Using credit cards abroad – A simple guide

Using credit cards abroad – A simple guide
Cash Lady

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Using credit cards abroad - A simple guide

Travelling aboard with your credit card? You may have heard the news – using credit cards abroad can be an expensive way to travel. Yet it really needn’t be, and in fact, it can provide many compelling benefits, such as safer travel.

Here we walk you through the advantages, the fees and the workarounds to make a saving.

The benefits of using credit cards abroad

A credit card can, could and should be a useful travel companion, as it can provide:

  • A safer alternative to cash.
  • Convenience in case you lose it – as you merely report it. This compares to cash which, once lost, has very little chance of being recovered.
  • Protection on your purchases – For purchases above £100 but under £30,000 you benefit from both the retailer and the credit card company being held jointly responsible. Should something go wrong, or should the item not be as described, you can turn to your lender for a full refund. This includes protection for travel, flights, hotels and holidays.

Using credit cards abroad – The feesUsing credit cards abroad - A simple guide

Most credit cards will involve fees each and every time you use it when abroad. What muddies this situation is that the fee can be called different things by differing credit card issuers – names that include: foreign purchase, loading fee or conversion/exchange rate fee.

The level of the fee also differs from provider to provider. Some cards charge up to 3% on every single purchase, whether you use them in a supermarket or a café; this can turn a £300 bill into a £309 bill.

Credit cards designed for use abroad

There is a wide range of credit cards that have been designed specifically for the traveller. These cards do not involve additional charges for spending when abroad. Always try to apply for this form of card first, and ensure that you read the terms and conditions in full before use.

Traveller tip: Do not use your credit card for withdrawing cash

Using credit cards abroad - A simple guide

Whether you choose to travel with a regular credit card, or a card designed for use overseas, using your credit card to withdraw cash is a seriously expensive way to borrow, especially when abroad.

Some cards will charge as much as 2.5% each and every time you withdraw, so a £100 withdrawal will attract a fee of £2.50. You will also need to account for the APR interest that will be applied immediately, rather than after the end of the first full month.

A final pointer is in relation to purchasing travel money. This form of transaction where you to purchase Traveller’s Cheques or currency is treated in the same way as withdrawing cash from an ATM, and so attracts the same fee and instant interest structure.

Asked whether you wish to pay in sterling or local currency?

Always choose to pay in local currency if you are asked at the point of sale, as you may be charged by either the bank or the store for handling the conversion.

Let us now take a look at the best credit cards for travel…

Credit CardRepresentative APRForeign Fee (Europe)Foreign Fee (Worldwide)
B Credit9.9% APR0%0%
Creation Everyday Credit Card12.9% APR0%0%
Nationwide Select Credit Card15.9% APR0%0%
Halifax Clarity Credit Card18.9% APR0%0%
Post Office Money Platinum Credit Card18.9% APR0%0%
Virgin Money Travel Credit Card19.9% APR0%0%

Alternatives to using credit cards abroad

Using credit cards abroad - A simple guide

  • Prepaid currency card – A prepaid currency card is topped up online or over a bank counter prior to travelling. This solution is a great option for those that have a poor credit score, and can also be a good way of ensuring you spend no more than you can afford.
  • Debit card – While debit card use does accrue fees when abroad, you will not be charged for withdrawing cash.
  • Arranging cash before you travel – Cash is a free way of spending whilst abroad, save for the cost of currency conversion. That said, it is not ideal from a safety point of view. The best alternative to cash is, therefore, Traveller’s Cheques.