Regularly go on holiday or shop on foreign websites? You could benefit from a specialty travel credit card that offers fee-free spending and outstanding exchange rates on overseas transactions.

What are travel credit cards?

When you make a purchase or take out cash in another currency on a debit or credit card, your bank will charge you to convert what you spent into pounds sterling.

Two things will determine what this costs you: your card’s payment network exchange rate set by Mastercard, Visa or American Express, and the fees your supplier adds on top.

Specialist travel credit cards don’t come with these fees, making it much cheaper to spend overseas or on international websites in another currency.

How much does it cost to use my credit card abroad?

You could face a range of charges for using your usual plastic overseas.

Typically your card will either swap at the Mastercard, Visa or American Express wholesale rate, which are near ideal.

However, providers then add a variety of fees to make the exchange depending on the type of transaction – which is when costs may really start stacking up.

There are three distinct sorts of charges that can be added on when using a credit card:

Non-sterling transaction fee

This is a percentage of the value of each transaction. You’ll normally pay up to 2.99 percent each time you use a credit card.
Non-sterling cash fee
When you withdraw money from an ATM using a credit card, you should also anticipate paying a fee of approximately 3 percent, with a minimum charge of £3.
The interest rate applied to cash withdrawals
When you use a credit card, you will immediately be charged interest on any cash withdrawals you make, and this interest rate may be far greater than the interest rate you are charged on purchases.

It is essential to make an informed decision because certain credit cards may turn out to be an expensive travelling companion. If you use the incorrect card, you run the risk of being charged for all three of these fees.

In most circumstances, the non-sterling transaction fee and, in certain instances, the cash cost will both be waived by specialist travel credit cards. This makes it significantly more affordable to spend money on international purchases.

How much does it cost to use your card?

Now that you know what to look for, review the fees that your credit card provider charges for purchases made in other countries to see whether or not a credit card designed specifically for travel might benefit you more financially.

The majority of credit card companies assess a non-sterling transaction fee of 2.99 percent and a non-sterling cash fee of 3 percent (with a minimum charge of £3), in addition to cash advance interest rates that can go as high as 29.9 percent and are sometimes assessed on a daily basis.

Therefore, using your card to make a purchase of £10 could cost you 30 pence, whereas withdrawing £10 in cash could cost you £3.30 at the time plus interest, the amount of which will vary depending on the terms of the card.

Which credit cards are the best to use when travelling outside of the country?

The following table provides information on the best credit cards to use when making purchases in a foreign currency or while travelling abroad.

Please keep in mind that the material provided in this article is intended solely for educational reasons and is not intended to serve as advise. Before committing to any kind of financial product, you should make sure that you have read and understood the specific terms and conditions that apply to your credit card provider.

Credit card and issuing organisation transaction fee in a currency other than sterling fees for transactions in currencies other than the British pound Typical Annual Percentage Rate
Metro Bank Personal Credit Card (Mastercard)  0%  0% 14.9%
A hypothetical loan of £1,200 taken out for a period of one year at a purchase rate of 14.9% (variable) would result in an annual percentage rate (APR) of 14.9%. (variable). Credit may be available, depending on your situation. There are some conditions.
Halifax Clarity Credit Card (Mastercard) 0% 0% 19.9%
A hypothetical loan of £1,200 taken out over the course of one year at a purchase rate of 19.9 percent (variable), resulting in an annual percentage rate (APR) of 19.9 percent (variable). Credit may be available, depending on your situation. There are some conditions.
Barclaycard Rewards Credit Card (Visa)  0%  0% 22.9%
Example: assuming you borrow £1,200 over the course of one year at a purchase rate of 22.9 percent (variable), this results in a sample annual percentage rate of 22.9 percent (variable). Credit may be available, depending on your situation. There are some conditions.

 

All information is accurate as of April 1st, 2022. These credit cards do not assess any fees for making purchases or cash withdrawals in foreign countries.

Who are the most reputable companies that issue travel credit cards?

It is not always easy to determine which service provider to go with, and once you have committed to using a particular company, it is often too late to alter your mind.

We conducted an analysis of the performance of 26 credit card providers based on factors including customer service, the ability to manage your account, and the ability to keep you informed about new offerings.

Credit cards while travelling: the most important guidelines to remember

Be sure to stick to these tried-and-true guidelines if you want to make the most of your travel credit card the next time you go on vacation.

1. Do not make any cash withdrawals.

Even if you have a card that does not charge a fee when used to withdraw money from an ATM in a foreign country, it is possible that you should still avoid doing so.

This is due to the fact that you will normally start accruing interest right away, and it may even be at a higher rate.

You can avoid incurring additional charges on your credit card by being well organised and paying off the balance on your card in a timely manner. On the other hand, this can be an annoyance that you’d rather avoid.

If you use your credit card at an ATM, there is also a possibility that your credit rating could suffer as a result of the transaction.

2. Make purchases using the country’s currency.

If you have a good credit card that you can use overseas, you should always opt to pay in the local currency because your card will convert your money at the best possible rate.

3. Refrain from taking out loans if there is no introductory 0% APR period.

If you want to avoid accruing interest charges, you should make it a priority to pay off what you owe each month, unless you have a credit card that offers a promotional period during which there is no interest charged on purchases.

FAQs regarding travel credit cards

Are you a little lost when it comes to travel credit cards? See whether the answer to your question is provided in the following section.

Should I apply for a credit card that specialises in travel?

If you frequently visit other countries, using a credit card that is specifically designed for use while travelling could help you save money.

Not only will it be more handy and safer than carrying mounds of cash, but the best ones will also allow you to spend money at an excellent exchange rate and without incurring any costs whatsoever.

What kind of exchange rate do I get with a credit card designed for travel?

When you make a purchase with a credit card in a foreign country, your bank will either exchange the money at the wholesale rate charged by Mastercard, Visa, or American Express, all of which are extremely similar to the rate that is being charged on the spot market at the time.

However, the rate that you are given will be the rate that is in effect at the time that your card provider processes the transaction, which is often a few of days after you have used the card.

Therefore, if the exchange rate changes between the time that you make the purchase and the time that your card issuer processes it, you may find that you end up paying more (or less) than what you had anticipated spending for the item.

Should I withdraw cash or use my credit card to make the purchase?

If you have a decent credit card that you can use abroad, charging purchases to the card will be cheaper than obtaining cash from an ATM.

Even with credit cards that do not assess a fee for withdrawing non-sterling currency, you will still be required to pay interest on the withdrawal beginning the moment you make the withdrawal and continuing until the balance is paid in full.

Is it preferable to make purchases with a debit card?

Similar to credit cards, there are good debit cards and bad debit cards to use when travelling internationally.

When using the majority of debit cards, you will be subject to a non-sterling transaction fee for spending, which is typically somewhere around 3 percent, and some banks will also subject you to a non-sterling purchase fee. Additionally, when withdrawing cash, you will be subject to the non-sterling transaction fee in addition to a non-sterling cash fee.

However, rather than moving your current account in order to get the trip bonuses, it is often simpler to apply for a credit card that specialises in travel rewards.

Should payments be made in the country’s native currency or in pounds sterling?

When you are travelling outside of the country, you will frequently be asked whether you would prefer to pay in British pounds or the currency of the country you are in.

If you pay in pounds, the merchant will handle the currency conversion for you, however the exchange rate is frequently unfavourable.

Always choose the local currency to pay with as long as you have a good abroad card. Your card issuer will handle the currency conversion for you, and they will typically offer the best rates available at the moment.

When I use my card in another country, will I risk having it blocked?

If you do not inform your bank or credit card issuer of your plans to travel, you run the risk of having your card blocked.

This is done to prevent fraud, but it may cause you a lot of trouble when you’re on vacation, especially if you haven’t brought any other methods of payment with you.

Before you leave the country, you need to give your credit card provider a call and let them know that you will be travelling internationally.

When shopping on international websites, should I use a specialty card?

When you shop online at international websites denominated in a different currency, the fees associated with using your usual credit card will be the same.

When shopping on international websites in a foreign currency, it will be far more cost effective to use a credit card that is specifically designed for use overseas.

When I use a specialty credit card for foreign purchases, will I be protected by Section 75?

This implies that in the event that there is a problem with a product or service that you have paid for with your credit card, you have the ability to recover the money from your supplier in the event that the shop does not make good on their promise to correct the issue.

This comes in especially handy if you make a purchase in a foreign country and something goes wrong with it.