Using Your Credit Card Abroad
People normally book holidays so that they can get away for a little bit and relax. However if you take the wrong credit card abroad with you, you can end up stressing out over your bill when you get back home. This is because many different credit cards have hidden fees and charges that apply when you use them overseas. Knowing exactly where you stand with your credit card and how you can use it, can help to make your holiday an all round more enjoyable experience.
It is certainly true that using your credit card to pay for things whilst you are on holiday is one of the most affordable options. It is also true that your debit card is often the best and most secure way to access cash whilst you are abroad. However it is important to know what exactly your card’s terms and conditions say about using it in other countries. If you don’t check this before you go, you could get a really nasty surprise once you finally get home and get billed again.
What costs are associated with using your credit card abroad?
There are quite a few different charges that will apply to you when you use a credit card in another country.
Foreign Exchange Rates
This refers to the cost of converting your British money into the currency that is used in the country that you are visiting. This rate will change a lot depending on who you bank with and what type of credit card you have. This is because each individual bank can determine its own foreign exchange rate for each different currency.
It can often be tempting just to look up the current exchange rate online and assume that that is how much your bank will charge you for the transaction to take place. However this is almost always not the case, the exchange rates that you see online are normally representative of the very best available exchange rates on the market. These rates are usually only accessible to transactions within big businesses where the amount of money being traded is normally up in the millions. For a member of the general public the situation is not so favourable due to the smaller amount of money being dealt with. This means that the rates you see online will not apply to you.
Overseas Usage Fees
These fees are applied to any transaction that you may make whilst you are abroad. This means that every single time you use your credit card or your debit card you will be charged by your bank. Some banks do not charge fees for using your card in other countries but most do and the amount that they charge will vary from bank to bank. The highest amount that you are likely to have to pay is around 3% of the transaction.
Another type of fee that you can expect to have to pay is the charge incurred for having to withdraw cash from ATMs whilst you are abroad. Again not all banks charge this type of fee but the vast majority of them do. The amount that they charge will normally sit at about 2-3% of what you are withdrawing from the machine.
This is not the only thing that you will be charged for when withdrawing this cash because the foreign usage fees still apply. For this reason it is not the most sensible idea to withdraw cash when you are abroad, as inconvenient as that is.
Flat fees are additional charges that apply to all uses of your card abroad, this is normally around two pounds no matter how much you are spending. This means that it is a good idea to take out large lumps of cash all at once rather than taking out quite a few individual amounts. By doing this you will minimise the amount of times that you are charged a flat fee and will therefore save yourself money in the long run.
How to find the best travel credit cards
If you are looking for a good travel credit card you should start by comparing the options available to you. This will allow you to get a good idea of what is on offer and will therefore help you to make an informed decision when you do decide on a card. Here on our website we offer a free and impartial price comparison service on a range of different credit cards. Simply type in what you are looking for and within seconds we’ll show a huge list of options that you could be choosing from.