bonus of 18,000 Virgin Points and the free card has a bonus of 3,000 Virgin Points):
Virgin Atlantic Reward+ Mastercard
18,000 bonus points and 1.5 points for every £1 you spend Read our full review
Virgin Atlantic Reward Mastercard
3,000 bonus points, no fee and 1 point for every £1 you spend Read our full review
You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.
American Express Preferred Rewards Gold is FREE for a year and comes with 20,000 Membership Rewards points, which convert into 20,000 Virgin Points.
SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on the ‘free for a year’ American Express Preferred Rewards Gold card is increased from 20,000 Membership Rewards points to 30,000 points. Points convert 1:1 into Avios (30,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.
American Express Preferred Rewards Gold
Your best beginner’s card – 30,000 points, FREE for a year & four airport lounge passes Read our full review
The Platinum Card from American Express comes with 50,000 Membership Rewards points, which convert into 50,000 Virgin Points.
SPECIAL OFFER: Until 27th May 2025, the sign-up bonus on American Express Platinum is increased from 50,000 Membership Rewards points to a huge 80,000 points. Points convert 1:1 into Avios (80,000 Avios!) and many other programmes. Some people may see even higher personalised offers. Click here to apply.
The Platinum Card from American Express
80,000 bonus points and great travel benefits – for a large fee Read our full review
Small business owners should consider the two American Express Business cards. Points convert at 1:1 into Virgin Points.
American Express Business Platinum
50,000 points when you sign-up and an annual £200 Amex Travel credit Read our full review
American Express Business Gold
20,000 points sign-up bonus and FREE for a year Read our full review
Click here to read our detailed summary of all UK credit cards which earn Virgin Points.
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