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

By the time you read this article, I will be back in London.  However, as I edit this article, 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.

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 …..

Want to earn more points from credit cards? – December 2021 update

If you are looking to apply for a new credit or charge card, here are our November 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 top current deals:

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

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

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

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee 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

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

30,000 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