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The Lloyds Avios Rewards credit cards are finally closing – what should you do?

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Lloyds Bank has announced that the Lloyds Avios Rewards credit cards are finally closing for good.

Anyone who still has one of these cards will be switched to a cashback credit card on 1st June.

In this article I want to look back at the history of the Lloyds / Avios relationship and look at potential alternative cards you could get.

Here is the history of Lloyds Bank and its Avios credit cards

If you’re not familiar with the Lloyds Avios Rewards credit cards, this is what you missed:

  • Lloyds TSB (as it was then) was given the contract to issue credit cards for the Avios Travel Rewards Programme, in the days when British Airways Executive Club and Avios were separate
  • The cards were issued as a double-pack of an American Express and Mastercard. As well as earning points, you received an annual British Airways upgrade voucher for hitting a spend target. Another attraction was 0% foreign exchange fees.
  • When Lloyds Bank sold TSB, TSB issued its own Avios-branded credit cards for a short period before closing them to new applicants in 2016
  • In early 2018, Lloyds Bank closed the Avios Rewards cards to new applicants
  • In late 2018, the Lloyds Avios Rewards card became a standalone Mastercard. This was triggered by American Express removing the ability of other UK banks to issue their own Amex cards.

What did you earn with the Lloyds Avios Rewards Mastercard?

From 2018, when the American Express element was removed, the Lloyds card became a fairly decent Avios card – at least by comparison with other Visa and Mastercard options.

You earned:

  • 0.4 Avios per £1 you spent in the UK
  • 0.8 Avios per £1 you spent outside the UK
  • 0.4 Avios per £1 transferred on a balance transfer

….. with an extra 25% bonus for Club Lloyds current account holders.

The annual upgrade voucher was removed when the American Express element was closed. The ‘no FX fees’ benefit was also removed at this point.

What is happening to the Lloyds Avios Rewards card now?

This is the letter that was sent to Lloyd Avios Rewards Mastercard holders yesterday:

“On 1 June 2021 we’re changing the rewards you can earn with your Avios Rewards Mastercard from Avios to a new cashback rewards scheme. This is because our agreement with Avios Group (AGL) Limited is ending.

Any Avios you’ve already collected aren’t affected – you’ll still be able to use them.

Every time you make a purchase you’ll earn cashback:

You’ll earn 0.25% cashback on any purchases you make, up to and including £4,000
• You’ll earn 0.50% on any purchases you make over £4,000
• You’ll earn cashback on all the purchases you make in a year – there’s no limit. This year you can earn cashback from June to December.
• Cashback will automatically be paid into your account every January.”

I reproduce this line without comment …..

“If you earn Avios on a purchase made before 1 June 2021 and then receive a refund after this date, you’ll still be able to use the Avios you collected from that purchase but we’ll deduct any cashback you would have earned. This cashback will be deducted at the rate you’re earning cashback at the time, so 0.25% or 0.50%.”

Is the new cashback card worth keeping?

You know what ….. it’s not bad by cashback standards.

0.25% is poor, but frankly it is no worse than the other free cashback or pseudo-cashback cards currently on the market.

If you would spend over £4,000 per year on the card, and so trigger the 0.5% rate, you will be doing substantially better than any other cashback card.

I recommend you have a look at this article from last week which ran through the best cashback credit cards in the UK.

Would I be better off with a miles and points Visa or Mastercard?

Yes. Whilst the best cashback Visa and Mastercard products are now very weak, there are some miles and points options which knock the new Lloyds cashback card into a hat.

You’ve got:

Virgin Atlantic Reward Mastercard 

This free card offers 0.75 Virgin Flying Club miles per £1 spent. If you can get 1p per mile by redeeming smartly, you are getting a 0.75% return on your spending.  Even if you get a little less than this, you are still head and shoulders above most of the cashback cards.  

Our full Virgin Atlantic Reward Mastercard review is here and you can apply here.

IHG Rewards Mastercard 

This offers 1 IHG Rewards point per £1 spent.  These are generally worth around 0.4p when used for Holiday Inn / Crowne Plaza / InterContinental etc hotel rooms, and at peak dates you can do a lot better.  The card also gets you Gold status in IHG Rewards for as long as you hold it.  

Our full IHG Rewards Mastercard review is here and you can apply here.

HSBC Premier Mastercard  

This offers points which convert into 0.5 Avios, 0.5 Etihad Guest miles, 0.5 Asia Miles or 0.5 Singapore Airlines Krisflyer miles for every £1 you spent.  If you can get 1p per mile – and some of these schemes offer better value than Avios – then you are getting 0.5% back on your spending and potentially more.  

Our full HSBC Premier Mastercard review is here.  Note that you need to be a HSBC Premier customer to get this card. 

I have only looked at free cards here because it is easier to compare the rewards.  

That said, as there is no sign-up bonus on the free Virgin Atlantic credit card, it makes more sense, in Year 1, to pay £160 for the Virgin Atlantic Reward+ credit card which comes with 15,000 Virgin Points as a sign-up bonus.  This card earns a huge 1.5 miles per £1 spent and you can downgrade to the free card from Year 2.

Conclusion

It’s time to finally close the door on the Lloyds and Avios relationship.

I have particular fondness for these cards, because I managed to earn 1.1 million Avios via a particularly generous sign-up offer it ran back in 2012. You can read that story here.

If you still have the Lloyds Avios Rewards Mastercard, you won’t find a better free cashback card on the market.

Your choice is either to stick with the cashback card, or switch to one of the Virgin Atlantic or IHG credit cards – more details below.

If you want Avios, your only option is HSBC Premier if you meet their strict income or savings requirement.

Virgin Rewards credit card

Virgin Atlantic Reward Mastercard

Bonus: None

Read our full reviewApply here

Other information:

  • Get a ‘2 for 1’ voucher, valid on cash or points tickets, when you spend £20,000 in a year
  • Alternatively, claim an upgrade voucher or Clubhouse lounge passes
  • Get free access to Virgin Money lounges across the UK
  • Annual fee: Free

Representative 22.2% APR variable

See if you qualify for sign-up bonus +

There is no sign-up bonus on the free Virgin Atlantic Reward Mastercard.

You may want to consider applying for the Virgin Atlantic Reward+ Mastercard instead.  This comes with a £160 annual fee but you receive a bonus of 15,000 points with your first purchase.  You also receive a higher earning rate of 1.5 miles per £1 spent.

After the first year, you could downgrade to the free Virgin Atlantic Reward Mastercard.

Learn more about the card benefits +

All Virgin Atlantic credit card holders receive free access to Virgin Money lounges across the UK.

When you spend £20,000 per year on the free Virgin Atlantic Reward Mastercard, you can choose a benefit.  This is what you can pick from:

A 2-4-1 voucher, valid for two years, for a Virgin Atlantic cash flight or a Virgin Flying Club redemption, in Upper Class, Premium or Economy

A return upgrade – on either a cash or miles ticket – from Premium to Upper Class, or from Economy Delight/Classic to Premium.  You can either upgrade 1 x return flight if travelling alone or 2 x one-way legs of two return flights if travelling with someone else.

A Virgin Clubhouse lounge pass (requires a same-day Virgin Atlantic, Delta, KLM or Air France flight)

Here’s the small print:

If you are a Red (no status) member, you need to pay 50% of the miles for your 2nd ticket if you redeem your 2-4-1 voucher in Upper Class.  This means that, for Upper Class redemptions for Red members, it is effectively a ‘2 for 1.5’ voucher. For Economy or Premium redemptions, it is a genuine ‘2 for 1’.

If you are a Gold member, you would receive two Clubhouse lounge passes instead on one if you chose that option

Taxes and charges need to be paid on the ‘free’ ticket as part of your 2-4-1 booking

Vouchers are valid for two years and you must fly the outbound leg of your trip before the expiry date

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

Bonus: 15,000 points

Read our full reviewApply here

Other information:

  • Get a ‘2 for 1’ voucher, valid on cash or points tickets, when you spend £10,000 in a year
  • Alternatively, claim an upgrade voucher or Clubhouse lounge passes
  • Get free access to Virgin Money lounges across the UK
  • Annual fee: £160

Representative 63.9% APR variable based on an assumed £1,200 credit limit and £160 annual fee.  Interest rate on purchases 22.9% APR variable.

See if you qualify for the 15,000 points sign-up bonus +

You receive a sign-up bonus of 15,000 Virgin points with your first purchase.

There are no restrictions on earning the bonus if you are accepted.  However, you cannot apply for a card if you currently, or in the previous six months, had a Virgin Money credit card.

Learn more about the card benefits +

All Virgin Atlantic credit card holders receive free access to Virgin Money lounges across the UK.

When you spend £10,000 per year on the Virgin Atlantic Reward+ Mastercard, you can choose a benefit.  This is what you can pick from:

A 2-4-1 voucher, valid for two years, for a Virgin Atlantic cash flight or Virgin Flying Club redemption, in Upper Class, Premium or Economy

A return upgrade – on either a cash or points ticket – from Premium to Upper Class, or from Economy Delight/Classic to Premium.  You can either upgrade 1 x return flight if travelling alone or 2 x one-way legs of two return flights if travelling with someone else.

A Virgin Clubhouse lounge pass (requires a same-day Virgin Atlantic, Delta, KLM or Air France flight)

Here’s the small print:

If you are a Red (no status) member, you need to pay 50% of the points for your 2nd ticket if you redeem your 2-4-1 voucher in Upper Class.  This means that, for Upper Class redemptions for Red members, it is effectively a ‘2 for 1.5’ voucher. For Economy or Premium redemptions, it is a genuine ‘2 for 1’.

If you are a Gold member, you would receive two Clubhouse lounge passes instead on one if you chose that option

Taxes and charges need to be paid on the ‘free’ ticket as part of your 2-4-1 booking

Vouchers are valid for two years and you must fly the outbound leg of your trip before the expiry date

Sainsbury's Nectar credit card

IHG Rewards Mastercard

Bonus: 10,000 points

Read our full reviewApply here

Other information:

  • Receive Gold Elite status in IHG Rewards
  • Points from spend count towards elite status
  • Annual fee: Free

Representative 22.9% APR variable

See if you qualify for the 10,000 points sign-up bonus +

You receive 10,000 IHG Rewards points as a sign-up bonus when you spend £200 within 90 days.

There are no restrictions on receiving the bonus if you have previously held this card or the (no longer available) IHG Rewards Premium Mastercard.

Learn more about the card benefits +

All IHG Rewards cardholders receive Gold Elite status in IHG Rewards for as long as they hold the card.

This is the only UK travel card where the points you earn from spending count towards elite status.  The 10,000 points you receive as a sign-up bonus do not count towards elite status, however.

HSBC Premier Mastercard

Bonus: None

Read our full reviewApply here

Other information:

  • Only available to HSBC Premier account holders
  • Annual fee: Free

Representative 18.9% APR variable

See if you qualify for the sign-up bonus +

There is no sign-up bonus on the HSBC Premier Mastercard.

There is a bonus on the HSBC Premier World Elite Mastercard.  This is worth 40,000 HSBC points (worth 20,000 Avios or other airline miles) for spending £2,000 within three months and a further 40,000 HSBC points (=20,000 miles) for spending £12,000 within twelve months.  The annual fee is £195 and you need to pay the fee for the second year in order to receive the second half of the bonus.

Learn more about the card benefits +

The points earned with the HSBC Premier Mastercard can be transferred to four airline frequent flyer schemes – British Airways Avios, Cathay Pacific Asia Miles, Etihad Guest or Singapore Airlines KrisFlyer.

They can also be redeemed for other items including retailer gift cards.

Cardholders can access any airport lounge in the LoungeKey network for a fee of £20 per visit.

Comments (87)

  • jjh4yb says:

    Maybe I’m missing something but NatWest & RBS offer a Reward Credit Card and this can be used for converting the rewards to Avios. The rate is not fantastic, but it is a margnal improvement over the replacement for Lloyds Avios.

  • Rick Toomer says:

    Is the Sainbury’s Nectar Mastercard worth a look to keep a trickle of Avios coming in on non-Amex transactions?

  • Wendy Jones says:

    We moved to Sainsbury’s/Nectar after the Tesco/avios partnership ended. Would the Sainsbury’s credit card be of any use to earn decent nectar points to transfer to Avios where we can’t use an Amex? We used to use the Tesco MC to earn clubcard points wherever I couldn’t use an Amex until we got the Lloyds which was significantly better. I’m just wondering if there was a way to make the Sainsbury’s cc work in our favour.

    Also if we did get the Sainsbury’s card would the nectar/avios earning be better on that than using BA Premium Amex (1.5 Avios) in store? When we were with Tesco we found the Avios earning rate with Clubcard points better when using the their current account debit card than using our BA Amex in store.

    My math skills suck and I’m just trying to wrap my head round what to do with my non Amex spend to make the most out of whatever Avios potential I can get, now that Lloyds is going.

    Thanks in advance if anyone has run the numbers

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