Which low interest rate credit cards also earn miles or points?
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When I cover miles and points credit cards on Head for Points, there is something which I always try to ram home. In general, miles and points credit cards are not suitable for you if you do not clear your balance every month.
Miles and points cards generally carry steep interest rates.
American Express is about to increase the interest rate on purchases on its Starwood Preferred Guest / Marriott Rewards credit card from 19.9% to 22.9% variable for example, and the Nectar and British Airways cards have been at that level for a long time. (The Starwood card has a decent sign-up bonus of 30,000 Marriott / Starwood points – worth at least £150 – but you really should avoid it if you won’t clear your balance each month.)
Quietly, however, the situation has changed.
Two of the top five cheapest low interest rate credit cards on the market now give points.
Using Moneyfacts data, there are five credit cards which currently have a long-term interest rate (as opposed to a short-term promo offer) of under 10%.
Option 1: The Tesco Clubcard low rate credit card
This card is free. There are various versions but the one we are looking at is the low rate version – click here – offering a market leading 5.9% APR variable. There is no sign-up bonus.
You would earn 1 Clubcard point for every £8 spent on this card, which converts to Avios (1 Clubcard point = 2.4 Avios) or Virgin Flying Club miles (1 Clubcard point = 2.5 miles). This works out at 0.3 Avios per £1 spent.
Note that Clubcard points are awarded on a ‘per transaction’ basis so you won’t earn anything on individual transactions of £7.99 or less.
Whilst not hugely generous, this is actually the highest Avios earning rate on a free Visa or Mastercard unless you meet the very stiff criteria for getting a HSBC Premier credit card.
If you are looking for a credit card with a low interest rate which also earns miles then this is the option for you.
Options 2-4, ranked by interest rate, do not offer loyalty points:
Bank of Scotland Platinum Low Rate Mastercard (6.4%)
Halifax Flexicard Mastercard (6.4%)
Lloyds Bank Online Platinum Low Rate Mastercard (6.5%)
We then come to …..
Option 5: American Express Rewards Credit Card
There are three versions of this card. You want the low rate option (click here). This comes with a sign-up bonus of 5,000 American Express Membership Rewards points bonus and a representative APR of 9.9% variable.
You will earn 1 Membership Rewards point per £1 you spend. These transfer 1:1 into Avios, Virgin Flying Club or various other airlines. They also transfer into Hilton Honors (1:2), Radisson Rewards (1:3) and Marriott Rewards (2:3). This recently updated article gives my thoughts on the most valuable transfer options for your Amex points.
The sign-up bonus is only available if you have not held a Platinum, Gold or Green American Express card in the last six months. You are OK if you have a BA, SPG, Nectar or similar Amex.
This is not the best American Express starter card and I only recommend it if you a miles and points beginner who also wants a low interest rate card.
Everyone else should get Preferred Rewards Gold instead because of the higher bonus and better benefits. The American Express Rewards Credit Card is also interesting if you are planning to cancel a Gold or Platinum card but want to keep your Membership Rewards points. I explain more in this article.
Conclusion
In general, my advice still holds – most miles and points credit cards should be totally avoided if you pay interest.
If you do pay interest on your credit card, however, the options above are the lowest interest rates on the market (as of the date of publication of this article) and two of them will also let your earn points whilst you spend.
Want to earn more points from credit cards? – September 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.
SPECIAL OFFER: Until 26th September 2024, sign up for FREE Barclaycard Avios Mastercard and you will receive a sign-up bonus of 10,000 Avios. This is double the usual bonus! You only need to spend £1,000 within 90 days. Our full review is here. Click here to apply.
You qualify for the bonus on these cards even if you have a British Airways American Express 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 Mastercard
10,000 Avios (to 26th September) 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.
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
British Airways American Express Premium Plus
30,000 Avios and the famous annual 2-4-1 voucher Read our full review
The Platinum Card from American Express
40,000 bonus points and great travel benefits – for a large fee Read our full review
Virgin Atlantic Reward+ Mastercard
18,000 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 22nd October 2024, the bonus on American Express Business Platinum is increased to up to 80,000 Membership Rewards points, worth 80,000 Avios. You will receive 8 points per £1 spent for the first three months, on up to £10,000 of spending. Click here to read our full card review. Click here to apply.
SPECIAL OFFER: Until 22nd October 2024, the bonus on American Express Business Gold is increased to up to 40,000 Membership Rewards points, worth 40,000 Avios. You will receive 4 points per £1 spent for the first three months, on up to £10,000 of spending. The card is FREE for your first year. Click here to read our full card review. Click here to apply.
American Express Business Platinum
Up to 80,000 points when you sign-up and an annual £200 Amex Travel credit Read our full review
American Express Business Gold
Get up to 40,000 points as a sign-up offer and FREE for a year Read our full review
Capital on Tap Business Rewards Visa
10,000 points bonus – plus an extra 500 points for our readers Read our full review
British Airways American Express Accelerating Business
30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios 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
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