An aerial battle is set to break out between rival banks next week with the launch of two new schemes allowing customers to claim free flights in exchange for spending money on their credit cards.

Lloyds TSB customers will be able to join Airmiles, the free-flights rewards scheme, after the bank poached the contract from NatWest. But NatWest is not giving up without a fight and has unveiled YourPoints, which it claims offers better value and greater flexibility.

The new schemes will launch on Friday and tens of thousands of customers are expected to switch loyalties as a result. Lloyds TSB says that it has received more than 60,000 applications for its Duo credit card, which allows customers to collect Airmiles. Customers can choose a Duo Mastercard or American Express card or both.

To add insult to injury for NatWest, Lloyds TSB will double the Airmiles reward rate for those who use its American Express card, to one mile for every £10 spent. NatWest rewarded customers with one mile for every £20 spent.

Lloyds is also offering an extra 500 Airmiles to NatWest cardholders who switch to Lloyds. Their points tally can be boosted further by using the Duo card in shops that are also members of the Airmiles scheme, such as Tesco, Homebase and Shell.

NatWest’s chances in the tussle are not helped by an Achilles’ heel in its air travel offering. Cardholders who do not spend at least £1,000 a month have to fork out £3 a month, or £36 a year, to join the YourPoints scheme, which has been set up in conjunction with the travel website eBookers.com and the low-cost airline easyJet.

NatWest offers one point for every pound spent on its credit card. About 4,100 points will earn a trip to Paris, on easyJet from Luton airport, with an additional £40 to pay in taxes. Laura Mottram, of NatWest, says: “Our customers said they did not understand the value of Airmiles. YourPoints is more transparent.”

However, Robert Kenly, of Moneysupermarket.com, the comparison website, says: “It is cynical to charge a fee of £3 a month and the scheme certainly favours high-spenders.”

But there is also a hitch in the Lloyds scheme. Customers who spend money on its MasterCard will receive fewer points than those who spend on the American Express card.

MasterCard customers earn one point for every £20 spent, dropping to every £50 after six months. Flying to Paris from Heathrow with British Airways requires 400 Airmiles – £8,000 in spending. But American Express cardholders need only spend £4,000 to earn the same flight because they receive one point for every £10 spent.

However, customers planning to travel in style will be disappointed to learn that they cannot use Airmiles to upgrade their seats.

NatWest and Lloyds are not alone in the battle for the skies. Morgan Stanley’s Buy and Fly! credit card, with an APR of 16.9 per cent, is a worthy competitor. It issues one point for every £10 spent, 200 bonus points for new customers and double points for the first six months. Points can be redeemed on flights from 19 airlines. Flying from Heathrow to Paris requires 390 points, or £3,900 of spending. Taxes are about £60.

Other cards offer travel reward programmes that are more restrictive, such as the bmibaby card from Citibank. Cardholders who spend £5,000 in a year can choose any flight on bmibaby, the low-cost airline, which flies only to European destinations. The APR is 16.9 per cent.

One of the most popular reward programmes is the Nectar scheme, which also allows members to exchange points for flights. A return trip to Paris from Heathrow costs 6,000 Nectar points, with taxes of about £62.50. Sainsbury’s and Debenhams, which have two of the largest memberships of the Nectar scheme, pay members two points for every pound spent with them.

The American Express Nectar card, with an APR of 15.9 per cent, offers two points for every pound spent in partner stores and one point elsewhere. By combining the loyalty card and the American Express card, members can collect four points for every pound spent in Sainsbury’s. How to negotiate US immigration, Travel, pages 18-19

For those who prefer cold, hard cash

If you prefer cash to free flights, the American Express Platinum Moneyback Card returns 3 per cent of your first three months’ spending and 1 per cent thereafter. The APR is 14.9 per cent.

Morgan Stanley returns 3 per cent on purchases made with its Platinum MasterCard until September, but only on spending up to £2,000 a year. Above this, the rate is 1.5 per cent. After four months the cashback rates fall to 1 per cent and 0.5 per cent. The APR on the card is 15.9 per cent.

Alternatively, the Marks & Spencer &More card rewards you with M&S vouchers. Each £1 spent in store, or £2 elsewhere, is worth 1p. The APR is 17.9 per cent.

CASE STUDY: Rerouting to avoid fee

Nick Rees is switching his credit card from NatWest to Lloyds TSB to continue to collect Airmiles. The 24-year-old, who runs his family’s furniture shop in Horsham, West Sussex, says: “I was pretty taken aback when I found out that Airmiles was leaving NatWest. I have been collecting points for years. I recently flew to Dubai and the Maldives through the scheme and am planning another trip this summer.”

Mr Rees considered sticking with his NatWest card, but was put off by the monthly fee. “I looked at YourPoints but Airmiles doesn’t have a monthly fee and Lloyds TSB is doubling the points you get back,” he says. “I will switch my credit card first and then look at whether it is worth switching my other accounts as well.”