Customers of Lloyds Bank face severe cuts to their Avios air miles credit card perks that could cost them thousands of pounds worth of free flights and bonuses.
The bank’s popular flights reward scheme, which is used by hundreds of thousands of customers, is being overhauled.
Lloyds is replacing its five Avios credit cards with a single card that offers fewer points for every pound you spend.
Fewer points for pounds spent: Lloyds is replacing its five Avios credit cards with a single card
It means customers will no longer qualify for free British Airways flights for their partners, upgrades to business class or fee-free spending on holiday.
Money Mail analysis shows in the worst cases, families will be thousands of pounds worse off.
For instance, under the current scheme, a family who put their entire annual spending on their Avios cards could accrue enough points and perks in one year to pay for flights worth £2,219.
If they spent the same amount on the new scheme, they wouldn’t even build up enough points for a short-haul flight to Europe.
The reward on the new card is so measly by comparison that the family would need to wait twice as long to amass the same number of points.
Lloyds is sending customers letters telling them that they will be switched to its new Avios Rewards Mastercard. The change happens two months after the date on your letter.
Customers will keep any Avios points they have already accrued, which will be transferred to the new card.
Those who currently have Lloyds Premier Duo Avios cards or Avios Rewards cards can keep racking up points towards free companion tickets or cabin upgrades until their next card anniversary, determined by the date they took out the card. They then have until the following anniversary to redeem the perks.
Any direct debits will be transferred, but standing orders will need to be updated with new card details.
The five cards that Lloyds is scrapping are: the Duo Avios Card, the Premier Duo Avios Card, the Avios Rewards Card, Premier Avios Rewards Card and the Choice Rewards Card
The changes by Lloyds are the latest blow to credit card holders after dozens of cutbacks on rewards and points by most banks in the past three years.
Cuts have largely been caused by the introduction of EU rules in 2015 that capped the amount card companies could charge retailers when their customers made transactions in stores.
Rachel Springall, of the data firm Moneyfacts, says: ‘Existing Lloyds Bank customers will likely be furious that the generous perks will now be cut. Luckily, existing customers won’t lose any of their points in the move, so they would be wise to assess whether it’s worth keeping the card or not, but there are limited other options to replace it.’
Andrew Hagger, of personal finance site MoneyComms, says: ‘It’s another nail in the coffin for rewards-based credit cards.’
The five cards that Lloyds is scrapping are: the Duo Avios Card, the Premier Duo Avios Card, the Avios Rewards Card, Premier Avios Rewards Card and the Choice Rewards Card.
In all cases, customers get an American Express (Amex) card as well as a Mastercard version — this is because some stores do not accept Amex.
However, you earn points at different rates on each card. The most popular deal is the fee-free Duo Avios Card. You get one Avios point per £1 spent on the Amex card and 0.2 points per £1 — or one point for every £5 spent — on the Mastercard. Spending overseas earns double points, but there is a 2.95 per cent transaction fee.
If a family of five put their entire year’s £18,000 spending on the cards — split £13,500 on the Amex and £4,500 on the Mastercard — and also spent £2,000 on the card on holiday, they would build up 18,400 Avios points, according to calculations by Rob Burgess, editor of frequent flyer website headforpoints.com.
That would pay for one economy return flight to Lisbon worth £325, or two economy return flights to Paris next month worth £598. You’d still need to pay airport fees, taxes and carrier charges.
Customers will get an American Express (Amex) card as well as a Mastercard version
Once customers are switched to the new, fee-free Avios Rewards Mastercard, they will no longer be given an Amex card to use alongside the Mastercard.
But the amount of points you get for spending on the Mastercard will rise from 0.2 to 0.4 per £1.
The family of five who spent the same £18,000 on the card would build up 7,200 Avios points — less than the 9,000 points you need for a return short-haul flight to a European destination. It would take more than two years to build up the same 18,400 points they previously amassed in a year. Losses are worse for customers who currently hold the Premier Duo Avios, Avios Rewards Card or Premier Avios Rewards Card.
The Premier Duo Avios Card costs £50 a year, but offers more points for your spend. On the Amex, you earn 1.25 points per £1, and 0.25 points per £1 on the Mastercard, plus double points on foreign spending.
You also get a free companion seat on an economy British Airways flight when you spend £15,000 in a year (to get the free flight, you need to buy a full-priced ticket using Avios points). For example, you could take your partner to New York on a flight worth £569, only paying the airport taxes and charges. This will not be available with the new Avios Rewards Mastercard.
In the worst case, the changes mean customers who hold the Premier Avios Rewards Card face losing more than £2,000 worth of perks. As well as losing the generous 1.5 points per £1 on Amex and 0.3 per £1 on Mastercard on their existing card, they lose a potential cabin upgrade for spending more than £5,000 in a year and a free companion seat for spending more than £12,000 in a year.
Cuts have largely been caused by the introduction of EU rules in 2015
Altogether, that could currently take the family of five to 25,600 points in a year — whereas in future, they will get 7,200 points.
As well as a companion flight worth as much as £569, the cabin upgrade could be worth as much as £1,254 if you upgraded from Premium Economy to Business Class on a return flight to Dubai.
Both Avios Rewards and Premier Avios Rewards cardholders will also lose fee-free overseas spending, although they will not have to pay the annual fee they currently face.
Mr Burgess says customers may consider replacing some of their lost perks by taking out other credit cards. He also suggests getting a separate card that doesn’t charge foreign exchange fees. He says: ‘The real losers are solo travellers who could use the Lloyds Avios Rewards annual upgrade voucher to travel in Business Class cheaply.
‘It was less useful for a couple, who were more likely to have a British Airways American Express card, which offers a 2-4-1 Avios voucher valid in all classes.’
Lloyds says: ‘American Express is discontinuing its existing licensing arrangements in the UK. Those who hold an American Express credit card with Lloyds Bank will see their product replaced by a Mastercard.’
THIS IS MONEY’S FIVE OF THE BEST HOLIDAY MONEY DEALS