Preparing for Summer Part 2 – earning miles with your credit card abroad

In Part 1 of ‘Preparing for Summer’ a couple of days ago, I looked at ways to earn points when booking airport car parking.  Today I want to recap 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 Amazon MasterCard, for example, gives you 1% of your spending back in Amazon vouchers.  Does your non-Amex payment card match that?

Credit cards

It is almost always a bad idea to use a mileage card for overseas spend.  This is because all miles and points cards – and indeed almost all other UK credit and debit cards – charge a foreign exchange fee of 2.75% to 2.99%.  Most card issuers hide this fee so you don’t realise you are paying it, because they simply adjust their exchange rate by 2.75%-2.99% rather than breaking the fee out.

There are a number of credit cards, however, which do NOT charge any foreign loading fees. Your transactions are converted at the wholesale exchange rates set by MasterCard or Visa, which to all intents and purposes are the ‘spot’ rates. has a done a lot of work in this area, so the best thing to do is to read this article on their site.

The best offerings are from the Halifax, Saga, the Post Office and Capital One, who have cards with no annual fee and no FX fees on purchases.  Nationwide also offers a good card, but only for its FlexAccount holders.

If you live in London, Metro Bank is another option. They have a free current account which comes with a ‘no FX charges’ debit card. This is a good option if you don’t want to increase the number of credit cards you hold.

What mileage cards ARE a good choice to use abroad?

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.  Amex’s home page for the card is here.

The Lloyds TSB Premier Duo Avios card (click for review) earns double Avios points when used abroad.  This means that the Amex card earns a whopping 2.5 Avios per £1 – so you are probably quits when you’ve paid the FX fee.  You also earn double miles abroad with the fee-free Duo Avios cards, at 2 Avios per £1 on the American Express card.  The Lloyds home page for the card is here.

The Priority Club Black Visa card (click for review) gives you 4 Priority 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.  This almost offsets the 2.99% FX fee.

Spending abroad also helps you to achieve spending targets. 

The Priority Club Black card mentioned above also gives you a free night voucher when you spend £10,000 per year.

The Lloyds TSB Premier Duo card mentioned above gives you a 2-4-1 voucher for Economy class Avios redemptions when you spend £15,000 per year.

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.

Tomorrow, I will look at the relaunched Avios Cash Passport and decide if it is worth a look or not.

(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.)

Congrats to Forty Love who leads the Head for Points / redspottedhanky tennis league (so far!)
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  1. Geoggy says:

    I have the PO Mastercard but with 3.5k on mine and 4k on my wife’s AA card to go, plus 9k BA spend I am going to take the hit on a forthconing holiday. Will probably spend a couple of grand, so 60ish quid in forex fees is worth it to me to burn through some spend.

    Would rather do that than mess about booking then canceling flights

  2. sandgrounder says:

    It’s worth it to hit the target spend, as you say, but it’s never cheaper than 1p/Avios to buy miles this way if you have a zero load card.

    I carry the Nationwide Select Visa myself, a couple of load-free current account options you missed are Norwich and Peterborough and the Cumberland BS. There are a couple of snags, however, with N&P you need to make 5 transactions a month (on the ‘Gold Light’ account, with the Cumberland, you need to live in the branch area.

    • Simon says:

      For the standard N&P Gold Account you need to deposit £500 a month, easy enough online these days, being able to take money out of an ATM abroad without a fee I find very handy.

  3. Dannyrado says:

    I have recently booked a redemption flight on Singapore Airlines, which was obviously billed in Singapore dollars. I used my Halifax clarity because it’s always a great rate, and no load fee’s.

    However I have recently thought I may have been better with my amex gold rewards card. Does anyone have experience of buying a foreign ‘travel’ product in a different currency? Do you get double double reward points? i.e doubled for being foriegn spend, and doubled again for being travel spend?

    • Simon says:

      You’ll get bonus travel points and bonus foreign points so if the transaction was worth £100 you’d get 300 points.

  4. Colin says:

    Found using Amex Gold account to have a good exchange rate when abroad (guess its the wholesale rate), much better than the rate at a money changer. Plus at least double MR points. All in makes the foreign transaction fee tolerable.

  5. Mr Bridge says:

    I am still pi55ed of that plat amex issued in usa, only pay $450 fee compared to our £450 and they waive the exchange fee as a perk

  6. I’ve had the PO Mastercard for years and the rates are consistently excellent – I use it for all my forex spend when abroad. I used to also use it for all spend in advance, but thanks to Amex’s incredibly annoying changes to travel insurance I’m now stuck using one of their cards (with the consequent 2.99% fee) to make any advance reservations.

    Just to highlight that the Metro Bank debit card also allows totally fee-free ATM withdrawls 🙂 – it’s really nice to just be able to walk up to a cash machine abroad and take money out in the same way as if you were at home, with no worries about fees. You also don’t need to live in London to get an account, you just need to be able to visit one of their London branches – I signed up a year or so ago when I was down for a day at a meeting and if you bring all the appropriate ID they’ll open the account and print your card on the spot!! I also like that they’re open 7 days, so even if you’re down at the weekend you can open an account – handy also for the rare times you have cheques to pay in and can’t make it to most other banks that are only open weekdays.

  7. Harry says:

    I dunno if you have posted this on headforpoints before but American express currency exchange at heathrow is offering double avios on purchases over 350 pounds – I only knew this when I went to heathrow T5 to collect my 347pounds worth of japanese yen which I purchased on the internet before – and i wanted to strangle myself for not knowing this before.

  8. Currently in Greece. Few places have even seen an Amex card before. None has so far been able to accept one. Most have tried. This is a serious limitation when considering which card to travel with.

  9. The mastercard rate is usually better than the visa rate. If you live in London, you should always be able to get a better rate for cash (except very obscure currencies), especially if your day job involves guessing which way each currency pair is heading. So in this case the only reason to use the Amex would be to hit spending targets. I do have €10k sitting at home which I bought at 1.35 per £, so thta would always beat any card for the rest of 2013 at least.

  10. pauldb says:

    A bit OT but I received a T&C update from MBNA this week for my AA card saving that I would have to pay a “non-Sterling transaction fee of [ ]%”.

    Clearly a typo but I wonder if I could challenge any fees they hit me with! Not very relevant though as for incoming- family reasons I won’t be going abroad this summer 🙁

    • I think there is a footnote that says something along the lines of “replace [] with the interest rate in your contract”. It is just a generic letter they have sent out to everyone (I’ve got one as well as I hold the bmi card).

  11. Ben E says:

    As Harry mentioned above, Amex currency exchange gives an ok rate and you can triple count on your miles (card, amex and heathrow rewards if heathrow). If you’re not fussy about carrying cash then it’s a great deal.