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? – July 2021 update

If you are looking to apply for a new credit or charge card, here are our July 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. Here are the other top current deals:

British Airways American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and a companion voucher for spending £20,000 Read our full review

BA Premium Plus American Express card BAPP

British Airways American Express Premium Plus

25,000 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

30,000 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

Earn both Avios and BA On Business points with your business spending 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)

  • Natalia S says:

    Creation has very limited ATM withdrawals: my friends got stuck with it this month abroad. They were allowed £300 a day (which is fine), but there’s also a cash withdrawal limit of £500 a week. So on their 3rd day they were wondering why they can’t get cash from any cash machine until they called Creation customer service and were told to wait for 5 days (!) to make their next cash withdrawal.

  • rams1981 says:

    to add to above, 10 July is a Sunday when the markets are closed mostly so not sure how they managed to have different rates on a Sunday… incredibly dodgy

  • Roger says:

    All this OT stuff about the £5 reward if you had the right Halifax current account is about to go off the boil.

    I had a snailmail letter from Halifax today about a change to Clarity cards. In essence, the £5 reward will be no more as from 1 September.

    • TGLoyalty says:

      was good while it lasted but was always unlikely on £300 spend after the cap

      0% FX and free withdrawals still worth keeping in your pocket on holiday

      • Genghis says:

        It’s still the only card, I believe (correct me if I’m wrong), that would offer free cash withdrawals from ATMs globally. Great for more cash based countries.

        • Roger says:

          The Creation Everyday credit card offers fee-free ATM withdrawals.

          There are several debit cards that offer fee-free ATM withdrawals. I use Nationwide FlexPlus Visa debit.

          See also http://www.moneysavingexpert.com/credit-cards/travel-credit-cards

          • Genghis says:

            Though Nationwide FlexPlus Visa is £10pcm. I use Metro Bank within Europe for ATM but then again, that’s only free within Europe.

          • Roger says:

            Yes, those are both debit cards attached to bank current accounts. Opening Metro accounts is restricted to London and some other SE towns. Nationwide is, er, nationwide.

            AFAIK the only free UK credit cards offering 0% f/x on ATM withdrawals are Halifax Clarity and Creation Everyday.

          • Roger says:

            Also, NW FlexPlus is £10 per month minus the credit earned on the balance. I pay £6 something net for the bundle which includes worldwide travel insurance, UK and European car breakdown cover, etc. Bargain!

  • Mr Dee says:

    The comparison is accurate as its about the best way to earn Avios from spend not what card offers you a reward otherwise I could start comparing rewards from other bank and credit cards that are not relevant to the actual spend.

    You can have your £5 credit every month from Halifax every month without having to put all your spending abroad on to it, there is no reason you can’t have both unless your spending less than £300 to meet the minimum spend.

    The halifax cc doesn’t have a rewards program so you would be earning nothing by using it vs the Lloyds card bring in some Avios.

  • mark2 says:

    Don’t forget that if you pay for things on your Amex card you get insurance especially for travel related items.

  • mark2 says:

    I have not seen this discussed on here. Am I the only one to receive an email from Supercard about a (very underwhelming) travel insurance scheme?

    • Mr Dee says:

      Yes though it was odd that they are giving away some free insurance with a free card

    • Genghis says:

      It was discussed a bit yesterday, Mark. I agree, very underwhelming and not very good if you look at the amounts and read some of the fine print.

  • Phil Layton says:

    I am now in dispute with Supercard over duplicate transactions. The Sale was to a Villa company in the US for a stay this coming October. Two Transactions appeared in the linked Tesco Clubcard two days later. I queried with Customer Service who said one was a preauthorisation and the other was the settlement. Wait 9 days and one will ‘drop off’ (I couldn’t see how this was going to happen without a refund going onto the credit card account.) Two days later I got a supercard credit of 2p two times (suggesting that both had been currency adjusted) and one transaction changed to ‘purchase’ but the other remained ‘pending’ on the app. Seven days later the pending transaction disappeared from the app. Two transactions remained on Tesco. 11 days later Im now ringing around filling in dispute forms (for a significant amount of money) I really cannot recommend this card atm.

    • Genghis says:

      Sounds like an awful experience. My Supercard is currently blocked due to my name being not fully accurate on the card. An ‘I’ instead of a ‘U’ which was probably my fault when I filled out the application which you have to do on a small smartphone. I passed their ‘checks’ though so it questions how thorough they are. They said on the phone they’d want £3 for a replacement card but I refused and asked them to waive it. Followed up with an email saying that their Ts and Cs only have a fee for lost and stolen cards. Waiting to hear back (been 3 days now) but not impressed so far.

    • Mr Dee says:

      Same situation when I used Curve and it wasn’t for a hotel or car hire company which is why I stopped using them

  • Egg says:

    I would not limit the £2400 to only holiday spend.
    Lots of places in the UK dont take Amex B&Q/Screwfix (Both part of Kingfishers) dont for example, so if you have the Amex issued BA card & the retailer do not take Amex, you are kind of stuck to use another card – which may end up being your debit card or another non-reward card.

    • Genghis says:

      If a retailer does not take Amex, then there are better options out there than using a Lloyds MasterCard (IHG platinum for example) notwithstanding Lloyds MC spend counts towards the £7k upgrade voucher target.

      For B&Q, buy gift cards in Tesco thereby paying with Amex and getting 150cc points = 360 avios / £50 spend.

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