How a credit card can help pay for your next holiday

We all know that holidays can be expensive, but regularly using a credit card could help you pay for your break. Here’s how…

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If you’re already thinking about next year’s holiday, there are two types of credit card that could help you get there for less – an airline credit card and a cashback credit card.

Airline credit cards enable you to earn reward points as you spend which you can then put towards the cost of a flight.

These cards are often linked to specific airlines such as British Airways or Virgin Atlantic, or they enable you to collect Avios points (which replaced Airmiles) which can be redeemed on hotels, ferries and car hire, as well as flights.

You can often combine these credit card rewards with any frequent flyer miles, which can be particularly useful if you fly regularly.

Cashback cards, on the other hand, give you cashback every time you spend on them. You can then use this to help pay for your next holiday (or whatever else you choose).

However, while both types of card can be handy, the major drawback is they often come with annual fees (which can be particularly steep for airline cards) and high interest rates, so you should only opt for one if you can afford to pay off your balance in full every single month.

Here’s our round up of some of the best options available on MoneySuperMarket.

Airline credit cards

If you’re happy to pay a fee, one of the top airline cards is the American Express British Airways Premium Plus.

What it offers: 18,000 bonus Avios when you spend £3,000 within the first three months, as well as a companion voucher each year when you spend £10,000 on the card, so a partner or friend can travel with you at no extra cost.

You'll also get three Avios points for every £1 spent with British Airways and 1.5 Avios for virtually every £1 you spend elsewhere.

As an example, a total of 9,000 Avios points will get you a return flight from London to Berlin, while 20,000 points will get you a return flight from London to Moscow.

Watch out for: The card has a hefty £195 annual fee, so it will only suit you if you intend to spend enough on it so the benefits outweigh the cost of keeping it.

Plus you’ll need to pay off your balance in full each month, otherwise you will pay interest at a rate of 22.9% pa (variable). The card has a representative rate of 76% APR (variable)*.

If you regularly fly with Virgin, the Virgin Atlantic Black Credit Card could be a better option.

What it offers: You’ll receive two cards with this account - you’ll earn two Flying Club miles for every £1 spent with the American Express credit card from MBNA and one mile per £1 spent on the Visa card.

You'll also receive 18,500 miles if you make a purchase within the first 90 days.

Watch out for: The card has a £140 annual fee and charges 22.9% pa (variable) if you don't pay off what you owe in full every month. The card has a representative rate of 57.4% APR (variable)**.

If you’d prefer a card with no annual fee, take a look at the American Express British Airways credit card.

What it offers: One Avios point for almost every £1 you spend and 3,000 bonus points when you spend £500 or more in the first three months.

Watch out for: The card charges 22.9% pa (variable) and has a representative rate of 22.9% APR (variable)***.

Alternatively, you could consider the TSB Avios credit cards.

What they offer: You’ll collect one Avios point for almost every £1 spent on the Avios American Express card and one point for every £5 spent on the Avios Mastercard. You also get double points on eligible spending abroad.

Watch out for: The cards charge 17.95% pa (variable) and have a representative rate of 17.9% APR (variable)****.

Cashback credit cards

If you’d prefer to collect cashback, the American Express Platinum Cashback Everyday credit card is a competitive choice.

What it offers: 5% cashback on up to £2,000 of purchases in the first three months and up to 1.25% after that, depending on how much you spend. You’ll earn:

- 0.5% cashback for spending of up to £3,500
- 1% cashback for spending of between £3,501 and £7,500
- 1.25% cashback for spending over £7,501.

Watch out for: To qualify, you need to spend at least £3,000 in a year. There’s no fee with the card, but only opt for it if you can afford to clear your balance each month – otherwise you will pay 22.9% pa (variable). The card has a representative rate of 22.9% APR (variable)***.

Alternatively, if you are happy to pay a £25 annual fee, take a look at the American Express Platinum Cashback Card.

What it offers: 5% cashback on up to £2,500 of purchases in the first three months, and 1.25% thereafter.

If you spend over £10,001 in a year, you'll also get 2.5% cashback in your anniversary month.

Watch out for: As well as the £25 annual fee, if you don’t clear your balance each month you’ll pay 22.9% pa (variable). The card has a representative rate of 28.2% APR (variable)*****.

*Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) with a £195 annual Fee your representative rate will be 76% APR (variable).

** Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) with a £140 annual Fee your representative rate will be 57.4% APR (variable).

*** Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) your representative rate will be 22.9% APR (variable).

**** Representative Example: If you spend £1,200 at a purchase interest rate of 17.95% p.a. (variable) your representative rate will be 17.9% APR (variable).

***** Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) with a £25 annual Fee your representative rate will be 28.2% APR (variable).

All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.

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Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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