Is the death of the airline credit card on the horizon?

MBNA has withdrawn eight of its airline rewards credit cards, including its Virgin Atlantic, Emirates and American Airlines cards, leaving slim pickings for anyone looking to use their credit card spending to earn free flights and ticket upgrades.

The move wipes out 75 per cent of the UK’s airline credit card line up – leaving just the Avios rewards cards from Lloyds and American Express and one from Flybe.  

Here’s everything you need to know about the eight cards that have been withdrawn and the trick to finding a card that still lets you clock up points to spend on flights.

The cards that have been axed

• Virgin Atlantic Black credit card
• Virgin Atlantic White credit card
• Emirates Skywards Elite credit card
• Emirates Skywards credit card
• Etihad Guest credit card
• Mileage Plus credit card
• Miles&More credit card
• MBNA/AAdvantage credit card 

Why have they been scrapped?

Nearly two years ago, an EU-wide cap on interchange fees came into force. This limited the amount credit card companies can charge shops and merchants to process a transaction at 0.3 per cent. 

Rob Burgess, editor of Head for Points, explains: ‘New rules brought in last year restricted the fee that payment processors could charge retailers for accepting credit cards to 0.3 per cent. 

‘It is very difficult to run a successful mileage card on this basis – if you earn 0.3p per £1 spent, you cannot pay an airline 0.5p to 1p per £1 to buy the cardholder an air mile.’

‘While the cap initially only related to MasterCard and Visa, now American Express’ cards offered in partnership with another bank or lender – such as MBNA – also fall under the same rules.

American Express’ co-branded cards – those it issues itself in partnership with another business, such as Lloyds – are also being reviewed.

Burgess says: ‘The way the law is written means that co-brand cards are seen as bringing in a fourth party. The British Airways American Express is seen as a four-way venture between American Express, British Airways, the shop and the cardholder. Four parties means it must cap its fees at 0.3 per cent.’

‘This obviously makes no sense at all, even inside the card industry itself, but unless the final EU court ruling goes against the Advocate General’s initial opinion (which is rare) the decision will be binding.’

Airline cards still available 

Lloyds Avios Rewards 

Currently, you can still open a Lloyds Bank Avios Rewards credit card that comes with two cards, one American Express and one MasterCard. 

In return for the £24 annual fee, you can earn 1.25 Avios for every £1 spent on the Amex and for every full £5 spent on the MasterCard. You can also earn 1.25 Avios for every full £5 of a balance transferred to your credit card account.

You can earn one upgrade voucher per year if you spend a minimum of £7,000 over 12 months. 

2 for 1: You get an Amex and MasterCard with the Lloyds Bank Avios Rewards deal

Upgrade vouchers can be used to upgrade by one cabin class either two one-way flights for two people travelling at the same time and to the same destination, or one return journey booked on a British Airways main line service. However, upgrades cannot be made to First Class. 

BA Amex 

You can also still take out the British Airways American Express credit card, which offers a 5,000 Avios boost when you sign up as long as you spend £1,000 in the first three months. 

It pays one Avios point per £1 spent and you get a free companion voucher allowing a friend or family member to travel with you when you redeem your points on a flight after each £20,000 annual card spend.

Unlike the Lloyds Avios card, there’s no fee for the BA version. 

There is also the British Airway American Express Premium Plus credit card. For a £195 annual fee, you earn 1.5 Avios per £1 spent and collect double on BA holidays and flights. 

There’s a 25,000 Avios bonus after £3,000 is spent within the first three months and a free companion voucher each year after £10,000 is spent. And you’ll get British Airways Executive Club membership. 

Flybe 

There is also still a Flybe Spend&Fly card from Creation. This offers a free Bonus Return flight excluding taxes when you spend £250 within six months.

You don’t earn points but your level of spend triggers eligibility for free flights – as outlined in the table below from FlyBe.

Virgin Atlantic

Virgin Money has announced that it will be launching new products early next year with Virgin Atlantic benefits, but no details have yet been released. 

Jet off to the Maldives: a £15,000 spend could get you a return ticket with a rewards card

But there’s still a clever way to clock up airmiles …

According to Burgess, the cards that don’t fall under the EU ruling are the American Express Green, American Express Platinum, American Express Platinum Cashback, American Express Preferred Rewards Gold and American Express Rewards card. 

The Platinum Cashback credit card and Platinum Cashback Everyday credit card – both from American Express – are the most lucrative cashback cards on the market paying up to 5 per cent back on spending. You can read more about them in our article to the top deals here. 

The Preferred Rewards Gold American Express card and the Membership Rewards American Express card however could be the best options long term if you are looking to take out a card to earn airline points.  

The Preferred Rewards Gold card costs £140 per year but it cost nothing in the first year. It is a charge card though, so you will have to pay the money off at the end of each month, but you should always do this anyway with any rewards credit card.

It currently offers 20,000 Membership Rewards points when you spend £2,000 in your first three months and gets you two complimentary lounge visits per year.

Each £1 you spend earns one Membership Reward point. You get double points for purchases with an airline and on currency, and three points for American Express Travel spends. 

A £1,250 monthly spend on the card in the first year earns 15,000 Membership Rewards points (but you could earn more if you are spending on travel or foreign currency). When you reach £15,000 in a year you get another bonus of 10,000 points – so that’s a total of 55,000 points in the first year.

You can swap these points for the same value to airline reward schemes including BA Avios, Virgin Flying Club and Emirates Skywards. 

Trading in 55,000 Avios would be enough for a return trip to the Maldives or two return tickets to Greece.

The Rewards Credit Card is free and comes with a 10,000 point sign up bonus, and pays one Membership Reward point per £1 spent.

A £15,000 spend in a year would get you 15,000 points, or 25,000 in the first year, including the sign up bonus.