Maximise your Avios, air miles and hotel points

Forums Payment cards American Express Foreign spend – fees vs points earning – worth an article?

  • chrismcb 5 posts

    I’ve often thought about the nuances of using a card with a foreign transaction fee, but accepting that fee as a way of “buying points”.

    As far as I’m aware, the best Amex card to spend abroad with is the Gold card – earning 2MR per pound.

    With 1MR = 1 Avios and 1 Avios worth notionally 1p, does that then equate to 2% back?
    Effectively reducing the foreign transaction fee to 0.99% – i.e. “Buying a MR (or Avios) for 1p”?

    Of course, with better use of the MR/Avios, the “purchase” could be less.

    I’m off on Monday for a month to the USA with a fair amount of spend expected (Disneyworld!).
    I don’t have time (or perhaps even the want) to open a Curve card, but regardless, I cancelled my Virgin cards and not sure on the current status of re-charging to Barclaycard Avios.

    I do have a Starling account (unused) and also something I’ve never seen written about which comes with the Barclays Premier account – a “travel wallet” https://www.barclays.co.uk/travel/managing-money-abroad/travel-wallet/.

    If I understand it correctly, I “buy” dollars from my current account and use the wallet, there are no fees.
    The rate, as of right now, is 1GBP = 1.2275USD, so not amazingly competitive (I can go to Tesco and change cash for 1.23).

    For Starling, $100 today converts to £79.43 – making it an exchange rate of 1.26 and no fees.

    Amex seem to have removed their rate checker.

    Not sure on the exact fees for Barclaycard Avios Plus.

    Ultimately, the question is:

    Use the Amex Gold card and accept the fee as a way of buying points?
    Use Starling as you could buy points cheaper than that?
    Or something else completely?

    Thanks

    scholar wong 38 posts

    I think in your case, you would also need to factor in the bonus 2500 MR points for each 5k of spend into the equation too, and generally the Amex FX rate is less favourable to Visa/Mastercard, so that’ll add to the cost for you to “buy” points on FX spend.

    yonasl 929 posts

    Interesting thread. Would like to hear what other people do:

    – Starling/Revolut/etc.: You put money and use the card abroad. You get 0% FX transaction fees (no need to “pre buy” currency but you need to put money on the account as it is debit)

    – Halifax Clarity (Credit card): You use the card abroad, get 0% FX fee, pay a month or so later (so get 1 month free financing vs. Starling/Revolut)

    – Using Amex and similar: You pay 3% when using t ecard abroad but get 1.5 Avios per £1

    So if you spent £5,000 on your holidays you will pay £150 in fees for an extra 7,500 Avios. You are going to spend the £5,000 anyway so how to look at this?

    1) You paid £150 for 7,500 avios or

    2) You paid £5,150 for 7,500 avios

    Richard Peters 171 posts

    Starling for cash and Halifax clarity for CC spend for us

    CyberMan 13 posts

    Chase is a good alternative for a debit card (also has a decent savings account linked). Virgin Money Club M account also has a good debit offering and comes with travel & tech insurance packaged in, and is fee free for transactions and cash withdrawals.

    For CC I have a legacy Nationwide card that’s fee free, but I’ve heard good things about the Halifax Clarity card. Barclaycard have a Rewards card which is 0% transaction & withdrawals so another alternative.

    NorthernLass 6,765 posts

    Curve – ideal for buying points and other FX spend if you’re happy using another points earning card than Amex. Paying the FX fee on Amex spends is rarely worth it. Works fine with Virgin and both avios and HH Barclaycards.

    JDB 4,181 posts

    @yonasi on Amex Gold you get 2MR (3MR for foreign airline spend) + potentially the 0.5MR bonus. My experience re the Amex rate vs MC/VI is also different to that above; it’s often quite a bit better. Also, not all of the cards above offer s75 which I consider valuable if paying hotel deposits, paying hotel at the start of the stay, buying airline tickets in advance (and definitely not wanting the airline to charge me in GBP) etc. in case anything goes. I also really don’t want the faff of loading cards and maybe finding there’s not enough on it. Also, quite difficult to ensure other family members follow protocol! So prefer to keep it simple.

    I see a lot of agonising about tiny sums to be saved on FX fees whereas I prefer to make the much bigger savings by booking directly with individual hotels. Obviously different if staying on points.

    You also don’t mention Curve although it’s possible to be penalised at weekends if you don’t have metal, but otherwise I find it excellent for saving and again for simplicity.

    dougzz99 614 posts

    My view is the only time it’s worth spending and incurring FX is if it’s the ONLY WAY you can hit a sign-up bonus. 3% even to buy 3 Amex MR (assume airline spend in FX) is still swapping real cash for something that can be devalued in an instant. The only way cash devalues in such a sudden way is if Truss and Kwarteng get back in charge of the circus.

    How to spend in foreign currency is well documented, and more MSE than HfP.

    Halifax clarity card if you want a credit card, Chase and Starling debit cards, and my personal fav is Wise. I’m not a fan of Curve, I don’t believe it can last and I don’t understand why any credit card would allow use through Curve. Others clearly rate it.
    I don’t know about the mentioned Barclays wallet, but HSBC do a Global Money Account that works within the app. I just checked and today the US$ rate they give is 1.2591 and the Euro 1.1606, these are rates to buy currency with GBP. They give you a debit card that then debits $ for $ etc. when spending, so proper FX and no charges I’m aware of.

    I think people can sometime get lost in points, and forget how much better cash is. There is value in points, but unless you’re using them immediately, or need a small amount to redeem on something larger, I’d never be buying them, I think caution is the way to go.

    dougzz99 614 posts

    @JDB – You can always pay direct to individual hotels and save on the FX. You (rightly) like S75 so why not a Halifax Clarity?

    AJA 1,028 posts

    @yonasl I assume you mean you get 1.5 Avios on the BAPP card? If so then I say your option 2 is £5.150k is the calculation as you need to spend the equivalent of £5k to get the 7.5k Avios but also need to factor in the 3% FX fee

    I am with @JDB on the S75 protection you get with using a UK credit card – I’d much rather pay a 3% fee for the S75 insurance that results. I also would rather make savings booking directly with hotels which I think more than makes up for the 3% FX fees

    JDB 4,181 posts

    @JDB – You can always pay direct to individual hotels and save on the FX. You (rightly) like S75 so why not a Halifax Clarity?

    @dougz99 I didn’t exclude Halifax Clarity, I just said some of the above cards didn’t offer it. I always pay directly to the hotel, because they are the ones offering the best rate deals. In the event of a chargeback or s75 I would prefer to deal with Amex vs anyone else and for 2.5MR the difference vs 0% FX fees is negligible and if I have saved 20%+ on my room rate, I’m not too bothered anyway. I understand there is a price for keeping life simple and I don’t want a whole lot of cards. If it weren’t for the allure of the Barclays Avios confetti I would have just one MC and two Amex, plus of course Curve.

    scholar wong 38 posts

    Credit card wise, the Barclaycard Rewards is the best option for FX. Even includes 0% interest on ATM if the statement balance is paid in full.

    Debit Card wise is probably Chase, due to the higher ATM limits and 1% cash back.

    Monzo Flex is an alternate option if you want to spread the cost of purchases.

    zapato1060 557 posts

    Note the Curve is only 1k spending/£200 atm withdrawals connected to Barclays Avios.

    Is that strategy still working without fees?

    Aston100 1,367 posts

    Halifax clarity card if you want a credit card, Chase and Starling debit cards, and my personal fav is Wise

    What makes Wise your favourite?

    yonasl 929 posts

    For those mentioning cash. If you see Halifax Clarity and immediately send a payment of GBP to the account your balance is netted and you don’t pay the interest.

    Starling otherwise is the only debit card that I know of with no cashpoint limits (Halifax has no limit but is credit which can affect credit score).

    anuj 93 posts

    I would suggest chase linked to zilch or Algbra used by itself. Both would get you 1.5% cashback, however you only get cashback using apple/google pay

    Aston100 1,367 posts

    For those mentioning cash. If you see Halifax Clarity and immediately send a payment of GBP to the account your balance is netted and you don’t pay the interest.

    You can make that payment several times to build up credit prior to your next ATM withdrawal, if you get the timing right.

    dougzz99 614 posts

    Halifax clarity card if you want a credit card, Chase and Starling debit cards, and my personal fav is Wise

    What makes Wise your favourite?

    It’s a near current account. You can transfer US$ and Euro into the account in currency, unlike the HSBC global wallet which you can only top up from the GBP part of it. Never had a problem using the debit card linked to it. The exchange rates are good, and charges minimal, couple of times I’ve had a refund of part of the charges paid. Not saying it’s the best, but it works for me and I trust it.

    BuildBackBetter 708 posts

    I’d much rather pay a 3% fee for the S75 insurance that results.

    You don’t need to pay 3% fee for S75 benefit. Clarity card has no fees.

    Other points to consider.
    You need to pay with an Amex to get travel insurance benefit on Amex plat. That takes away flights and hotels which are usually the biggest cost.
    Curve also has the atm withdrawal benefit.

    rams 227 posts

    I have a Santander mortgage and 123 lite account. Gives me£5 credit every month which covers the £2 account fee and £3 Santander credit card fee which has 0% FX fees and 0.5% cashback.

    Aston100 1,367 posts

    You need to pay with an Amex to get travel insurance benefit on Amex plat

    Is this true?
    I know the care hire insurance benefit doesn’t require the car to be paid for with Amex.

    ukpolak 58 posts

    My strategy although I have to consult the Tesco premium CC to see if cash advances are still fee-free..

    1. CC spend on Halifax clarity 0% fee

    2. Cash – withdraw currency at Tesco bureau de change (in store manned kiosk) and pay using my Tesco bank Mastercard credit card. The rates are always pretty decent and because it’s on the credit card, I didn’t “pay” for the cash advance until the bill comes in. Withdrawing FX using a Tesco cc was always fee free, too. And IIRC it qualified for clubcard points as it’s just considered regular credit card spend.

    HughM 62 posts

    I got my Starling debit at the start of Covid, when cash was a source of infection. It has been faultless, handling all those holiday transactions in euro. Before, every motorway toll from Calais to Naples, I had to get out of the car and run round with coins. Now, just Starling contactless. A luxury. (haven’t tried withdrawing cash on it, yet).

    chungcyk 21 posts

    Not quite applicable for the OP – but I understand Virgin Atlantic cards is also 0% fees for Euro in person transaction in the EEA

    baec_newbie 86 posts

    Realise this may be too complex to be worth the savings/benefits for some, but for foreign-denominated goods/services I use (in order of preference):

    Algbra for anything up to £100 that I can pay for using Google Pay, i.e. contactless in-person as well as some in-app and web payments. 0% FX fees and earns 1.5% cashback up to a total of £22.50 a month (i.e. £1500 in transactions).

    Curve for anything non-GP up to £100 during the week. 0% FX fees up to £1000 a month with the free tier. I have this linked to my free Barclaycard (downgraded from the Plus once I’d earned the voucher) so get 1 Avios/£.

    Algbra for anything non-GP up to £100 during the weekend (due to Curve’s weekend markup). Still 0% FX fees but non-GP transactions only earn 1% cashback up to a total of £10 a month (i.e. £1000 in transactions).

    Chase for anything non-GP up to £100 during the weekend, once I reach Algbra’s £1000 monthly cashback limit. Don’t like to have my money spread around too many accounts so I use this as more of a backup where necessary.

    Aqua Reward credit card for any purchases of £100+ where I feel I want the section 75 protection. 0% FX fees and earns 0.5% cashback (sadly rounded down to the nearest £5 and only paid annually). If I don’t feel the need for s75 (e.g. it’s a hotel where I’m paying on check-in) I revert to one of the above methods.

    For foreign-denominated cash withdrawals I use (in order of preference):

    Starling for cash in countries where there are fee-free ATMs (i.e. most of Europe, plus some other countries). Gives 0% FX fees with no monthly limit, just the daily £300 withdrawal limit which most cards will have.

    Chase for US cash withdrawals – no fees at Chase Bank ATMs (most other US banks/ATMs tend to charge a fee). Again, 0% FX fees and so this also provides a back-up if I’m close to the daily Starling limit. £1500 a month foreign ATM limit, but no daily limit.

    Algbra as a tertiary back-up to the above, should I be getting close to my monthly limits. 0% FX fees but it’s unclear what the monthly withdrawal limit is.

    Curve I suppose would be a quartenary back-up, though I’d try to only use this during the weekend due to the FX markup. The £200/month limit is also rather onerous.

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