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

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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?

UK Rewards credit and charge 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.

Curve is one option

Curve – you can visit their website here – is an intriguing option.  You can find out more about Curve in this article – they will pay you £5 to try it out you don’t have anything to lose.

Curve, which is branded as a Mastercard, is NOT a credit card.  Instead, it recharges purchases made in a foreign currency to any other Mastercard or Visa you own, in £.

Curve adds a 1% FX fee to each transaction.  This is a lot lower than the 3% fee added by almost all UK credit and debit cards.  More importantly, you will also earn miles or points on the Mastercard or Visa which Curve recharges.

As an example, assuming £1 = $1.30:

You make a purchase in the USA for $130

Curve translates this to £100 and adds a 1% fee

£101 is recharged to the Visa or Mastercard linked to your Curve card – you earn miles or points on this card as you would usually, assuming it is a loyalty card.  The points earned should cover much of the fee.

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

Earning Avios AND avoiding all FX fees

If you’re happy to take out another credit card and incur a £24 annual fee, there is an attractive alternative.

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.

The Lloyds card has a £24 fee.  There is no sign-up bonus.

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.  None of these cards offer any loyalty points, however.

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 free 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 IHG Rewards Club Premium Mastercard 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 Mastercard 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

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.

Alternatively, take a look at Curve (they will pay you £5 for trying it) or one of the ‘no annual fee but no loyalty points’ 0% credit cards listed above.

Want to earn more points from credit cards? – April 2024 update

If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.

British Airways American Express Premium Plus

25,000 Avios and the famous annual 2-4-1 voucher Read our full review

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review

Virgin Atlantic Reward+ Mastercard

15,000 bonus points and 1.5 points for every £1 you spend Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers:

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

American Express Business Platinum

40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and FREE for a year Read our full review

Capital on Tap Business Rewards Visa

Huge 30,000 points bonus until 12th May 2024 Read our full review

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.

Barclaycard Select Cashback Business Credit Card

1% cashback uncapped* on all your business spending (T&C apply) Read our full review

Category

American Express Gold card, British Airways and Avios

Comments (92)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Longshot says:
    22 Jul22 July 08:25

    A colleague claimed that the Lloyds Amex FX rate was about 1% worse than the Lloyds MasterCard FX rate which would negate most of the extra points – does anyone know whether this is correct?

    • John says:
      22 Jul22 July 08:48

      The rates are independently set by Amex and Mastercard, and yes, the Mastercard rate is usually better by a bit, it can be up to 1% better, but occasionally will be worse.

      There is no way of knowing in advance unlike with Visa (but you may still get “tomorrow’s rate” with visa) so there’s no point worrying about it, unless you obsess over FX rates like I do, and have a way to trade currencies back after spending on your card.

    • idrive says:
      22 Jul22 July 11:59

      “AMEX rate from the Amex site”
      If you make a transaction in a foreign currency, we will convert it into Pound Sterling on the date we process it. Unless a particular rate is required by law, we will use conversion rates based on interbank rates we select from customary industry sources on the business day prior to the processing date (called the “American Express Exchange Rate”). This rate may differ from rates that are in effect on the date of your transaction. Fluctuations may be significant. If the transaction is in U.S. Dollars, it will be converted directly into Pound Sterling. In all other cases, it will first be converted into U.S. Dollars and then into Pound Sterling.

      • idrive says:
        22 Jul22 July 12:00

        I believe this happens for all Amex cards, not only the Amex issue ones.

    • Mr Dee says:
      22 Jul22 July 16:17

      Today I seem to have been charged 1.195 for a euro purchase on the amex when the apparent xe.com rate was 1.189 whether this will change before its posted I am not sure.

  • Sussex Bantam says:
    22 Jul22 July 09:18

    I have a Clarity card and remember seeing comments from people saying they also use this to withdraw cash from ATM. I’ve been waiting for this article to ask – how do you do this without incurring cash advance fees ?

    • Roger says:
      22 Jul22 July 09:25

      Use it like any card in an ATM. There are no Clarity fees but some ATM operators add a fee, typically $3 in the USA for example.

      Clarity’s interest starts quickly (same day or next day). It’s only a few pence per £100 if you leave it until your next statement, or you can make an interim payment online. If you leave it, there’s the risk of interest on interest – Clarity once collected 1p from me as my direct debit total. 😀

      • Sussex Bantam says:
        22 Jul22 July 09:31

        Thanks ! I had no idea it would be such a small amount…

        • John says:
          22 Jul22 July 12:19

          Everyone should really think about this before taking out a credit card 🙂

          Clarity interest rates are 18.9%, 21.9% or 25.9% (but some people have older rates of 12.9% or 17.9%).

          If you have the worst rate of 25.9%, then if you withdraw £100 and don’t pay it back for a year (notwithstanding that your credit would be ruined if you didn’t pay), you’d be charged £25.90 interest, which is £2.16 per month, or 7p per day.

          In practice I have never been charged interest if I pay on the day the cash withdrawal shows up – but I usually have a few purchases on there at the same time.

          Note that if you are going to spend on the card as well as withdraw cash, it’s best just to pay off everything as soon as possible without waiting for a statement, though the interest would only be a few pounds.

    • Genghis says:
      22 Jul22 July 09:47

      Once I make an ATM withdrawal on the Clarity, the same day I look at the app to see the pending charge and then make a payment of this amount into the Clarity account.

    • Raffles says:
      22 Jul22 July 10:04

      You pay any fee charged by the ATM owner. No other fees are added though and there is no FX margin.

    • The_Real_A says:
      22 Jul22 July 10:08

      Just be aware that cash advances appear in your credit report, and will negatively effect your credit score. Its marginal as long as your finances are in good order.

      • Mr Dee says:
        22 Jul22 July 17:08

        Didn’t know that, I would rather use a debit card for withdrawals abroad where possible, nationwide/metrobank

  • Genghis says:
    22 Jul22 July 09:59

    11. REWARD PAYMENT

    11.1 – If you meet the requirements set out in condition 11.2, then for any statement period in which you:-

    (a) make at least £300 of Purchases (once any Purchases refunded in that period have been deducted);
    (b) stay within your credit limit; and
    (c) make your minimum monthly payment;

    you will qualify for a £5 credit to your account in the following month. The credit will not be treated as a payment to your account under these conditions.

    11.2 – To be eligible for the reward set out in condition 11.1, you must, at the time you enter into this agreement:-

    (a) hold a Halifax current account and pay in £1,000 or more each month;
    (b) use our switching service to move your current account to a Halifax Current Account and agree to pay in £1,000 or more each month;
    (c) open or hold a Halifax Ultimate Reward Current Account.

    http://www.halifax.co.uk/creditcards/help-guidance/terms-and-conditions/clarity-card/

  • AndyR says:
    22 Jul22 July 10:00

    Surpised Supercard is recommended without knowing the cost of these additional charges for FX changes? Isn’t it correct that if the rate changes in their favour they charge a fee but not if it goes against them?

    • Raffles says:
      22 Jul22 July 10:05

      In theory you get it both ways, but rate moves have generally been in one direction recently ….

      • Genghis says:
        22 Jul22 July 16:50

        I got a refund to a cancelled Curve which went back to a cancelled Amex. The same amount in GBP was refund as was initially charged.

        I questioned this with Curve as GBP has weakened post Brexit referendum.

        If spot rates were used, I would have got an extra tenner or so. Curve responded saying that the exchange rate doesn’t come into it as you’re refunded the same amount regardless and if the exchange rate had moved the other way, I’d have still got the original payment amount.

        Hard to believe IMHO.

  • The_Real_A says:
    22 Jul22 July 10:00

    No this is not correct. its a statement credit and you can send it anywhere.

  • Raffles says:
    22 Jul22 July 10:00

    Thanks Roger. Will look at this and may well rephrase the article.

  • AndyR says:
    22 Jul22 July 10:02

    You need a Halifax current account to get the £5 though.

    • The_Real_A says:
      22 Jul22 July 10:10

      And the halifax current account needs to meet funding/usage conditions too. It cannot be a dormant account (based on a conversation i had with customer service late last year)

      • John says:
        22 Jul22 July 12:27

        The T&Cs (copied in above by someone else) say clearly that the conditions on the current account only apply “at the time that you enter into the agreement”.

        Anyway everyone should be doing it, it takes 20 seconds on the 7th of every month to moving £1000 into and out of a Halifax account to earn a fiver (this is different from the credit card) – although it’s £3.75 for higher rate taxpayers…. and you need to do it for Lloyds/BOS/TSB/Santander to earn interest anyway

        • Genghis says:
          22 Jul22 July 16:19

          Depends how much interest a HRT earns as from 16/17 tax year there’s a £500pa tax free allowance on interest income.

  • rams1981 says:
    22 Jul22 July 13:10

    Supercard claimed to me that it’s the merchant who delayed receiving the funds hence why all my transactions recently went through when the £/Euro rates were at it’s lowest on 10th July. They’ve also used different FX rates throughout and not the end of day rates.

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