Maximise your Avios, air miles and hotel points

Is Lloyds Avios Rewards now the best credit card for FX spend?

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The Lloyds Avios Rewards credit card was a game-changer when it launched in October.  For the first time, we had a credit which offered NO FOREIGN EXCHANGE FEE – AND gave you Avios points for your spending as well!

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 – charge a foreign exchange fee of 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 2.99% rather than breaking the fee out.

The key question, then, is whether or not the Lloyds Avios Rewards card is worth getting.

Which cards charge no FX fees?

There are three main FREE credit cards in the UK which do not charge any fees on overseas transactions:

The Post Office Credit Card – no annual fee, 0% on FX purchases, 2.5% (min £3) cash advance fee on FX cash withdrawals, no cash advance fee when you buy foreign currency at the Post Office.  (Representative APR 17.8% variable, the Post Office credit card is provided by Bank of Ireland UK.)

Halifax Clarity – no annual fee, 0% on FX purchases, no ‘cash advance fee’ on FX cash withdrawals  (representative APR 12.95% variable)

Capital One Classic Extra (low credit limits) – no annual fee, 0% on FX purchase, 3% (min £3) cash advance fee on FX cash withdrawals.  This card also pays 0.5% cashback on all purchases!  You are unlikely to get a credit limit above £1,500 however. (representative APR 34.9% variable)

There is also a Saga card if you over 50.  This has a £2 / 2% cash advance fee but does not charge any interest on cash withdrawals if repaid immediately.  Nationwide also has a ‘no fees’ card but this is only available to its current account holders.  The Santander Zero card, which did perform well, is no longer available to new applicants.

There are also three debit cards worth considering, although you will need to open a current account with the relevant bank which is an added complication.  These are Norwich & Peterborough Building Society, Metro Bank (although they are limiting their ‘free FX’ deal to Europe from March) and Cumberland Building Society.

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.  You may also want to increase your chance of getting further travel cards by not ‘wasting’ some of your credit score on a ‘no FX fees but no miles’ card.

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 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 Black 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.  This almost offsets the 2.99% FX fee.

Spending abroad also helps you to achieve spending targets

The IHG Rewards Club Black 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

Unless you are struggling to hit an annual spending target, you should seriously consider adding the Post Office, Halifax Clarity or Lloyds Avios Rewards cards to your wallet, purely to use for overseas spending.

If you will spend over £2,400 abroad and are happy to pay the £24 fee, the Lloyds Avios Rewards card is a good choice – otherwise go for the free Post Office or Halifax cards.

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 American Express, British Airways and Avios, IHG One Rewards, Virgin Atlantic and Flying Club

Comments (35)

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

  • Mark says:
    3 Jan3 January 07:55

    As a Halifax current account holder I have a Clarity Rewards card with gives £5 cash back if you spend £300 in a billing period, i.e. max 1.67% if you spend exactly £300 with no fx or annual fees.

    I believe this is still available to account holders if you enquire in a branch.

    With the demise of the 3% Aqua card that’s about as good as it gets for overseas spend.

    • Will says:
      3 Jan3 January 12:02

      That’s good to know as classically halifax make it really hard to get the reward account and cc (visit in branch or very long phone calls). Want to ditch my post office cc for the clarity cc as the PO interface is shocking (can’t pay online only via bank and no details online of conversion rate. Online doesn’t even give a payment due date, you have to wait for a statement in paper form!!)

  • Martin Smith says:
    3 Jan3 January 08:01

    Metro Bank don’t just have a no FX fees debit card. Their credit card is also fee-free abroad

    • Londonbus says:
      3 Jan3 January 13:03

      Yes. I have a Metro account just for this re the debit card.

      I like the ability to use ATMs abroad without getting gouged for fees.

      I have a Santander nee Abbey Zero credit card which also has no FX fees. Charges interest on ATM withdrawals but no transaction fees.

  • Tony says:
    3 Jan3 January 08:12

    Yes I have this card as well – think the limit given was £7k. Note the rates are prices at only two decimal places so I think they probably win a bit back here, and the interest free period is only 42 days I think (bill due 2 weeks after statement date).

    • Kiran says:
      3 Jan3 January 08:46

      you are correct about 2 week deadline for payment after the statement date. I always pay my credit cards with direct debit and so don’t really notice the difference.

  • andystock says:
    3 Jan3 January 08:38

    The amex Gold catd has been earning me triple avios on Hotel and travel spend overseas, offsetting the 2.99% fee. Also remember ad its a chargecard you pay no interest.

    • Andy says:
      3 Jan3 January 11:15

      Hi Andystock,

      Do you know if you get triple points if you make a travel purchase in a foreign currency on the internet or if it only works when you are abroad? For example, if I buy a flight from BA in Euro’s would I get triple points?

      Thanks!
      Andy

      • Andrew says:
        3 Jan3 January 12:03

        Officially you should only ever get double points.

        In practice I’ve found the various bonuses do stack up sometimes earning 4 or even 5 points per pound but it’s very dependant on the exact retailer. Most of the time it works but I wouldn’t count on it.

        Online purchases in a foreign currency will also earn double points (maybe triple for travel spend) but you wouldn’t want to pay for a BA flight in Euros. You’d already be getting double points due to the travel spend. That extra point per pound isn’t going to be anywhere close to offsetting the 3% fee.

      • andystock says:
        4 Jan4 January 07:00

        I have just purchased a Prague to LHR flight for a mate on BA.com in cech currency for £39.20 and earned 117 points.

        Another one was an Hoilday Inn Express in Hong Kong which I earned triple points on in addition to all the IHG reward points earned on IHG’s Big Win promotion and the bonus codes raffle s had had on here

    • Will says:
      3 Jan3 January 12:03

      I get triple points on my gold for UK hotel stays!!

  • Kiran says:
    3 Jan3 January 08:48

    Quick couple of questions. I presume there is no FX transaction fee on both the Amex as well as the Mastercard which form part of the Lloyds Avios package? Also, is there any sign-up bonus?

    • Raffles says:
      3 Jan3 January 09:24

      No, no bonus except for double Avios for the first 6 months. I think that is why there has been
      Iimited enthusiasm so far for it.

  • Roger says:
    3 Jan3 January 09:04

    As an existing Lloyds TSB-branded Avios Duo (previously Air Miles) cardholder, I’m presumably still banned from taking out the new card. (Lloyds said in a snailmail letter that on reissue, my cards would be branded Lloyds, though I wouldn’t be surprised to see TSB-branded cards.)

    Interesting to see £2,400 as the threshold for annual foreign spend to be beneficial. This makes it a contender if I were to be unbanned. I’m in my first year of my AmEx PRG card so the position isn’t urgent. That card is probably not for me in a second year unless it secures my free BA PP AmEx.

    BTW, Nationwide’s £10 a month FlexDirect current account offers no-fee foreign cash on its debit card. Not a free account, of course, but with such significant other benefits I’m thinking of transferring from my FlexAccount to the FlexDirect account.

  • Worzel says:
    3 Jan3 January 09:43

    Santander Zero(no longer available) does the job very nicely for me-infrequent overseas travel, spending my own money.
    If I didn’t have this card I’d go for the Halifax Clarity-preferring to keep home and overseas spend apart. Of course frequent travellers spending their own, or others money, will no doubt see it from a different angle.
    Roger(9:04) could you expand on: ‘unless it (AmEx PRG) secures my free BA PP AmEx’. ? Is this a historic arrangement?

    Thanks

    Worz.

    • Roger says:
      3 Jan3 January 10:01

      Hi, Worzel. Yes, it’s almost certainly a historic arrangement.

      BAPP AmEx cardholders with another qualifying AmEx account (platinum and gold charge cards, SPG credit card and perhaps a couple of others) used to have a zero fee. This was withdrawn a couple of years ago for new applicants.

      Whether it still applies to me I wil find out in a month or two. I had a plat since 1995 and gave it up last year, taking out the gold PRC after a decent interval. This may or may not be a new relationship! I clearly hope not.

  • Casey says:
    3 Jan3 January 09:53

    I too have the Lloyd’s TSB-branded Avios Duo. Unlike many other members of the forum I had no problem with the sign-up bonus being allocated automatically, although I agree the communication on how to do this was very poor. My question is, if I cancel these cards having triggered the sign-up bonus, will I be able to reapply for the new cards in six months or so in order to have an AMEX that is fee-free abroad, and still gives generous Avios? Thanks!

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