(This article was updated in October 2016)
People who drift into this odd hobby of ours often apply for a couple of credit or charge cards almost at random, perhaps because they were on promotion or because they didn’t know any better. They don’t have a long term strategy at that time, not surprisingly.
If you have just become involved in miles and points, the question to ask is:
“What credit cards should I get now, and which credit cards should I end up with?”
It’s like a substantially less exciting version of dating! You may meet someone who is good for a Summer of fun, but at the same time you also know that you will end up settling down with someone who better shares your long-term ambitions ….
What cards offer the most generous sign-up bonuses?
If you are just coming into the world of miles and points, you may be looking for something to give you a ‘big hit’ in terms of points. This will help you build up your balances quickly and get a good redemption under your belt.
Based on the size and flexibility of the rewards, the most valuable American Express and MasterCard / Visa option would be:
American Express Preferred Rewards Gold (20,000 Avios for signing up, no fee, good earnings rate) + Hilton HHonors Platinum Visa (free night at ANY hotel in the wider group, even the Conrad Maldives, for spending £750!)
These two cards will effectively give you £500-worth of sign-up bonuses between them, and will help you get the first redemption under your belt. And once you’ve done, say, a free weekend in Venice / Rome / Berlin with your other half (flights on Avios, hotel via the Hilton Venice, which is a lot smarter than you might imagine / Waldorf-Astoria Rome / Waldorf-Astoria Berlin) you’ll be hooked.
You are then in a position to think about where you want to go next with your credit card strategy …..
Which cards offer the largest mileage benefits for on-going spending?
For most people, your ‘end game’ with loyalty credit cards – assuming you are focussed on Avios – will probably be:
The 2-4-1 voucher with the BA PP Amex, when you spend £10,000, is the most valuable perk in loyalty credit cards, as I showed mathematically here. And the Tesco MasterCard is the highest earning MasterCard / Visa for Avios unless you meet the very tough requirements for the HSBC Premier card – although 0.3 Avios per £1 is still not great.
(Here is my full review of the BA Premium Plus Amex, here is my full review of the Tesco MasterCard including how you can get 1,000 bonus Clubcard points if I refer you)
If you spend a lot of money abroad, you might want to add:
because it comes with NO foreign exchange fees, saving you 3% on all your overseas spending. There is a £24 annual fee but you will save more than this if you spend over £800 outside the UK. You earn 1 Avios per £1 on the Amex and 0.25 Avios per £1 on the MasterCard – not great, but this is a card you can keep in the desk until you travel.
Supercard from Travelex is a better option for foreign spend if you don’t want to pay the fee for the Lloyds card.
You can still apply for other cards as good bonuses come along, especially once you’ve spent the £10,000 on your British Airways Premium Plus Amex to trigger your 2-4-1 Avios voucher. But these cards are both good choices for the long term.
“I don’t earn enough to spend £10,000 per year to trigger the 2-4-1 voucher on the BA Amex”
In that case, you are more likely to end up with:
… as the two highest earning free Avios cards (1 per £1 on the BA and TSB cards, 0.3 per £1 on the Tesco card). The TSB card offers double Avios on overseas spend but the BA Amex offers a sign-up bonus. The TSB Avios card has never had a sign-up promotion.
“I tend to travel on my own so I can’t use the BA Amex 2-4-1 voucher”
If this describes you, take a look at this article on cards for solo travellers. You will probably find the upgrade vouchers earned via the Lloyds Avios Rewards cards more useful. You are probably looking at:
“The Tesco card is embarrassing when I open my wallet and puts off the girls / boys”
In this situation, because the earning rate is poor on almost all other Visa and MasterCard products, I would go with:
British Airways Premium Plus American Express + whichever Visa or MasterCard is currently offering the most attractive sign-up bonus in your opinion
The point of this post is that, after a bit of churning, you will want to ‘settle down’ with cards which offer genuine long-term value and which can genuinely help you reach your Avios goals. One of the combos above is likely to be your best bet.
Please do post below if your choice of long-term wallet partners disagrees with mine …..
Representative APR rates for the cards above can be found on our ‘Credit Cards Update’ page.
Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history. By recommending credit cards on this site, I am – technically – acting as a credit broker. Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.