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Is This Another Nail In The Coffin For The UK Airmiles Credit Card Market?

Another two travel rewards credit cards bite the dust

In December, I talked about how recent EU laws relating to credit cards had all but destroyed the UK travel hacking market. For those unfamiliar with the term, this is the ability to earn airmiles from UK credit cards. The UK airmiles credit card market had shrunk from a whopping twenty cards to nine measly options.

Sadly, another two cards have bitten the dust this week. Both the Hilton HHonors Credit card, and the Lloyds AVIOS credit card have been withdrawn. The latter is still available if you go into a bank and existing cardholders are not affected.

Admittedly this makes it easier for you to select your UK airmiles credit card, but what this means for the future of credit cards offering airline rewards in the UK remains to be seen.

EU flag
Source: Pixabay

Why are the card companies withdrawing their cards?

The EU cap on interchange fees, introduced in December 2015, limits the amount that credit card companies can charge. The limits are:

  • 0.3% for domestic credit card transactions
  • 0.2% for domestic debit transactions

What does this mean?

At the time of implementation, Gov.uk forecast that British business could save up to £480 million a year on almost 10.7 billion credit and debit transactions. George Osborne claimed it would mean lower prices for consumers. The whole basis of the legislation was supposed to be more transparency, lower prices and increased card payments. In theory then this should be good news.

But as with any legislation, there are winners and losers.

For business?

18 months on and merchants have clearly benefitted from the reduction in costs.

The European Payments Council recognises however that credit card issuers have suffered losing a potential €2bn in revenues. This, of course, has been passed on to the consumer with many reducing rewards, introducing or increasing card fees., or withdrawing from the market completely.

For consumers?

The Uk is the largest credit card market in the EU, and companies such as M & S and Tesco have been slashing rewards for their customers.

In addition, the withdrawal of all MBNA airline credit card options in the UK really limits the choice for those in the UK wishing to use credit cards to travel hack.

Furthermore, the European Payments Council stated in summer 2017 that ‘consumers are yet to see any reduction in the costs of goods and services directly attributable to the regulations‘.

Credit card insurance offers protection
Source: Pixabay

For travel hackers?

There are still options available for you to boost your airmile balance, but these are now seriously limited and almost all of them come with a charge. With less competition in this space, we may see further reductions in accrual rates or more withdrawals. My message is simple – make hay while the sun still shines as sign up bonuses such as the 26,000 AVIOS from the British Airways Premium Plus Card or 22,000 from AMEX Gold may soon be a thing of the past! Now that really will compromise my ability to fly business for less than economy.

graveyard
Could this be the end of UK travel hacking? Source: Pixabay)

What do you think?

Do you have a view on these legislative changes and what they might mean for you? Have your say in the comments below.

Grab an airmiles credit card while you can

Which Airmiles Credit Card Is The Best In The UK?

About Anne

Anne is the founder and editor of TravelTheGlobe4Less. If she isn't travelling, she is thinking of travelling or planning her next trip. She has visited over 80 countries on six continents and sampled everything from backpacking to bank bursting travel. Her mission is to help you enjoy more luxurious travel without the luxury price tag through the use of airline and hotel rewards and other money saving travel tips

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20 comments

  1. As a regular card user, and also a business owner, I can see both sides of this.
    I have used the travel hacks to get points in the past, but I do agree with the intent of the legislation – you never really know how you are paying for the airmiles – as there is always a cost.
    To be honest I prefer the convenience of being able to use my card for almost everything now, without any hassles like minimum purchase or other spending limits at the low end, is better for my finances – and in business the bottom line is healthier from lower fees to the card companies, that made huge profits off the backs of these cards.
    If you want rewards, now it is going to have to be from flying it seems…. love the hacks and advice in that space, so thanks!

    • Yes I hear you. I can totally understand the disadvantage to a business owner. I’m just going to try and milk it while I can as I simply don’t fly enough to ever earn enough miles to fly business or first without paying for it.

  2. Michael Kelly

    The Credit Card Air miles issue has always intrigued me.

    While people in the US have great choice and earning ability, those in the UK are left with only a very small handful of cards to choose from .. but, they still have a choice albeit small

    Have pity on those of us who live in Ireland. Not one single credit card is available to residents to earn miles on .. not a single one!

  3. I am just beginning to really utilize points and miles and learn about ways to hack travel. It is unfortunate that UK Credit card customers are being so severely limited. Hopefully this does not limit too many people in their travels that reside in the UK.

  4. Honestly, this stuff just flies over my head. For me air miles and points are too complicated. I don’t know if I don’t have the skill or the patience to keep track of points and spending required to make it worth it. I probably should though as I could be saving a lot of money. Lol

  5. Megan Jerrard

    Yikes that sucks 🙁 We have a non existent credit cards rewards scene in Australia, so I know how painful it is! Definitely, as you put it, time to make hay while the sun still shines – I hope that less competition doesn’t totally ruin the quality of programs you’ve been enjoying until now.

  6. I am not an air mile credit card holder but surely was planning to look one for us. Your post has laid down some important facts which we actually need to rethink. Great iformative post.

  7. That’s really interesting. I’ve actually never used the travel hacks to get airline miles, preferring to go the route of budget airlines (which seems to save money in the long-run if you don’t spend a lot in general). But I was certainly considering getting into it in the future, and now it seems that option won’t be around forever for me as a UK citizen. Thanks for the information!

  8. It’s a pity that the number of card companies offering the facility to earn air miles on the cards have reduced in the UK. I think it’s a worldwide thing because even in Dubai we do not have any credit card companies left that are offering this benefit anymore. It’s not good news !

  9. I do not live in Europe but I know what you mean. Most of us travelers use miles and credit card points to fund our travels & regulations like can be detrimental to our plans. Good that you brought it out well in your post.

  10. Now that is a perspective that I never considered when I heard the news. Maybe coz I did not need to. However, I am glad that you have listed down the downsides of this policy for I will definitely be looking at it from this angle the next time I do need it. Well analyzed. Your post gives everyone some food for thought

  11. I haven’t spent the time to learn about travel hacking, it’s on my to do list but never makes it to the top. Sounds like I need to jump on it before all the options are gone

  12. OH well this SUCKS. Sad to hear that. Although I’ve never collected — and should because I’ve been full-time travel blogging for 5 years!! I hope you’re able to find a card that gets you the rewards you deserve.

  13. Sadly, I feel like credit cards with airline/air mile benefits have shrunken everywhere. The sign-up bonuses used to be better in the states and I also used to use British Airways points so much more (6 years ago), now, I barely use them as it’s hard to find a good deal 🙁

    • It definitely is getting harder now, and this certainly doesn’t help! I’m hanging in but praying that BA don’t pull their card

  14. Would Brexit affect this? I didn’t know it would have an impact like that. Norway is not a part of the EU and we do have so many extra fees and is way more expensive than EU countries. I actually have just one airmile card and it is not so many points so I can use it for anything.

    • I guess it all depends on which laws we decide to keep and which we decide to revoke. As this is already on the statute books, I cannot imagine that it would be top priority in terms of revocation so I suspect not, but I could be wrong.

  15. Why is it that whenever the government says a measure will benefit people, it actually ends up screwing them over?? It is a shame that it has had this knock-on effect, I’m not too affected as I don’t fly enough but for people like you this really is a bummer 🙁

    • I am just praying that BA do not revoke their cards, although that seems unlikely as they are promoting it heavily at the moment.

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