What credit card should I use to pay for my holiday?

By the time you read this post, I will be back in London.  However, as I edit this post, I am still sitting in Dubai pondering how to pay the hotel bill.

It’s not that I can’t afford it – I was more concerned with which ‘miles and points’ credit card I should use to settle the bill!  I thought I would run through my thinking.

Credit cards

There was a MASSIVE shift in the market last October when Lloyds introduced the Lloyds Avios Rewards credit card (representative APR 22.7% variable, including fee).  For the first time in the UK, we had a credit card with NO foreign exchange fees (saving you 3% compared to 99% of UK credit cards) and gave you reward points at the same time!

There is a £24 fee on the Lloyd Avios Rewards card, but if you spend more than £2,000 abroad then the Avios earned will offset the fee.  Alternatively, there are some great free cards with no FX fees such as the Bank of Ireland UK-issued Post Office card (representative APR 17.8% variable).

However, for one reason or another, I never got around to applying for either.  I simply have too much plastic already.  Our hotel room this week is also being paid for on points, so our spending will be lower than usual.

Comparing the options

Here is what my wife and I have in our wallets and what we would get for every £1,000 of foreign spend:

American Express Platinum – would earn me 1,000 Membership Rewards points per £1,000. Good for 1,000 Avios or a variety of hotel schemes.  I am not short of Membership Rewards points at the moment, however, so the marginal value of another 1,000 is modest.

British Airways American Express Premium Plus (representative APR 56.4% variable including fee) – would earn me 1,500 Avios.  My new British Airways Amex card year started in February, so I am working towards my new 2-4-1 voucher.  A bit of overseas spending would certainly help.  However, I have a huge pile of Avios so, again, another 1,500 per £1000 doesn’t add much.

Priority Club Black Visa  (not available again until June) – As I wrote recently, I have just successfully applied for this card again.  The Priority Club Black card earns 2 points per £1, but you get double points for foreign spend.  Given that I value IHG points at 0.5p, that would be the equivalent of 2% back.  We only have about 300,000 Priority Club points between us, so the points we would earn are more meaningful.

More importantly, the Priority Club Black Visa has a ‘free night certificate’ which is triggered when you spend £10,000 on the card.  If I used that at the InterContinental in Paris, London or Cannes (not unlikely) I’d be getting at least £250 of value from the voucher.

bmi Platinum MasterCard (no longer available to new applicants) – would earn me 2,500 Avios per £1000 spent. I have the old-style version which pays 2.5 miles per £1.

Tesco Clubcard MasterCard (representative APR 18.9% variable) – would me earn me a poor 250 Clubcard points per £1000 of spending.

Marriott Rewards MasterCard (representative APR 16.9% variable) – this card does offer double points for foreign spend.  However, the earnings rate is so poor that even then I would only get 2,000 Marriott points, worth about £10, for every £1000 of foreign spending.  Not worth it given that I need to pay the 3% foreign exchange fee.

Starwood Preferred Guest American Express card (representative APR 36.2% variable) – would earn me 1 SPG point per £1 spent.  There is no bonus for foreign spend or for staying in a Starwood hotel, so no additional perks for using it abroad.  SPG points convert to airline miles at a 1 : 1.25 ratio based on converting 20,000 at a time.

House of Fraser Mastercard (representative APR 19.9% variable) – a card my wife has. It is not bad, paying 1% cashback in House of Fraser vouchers. We would therefore get £10 back per £1000 of spending if we used this card.

NatWest MasterCard (no longer available to new applicants) – my wife also has one of these, it pays out in useless YourPoints worth about 0.5p per £1 spent. I can’t even be bothered to work out how little I would get!

What did I decide?

On the face of it, it seems to be a toss-up between the British Airways Premium Plus, the bmi Platinum MasterCard and the Priority Club Black Visa.

In no case, of course, do the direct benefits offset the 3% foreign exchange fee I have to pay – I am fully aware of this.  However, the spend we do would help push me towards my next 2-4-1 voucher on the Premium Plus Amex or the free night voucher on the Priority Club Black Visa.  This nudges them ahead of the bmi card, despite it paying 2.5 Avios per £1!

Because of the double points for foreign spend on the Priority Club Black card, I think it just wins.  I will have no trouble hitting the £10,000 target on my BA Amex via UK domestic spending, so I might as well take the foreign spend bonus on the Priority Club card.

I will also make a mental note to ensure that one of us gets a ‘no FX fees’ card before our next overseas holiday where we will not be getting our accommodation for free …..

(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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  1. oyster says:

    Have only just got myself the Post Office credit card just for personal spend overseas. It’s going to feel ‘unrewarding’ using it for spend so I have to try and convince myself that somehow I’m getting Avios on it.
    Let me see; 3% saving on a £1,000 spend is £30. For £30 I could buy 4545 Avios from BA.
    So net result is approx 4.5 Avios per £ – beats all the ‘reward’ cards.

    • Sandgrounder says:

      You can buy Avios for .66p each? Put me down for 100k! For starters!

      • £31 per 1000 avios when purchased through BA. No? Or are you referring to earning through flying?

        • oyster says:

          Yes – maths fail there!.
          But with the ‘saved’ £29.50 on a £1,000 spend I could buy 7 Visa gift cards from Tesco which would earn me 1050 Clubcard points and hence 2520 Avios plus £1.85 in change. (plus right now you’ll also get 14p off a litre of fuel for that spend which could be worth a further £8+). Invest that saved £8 in 2 more Visa gift cards and you’re up to 3240 Avios.

          And I forgot to add the credit card Avios. So for 9 gift cards it’s a further 970 Avios using an Amex Gold.

          Grand sum of 4210 Avios for a £1,000 foreign spend.

          Now I need to get back to my proper job!

        • avidsaver says:

          Sorry but how do you buy 7 visa gift cards at Tesco for £29.50? The 3v’s cost £25 each
          and the fee carrying Visa Gift cards cost either £25 of £50 each PLUS the fee! Or am I missing something here?

        • Andrew S says:

          I think he iis talking about the visa card with the 3.95fee that can be used anywhere.

        • avidsaver says:

          Many thanks Andrew S. I understand now!!!!

  2. I use the Halifax Clarity card for my overseas spending. I also take out cash on this card – and then pay it off the next day to avoid immediate interest payments. I need to clear any outstanding balance as well – but if there’s a month between foreign trips, and I take cash out at the start of my trip, it works out ok.

    • whitenoise says:

      Indeed the Halifax Clarity is the card I use abroad as well. If I withdraw money from the card whilst abroad, I don’t worry about paying it off until I come back. While there is no fee for cash withdrawals, you get charged 12.9% APR on this, including if you pay it back in full. However this works out at around £1/month per £100 withdrawn, so isn’t worth worrying about 🙂

    • Andrew says:

      Another thumbs up for the Halifax Clarity card. Hundreds of pounds of spend + paying balance off ASAP = commission of a few pennies.

  3. If you use Amex in the US do you still get charged the 3% fee.
    I used Amex to pay a Disney cruise bill last year and there was no 3% fee.

  4. Vardster says:

    I too have the Halifax Clarity Card. If I take cash out abroad and pay it off the next day does it save the 12.9% APR?

    • Andrew S says:

      Yes it does

      I recently had a weekend away and took a few hundred euro`s out of the ATM and settled the hotel bill with the clarity card. Returned home, waited for the transactions to apply to the account (this takes upto a week) and set up a bank transfer (“pay a bill”) for the full amount.

      Was charged about 80p interest. The cash advance charge % is annual.. Mind you i have a perfect credit score and only managed an APR of 20%, so dont assume you will get accepted at 12%

  5. George says:

    I recently faced the same question and I decided to go with the Amex Gold, because it triggers triple points on the combination of travel and foreign spend. Settling my Malta stay at the Corinthia triggered the triple points bonus. I don’t consider me either MR- or Avios-rich, so it made sense to get the most of it. Had I had the BMI card, I think I might have gone for that one though…

    • rakehey says:

      I use the Amex Gold too for all foreign spend (including hotels booked in this country that are charged in foreign currency). Seems best deal for getting avios to me…

  6. Sandgrounder says:

    I have a Citi current account, no reward points but having accounts in three currencies, good travel insurance and an interest free overdraft for no charge is a great deal. I have to thank another reader who pointed out that interbank transfers into the currency accounts attract no commission at all. I’m a little shamed to admit that I had never tried, presuming a fee would apply, and have been paying the 2% or so adjustment Citi apply between their own accounts for years. There are no fees for ATM withdrawals in the same currency as the account, transfers from your Euro account to any bank in the Eurozone are free, and you can have a USD cheque book which clears through New York for free.

    • idrive says:

      Actually, the best pair witi a CITI currency account is to go via a third party money transfer (I use Currencyfair) and send the funds back to the destination account. otherwise, CITI is eating the spread

  7. I have a trip to the US coming up with plenty of hotel spend. I did seriously think of getting the Lloyds Avios card, but wasn’t sure how often I’d be using it otherwise, since I have a European credit card for Euro spending. And since I’m in the first year of my AMEX Gold, I’ll get three points per pound – I tend to value Avios at 1p, so that more or less sets off the 3% foreign transaction fee. Plus, the spending will probably help to push me towards the £15,000 for the 7,500 bonus points, so overall it’s worth it.

    It probably makes sense to have a fee-free card like the Post Office one for foreign spend, however, once the first AMEX Gold year is over.

  8. I used the Lloyds Rewards Avios Amex for paying hotel bill in Algarve recently. No FX fee and 2.5 Avios for every pound (for the first six months) is a pretty good deal I thought.

    • idrive says:

      ok, you say no FX fees and they claim it too. BUT are we sure that the FX rate is the one Masterd or Visa applies for that day? maybe i lost this in the flow of information. or they apply a rate they decide?

  9. Clive J says:

    I’m imagining a scene where a massive queue builds up behind you at check-out as you line all these cards out on the desk and work out which one to use 🙂

  10. pazza2000 says:

    Slighty related… I’m trying to make payments towards a BA holiday with 3V cards having read that they can be used, however it is failing as the billing address is incorrect. The billing address I assume being the address to which I registered the cards with. Any ideas?

    • idrive says:

      is your BA account registered at the same address as the 3v?

      • pazza2000 says:

        Yes it is, although that shouldn’t make a difference is imagine anyway.

    • Blacksmith says:

      Keep trying with the 3v card. I have had success on the second or third attempt with the address issue. It seems like the 3v system responds intermittently to the address query.

      • pazza2000 says:

        Tried again tonight, two or three attempts per card less a £1 pre auth charge each time, No success! I only activated the cards last night, although every billing address detail I’ve entered on BA.com matches the address registered to the character.

        • It’s probably the BA website that’s the problem. I’ve just emailed them to tell them their site sucks and if they’re going to email me offers, I expect not to end up in a constantly reloading page loop where the search doesn’t work. As the website is the way most of their customers interact with them, it would help if they actually invest some time and effort into making it work properly.

          I suppose I could offer them an apprentice!

  11. Blackberryaddict says:

    I mostly use my Amex Gold for foreign spend – especially on business travel, but also on personal. Foreign hotels tend to yield 3 MR points per pound. The thing is, even if I used a exchange fee-free card, I don’t think I would add up all the fees I have saved and go to the BA website to buy Avios. Or go through even more complicated hoops as described above to get more Avios. Life really is too short for that. But at the end of the year on 15k spend I’ll have 45-50k points – that’s two UUAs to the US. That’ll do me fine.

  12. I know we’ve gone slightly O/T with our “Which cards we use for overseas spending”, but I use Halifax Clarity for card payments and – whilst not being a huge advocate of packaged current accounts – my Nationwide FlexPlus Visa Debit card for commission-free and fee-free cash withdrawals abroad.

    My ‘value for money’ decision on the Nationwide account (£10pcm) for this year at least was the inclusion of a 5* defaqto-rated Worldwide Family Travel insurance.

  13. Jason K says:

    I hit the £7k spend on my Lloyds Amex in the US in December. Had already offset the fee with TC, earned just over 18k avios, and will save 25k avios using the upgrade voucher for my next solo trip to the US. Not bad, especially since I’d already hit all my other spend targets.

  14. Jean Baird says:

    I am unsure about the difference between the BA Amex and the ordinary Amex and do we receive the same offers on both cards.

    I have a BA card and use it all the time although it is difficult to get flights using just avios points you seem to have to book way in advance and my lifestyle just does not allow that

    Many thks

    • If you don’t spend enough on your BA Amex to trigger the 241 voucher, you may be better off with an Amex Membership Rewards card (Platinum, Gold) or the Starwood Amex. These allow you to convert to a large number of airline and hotel schemes, so you retain flexibility and can move your points to whoever has availability at the time you need to book.

  15. Does anybody know how many points would you get on a Priority Black VISA for spend at a IHG property in a foreign currency? 4x, 8x, or ??

    I have £1000 of IHG hotels booked abroad which need to be paid for (without additional meals, drinks etc)

  16. I use Halifax Clarity overseas but slightly finessed by having the Reward version; not sure if this is still available but you get £5 each month you spend at least £300.