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.

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.

It’s always best to only spend what you know you can afford to pay back.

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

Airline credit cards

Cards with an annual fee

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

What it offers: 25,000 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 virtually every £1 spent with British Airways and BA Holidays 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 Athens.

Note that this is per person, and you’ll still have to pay taxes, fees and carrier charges.

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 76.0% APR (variable)*.

Also bear in mind you won’t be eligible for the 25,000 bonus Avios if you already have another personal British Airways American Express card or have had one in the past two years.

If you regularly fly with Virgin, the Virgin Atlantic Reward Plus credit card could be a better option.

What it offers: You’ll receive three miles for every £1 spent direct with Virgin Atlantic or Virgin Holidays and 1.5 miles for every £1 spent on everyday purchases.

You’ll also receive 15,000 bonus miles with your first card purchase, providing you make it within the first 90 days of opening your account.

Watch out for: The card has a £160 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 63.9% APR (variable)**.

Also be aware your qualifying spend excludes cash withdrawals, interest, balance transfers, money transfers and fees.

To qualify for the card, you’ll need to have an income of at least £7,000 or household income of at least £15,000.

Cards without an annual fee

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 5,000 bonus points when you spend £1,000 or more in the first three months.

Watch out for: The card charges 22.9% pa (variable) on purchases if you don’t pay them off each month and has a representative rate of 22.9% APR (variable)***.

Bear in mind you won’t be eligible for the 5,000 bonus Avios if you already have another personal American Express card or have had one in the past two years.

Alternatively, you could consider the Virgin Atlantic Reward credit card

What it offers: You’ll receive 1.5 miles for every £1 spent direct with Virgin Atlantic or Virgin Holidays and 0.75 miles for every £1 spent on everyday purchases.

You’ll also receive 5,000 bonus miles with your first card purchase, providing you make it within the first 90 days of opening your account.

Watch out for: The card charges 22.9% pa (variable) on purchases if you don’t pay them off each month and has a representative rate of 22.9% APR (variable).***

Your qualifying spend excludes cash withdrawals, interest, balance transfers, money transfers and fees.

To qualify for the card, you’ll need to have an income of at least £7,000 or household income of at least £15,000.

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 all purchases in the first three months, up to £100 cashback. T&Cs apply.

After that, you’ll earn up to 1% cashback, depending on how much you spend. You’ll earn:

- 0.5% cashback for spending of up to £5,000
- 1% cashback for spending of over £5,000

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 in the first three months, up to £125 cashback, and up to 1.25% thereafter, depending on how much you spend. You’ll earn:

-1% cashback for spending of up to £10,000

-1.25% for spending of over £10,000

Watch out for: As well as the £25 annual fee, you’ll pay 22.9% pa (variable) if you don’t clear your balance each month. 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 76.0% APR (variable).

** Representative Example: If you spend £1,200 at a purchase interest rate of 22.9% p.a. (variable) with a £160 annual fee your representative rate will be 63.9% 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 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.

MoneySuperMarket is a credit broker - this means we'll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a commission by the lenders - though the size of that payment doesn't affect how we show products to customers.

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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