Maximise your Avios, air miles and hotel points

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 articlethey 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? – September 2021 update

If you are looking to apply for a new credit or charge card, here are our September 2021 recommendations based on the current sign-up bonus

You can see our full directory of all UK cards which earn airline or hotel points here.

The following offers will expire on 2nd November 2021:

  • 10,000 Avios on British Airways American Express
  • 40,000 Avios on British Airways American Express Premium Plus
  • 60,000 points on The Platinum Card from American Express

Here are the top current deals:

British Airways BA Amex American Express card

British Airways American Express

10,000 Avios for signing up, no annual fee and an Economy 241 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

40,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

Nectar American Express

American Express Preferred Rewards Gold

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

American Express Platinum card Amex

The Platinum Card from American Express

60,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

15,000 points bonus and the most generous non-Amex for day to day spending 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.

American Express Business Gold

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

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

60,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company 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 Credit Card

1% cashback and no annual fee Read our full review

Comments (92)

  • 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 🙂

  • 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.

  • Ian says:

    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.

  • Ian says:

    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

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