Holiday Tips 2 – the best ways of earning miles with your credit card abroad

In Part 1 of Holiday Tips on Wednesday, I looked at ways to earn points when booking airport car parking.  Today I want to provide an updated look at the best ways to earn points when using your credit card abroad.

Something I stress on Head for Points whenever I can is the need to keep a clear mind when earning miles or points. If you are buying a product or service primarily because it offers you miles, you should have a view of how much those miles are worth to you to avoid over-paying.

This is especially true when earning miles from credit cards. Credit card miles are not free miles because you always have the alternative of using a cashback card instead. The ASDA Money card gives you 0.5% of your spending back in cash. Does your non-Amex payment card match that?

Credit cards

Historically, it was almost always a bad idea to use a mileage card for overseas spend. This is because all other miles and points cards – and indeed almost all other UK credit and debit cards – charged a foreign exchange fee of 2.99% which is itemised on your statement.  You can clearly see how much money is going out on avoidable FX fees.

Supercard is the way forward

A few weeks, Travelex launched Supercard after a long beta trial.  This is a revolutionary way of making payments abroad without incurring any fees.  I explained it in detail here.

Your Supercard acts like a traditional MasterCard card.  You link, via a Smartphone app, another Visa or MasterCard (not Amex) credit card to it.  You pay with Supercard and it immediately recharges your other Visa or MasterCard credit card in Sterling.

There are NO FX fees involved – the conversion is done at the MasterCard interchange rate.  More importantly, you earn full miles or points on the credit card which you link to your Supercard.

Note that there is a foreign exchange fee of 2.99% if you use your Supercard in an ATM abroad.

Supercard has some teething problems over additional ’rounding’ charges it is adding.  However, it works perfectly well.   Mine is linked to my IHG Rewards Club Premium Visa so I am also earning 2 IHG Rewards Club points (worth 1p) for every £1 recharged to it as well as earning towards my free night voucher for spending £10,000.

Curve is another option

Curve operates in a similar way to Supercard – you can visit their website here.  Curve is, however, not as competitive as Supercard for foreign spending due its £35 card fee and the 1% foreign exchange fee it adds to all purchases.

Curve allows you make ATM withdrawals abroad for a flat £2 + 1% rather than a 2.99% fee.  One £200 withdrawal per month can be recharged to a credit card – earning miles – but further withdrawals must be recharged to a linked debit card.

Some HFP readers are also very positive about Revolut.  To be honest, I find the concept fiddly and struggle to see the value if your credit rating is good enough to get a credit card.  Others disagree.

Earning Avios AND avoiding FX fees

In any event, none of the options above may actually be your best option.

In late 2013, Lloyds Bank broke the mould by introducing a credit card – the Lloyds Avios Rewards card – which gave you miles AND no foreign exchange fees.  It was the first UK credit card to do this.

No-one else has yet followed suit and, now that interchange rates are capped, I doubt anyone will.  After all, FX fees are one of the few ways that a card issuer can now make a profit from anyone who pays their bill promptly.

Lloyds Avios Rewards 2

The Lloyds card has a £24 fee, albeit (as my review explains) you can receive 4,500 Avios for signing up if you are referred.

There are also a number of FREE credit cards in the UK which do not charge any fees on overseas purchases.  These include The Post Office Money Platinum Credit and Halifax Clarity.  Clarity also offers totally free overseas ATM transactions.

How does the Lloyd Avios Rewards card compare?

The Lloyds Avios Rewards card comes with a £24 annual fee, which makes it worse than the Post Office and Halifax Clarity cards. There is also a 3% fee on cash withdrawals abroad.

You will, however, receive 1.25 Avios per £1 spent abroad on the Amex card and 0.25 Avios per £1 spent abroad on the MasterCard. The Post Office and Halifax Clarity cards have no rewards programme.

If you value an Avios at 1p, and assuming your foreign spend is 75% Amex (your hotel will take it) and 25% MasterCard, then the Lloyds Avios Rewards card is a better deal than the Post Office or Halifax cards if you spend over £2,400 abroad each year.

(Why? Because your £24 annual fee will be offset by the 2,400+ Avios earned back)

Is it ever worth using another credit card abroad and swallowing the 3% fee?

You may not want to go to the trouble of applying for another credit card just for overseas transactions.  There are some miles and points cards which are a decent choice for using abroad if you don’t want to go to the trouble of applying for a ‘no FX fees’ card.

The American Express Preferred Rewards Gold card (click for review) gives you double points when you use it abroad. This means you get 2 Membership Rewards points per £1, which converts to 2 Avios per £1. This does not fully offset the 2.99% FX fee, but comes close.

The free TSB Avios card (click for review) earns double Avios points when used abroad. This means that Amex card (on the free version) earns 2 Avios per £1 which offsets much of the FX charge.

The IHG Rewards Club Premium Visa card (click for review) gives you 4 IHG Rewards Club points per £1 spent abroad. These can be redeemed for free nights at Crowne Plaza, Holiday Inn, InterContinental etc hotels. I value these at roughly 0.5p per point, so 2p of value per £1.

Spending abroad also helps you to achieve spending targets.

The IHG Rewards Club Premium Visa card mentioned above also gives you a free night voucher when you spend £10,000 per year.

The Virgin Atlantic cards offer upgrade vouchers when you hit specific spend thresholds.

And of course the BA Premium Plus Amex gives you a 2-4-1 voucher for Avios redemptions valid in any class when you spend £10,000 per year.

You may find it worthwhile paying the FX fee on your credit card in order to achieve some of your spending target. After all, for most of us our holiday is one of the main expenditures of the year.

Conclusion

Supercard is, I think, the best free option for foreign spending at places which only accept Visa or MasterCard, especially if you recharge transactions to a points-earning card.

If you will spend over £2,400 abroad and are happy to pay the £24 fee, the Lloyds Avios Rewards card is an excellent choice.

A later article in this series will look at the best ways to obtain cash whilst earning miles.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the 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.

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Comments

  1. Don’t forget that if you pay for things on your Amex card you get insurance especially for travel related items.

  2. I have not seen this discussed on here. Am I the only one to receive an email from Supercard about a (very underwhelming) travel insurance scheme?

    • Yes though it was odd that they are giving away some free insurance with a free card

    • Genghis says:

      It was discussed a bit yesterday, Mark. I agree, very underwhelming and not very good if you look at the amounts and read some of the fine print.

  3. Phil Layton says:

    I am now in dispute with Supercard over duplicate transactions. The Sale was to a Villa company in the US for a stay this coming October. Two Transactions appeared in the linked Tesco Clubcard two days later. I queried with Customer Service who said one was a preauthorisation and the other was the settlement. Wait 9 days and one will ‘drop off’ (I couldn’t see how this was going to happen without a refund going onto the credit card account.) Two days later I got a supercard credit of 2p two times (suggesting that both had been currency adjusted) and one transaction changed to ‘purchase’ but the other remained ‘pending’ on the app. Seven days later the pending transaction disappeared from the app. Two transactions remained on Tesco. 11 days later Im now ringing around filling in dispute forms (for a significant amount of money) I really cannot recommend this card atm.

    • Genghis says:

      Sounds like an awful experience. My Supercard is currently blocked due to my name being not fully accurate on the card. An ‘I’ instead of a ‘U’ which was probably my fault when I filled out the application which you have to do on a small smartphone. I passed their ‘checks’ though so it questions how thorough they are. They said on the phone they’d want £3 for a replacement card but I refused and asked them to waive it. Followed up with an email saying that their Ts and Cs only have a fee for lost and stolen cards. Waiting to hear back (been 3 days now) but not impressed so far.

    • Same situation when I used Curve and it wasn’t for a hotel or car hire company which is why I stopped using them

  4. I would not limit the £2400 to only holiday spend.
    Lots of places in the UK dont take Amex B&Q/Screwfix (Both part of Kingfishers) dont for example, so if you have the Amex issued BA card & the retailer do not take Amex, you are kind of stuck to use another card – which may end up being your debit card or another non-reward card.

    • Genghis says:

      If a retailer does not take Amex, then there are better options out there than using a Lloyds MasterCard (IHG platinum for example) notwithstanding Lloyds MC spend counts towards the £7k upgrade voucher target.

      For B&Q, buy gift cards in Tesco thereby paying with Amex and getting 150cc points = 360 avios / £50 spend.

  5. Graham Walsh says:

    I had a nightmare in Toronto last week with Supercard. The beta was ok, the full production product is frankly crap. Wouldn’t work in a taxi, a bar and in duty free. Supercard just come back with a list of things why it wouldn’t work, none which apply. When on the beta, transactions took 6 weeks to hit my Virgin Visa at times I cancelled Curve due to no Amex, but I’m actually thinking of digging out my Santander Zero for foreign travel. Edinburgh next week :)

  6. lucinda says:

    Halifax clarity rewards card also has a decent offers programme, a bit like the amex offers which you have to register on the card.

    Not gonna make u a millionaire but things like 5pc cash back at waitrose come up regularly and arehandy as obv you just buy gift vouchers.

  7. Supercard worked ok, apart from the dodgy additional amounts. Only one failure in the USA.

    Well it did until the pin suddenly failed.

    You can’t alter the pin or use it on PayPal so no good if you use PayPal to buy anything such as services abroad.

    So seems that I will ditch supercard and probably swallow the 1% charge on curve. Just trust them a bit more.

  8. Used clarity to withdraw cash. Great.

    Instantly paid off the figure and a little bit more from my bank account.

    The credit actually beat the withdrawal.

    Was amused to be charged 2p interest.

    Would love to know how that was derived.

    Can’t be from another purchase as that is free of any interest charges if paid off in full.

    Might write and find out lol