Should I get a special travel credit card for when I travel abroad?

A trip abroad deserves a specific travel credit card. It could help you avoid charges on withdrawals and purchases, or you could earn airline reward points before you jet off. Like with all credit cards, you should bear in mind the credit limit, interest rate and charges. That way you can spend more time enjoying the scenery and less time worrying about bills.

Woman sat by the pool, with sunglasses on, enjoying her holiday

If you agree with these statements, a travel credit card could be right for you

“I want to say ‘au revoir’ to costly hidden charges”

A major benefit of travel credit cards is that many, if not all, of the fees don’t apply for a set amount of time. You might also benefit from travel-related rewards and discounts, like air miles.

A credit card is also a safer alternative to carrying large amounts of cash while on holiday. However, the last thing you want is to pay mysterious fees whenever you take cash out or pay for a meal.

One fee you should look out for when using a credit card, especially abroad, is a non-sterling cash transaction fee. You might just need a little cash top-up to pay for a few drinks in a bar that doesn’t take cards. However, if you use the ATM you could incur a fee.

There’s also a non-sterling purchase fee. Let’s say you move down the street to a nicer bar that takes cards – there could still be a fee for spending in a foreign currency instead of sterling.

A retailer might give you the option of paying in sterling instead of the local’ll probably be charged a higher rate for the conversion.

To complicate things further, a retailer might give you the option of paying in sterling on your card instead of the local currency. This is called dynamic currency conversion. In one way it’s convenient because you can see on your bill exactly how much you’re about to spend, but bear in mind you’ll probably be charged a higher rate for the conversion.

It’s better to use a currency conversion app to understand how much you’re paying and avoid the charge by checking the bill before tapping to pay or entering your PIN. Then pay in the local currency if your card has no fees for non-sterling transactions.

If you decide to use the ATM anyway and accept the charges mentioned above, don’t forget that as soon as you make a cash withdrawal, you could be charged interest on it until you pay off your balance.

To put these fees into perspective, using the wrong sort of credit card abroad could go like this... 

You take out £100 at a cash machine. You could be charged £3 extra for foreign usage, a £3 cash withdrawal fee, and £2 interest before you pay off the bill. That’s £8 just for taking out a bit of cash.

Multiply this a few times across a week-long trip and it’s easy to see how foreign transaction costs add up. If you use the right card, however, that money could pay for an extra meal or family activity.

“I plan to pay off the balance as soon as I get home”

You return home with a lovely tan, a few quirky souvenirs, and some spending on your credit card. Do you think you’ll have enough spare money to pay off the balance in full now that you’re back? If you can’t pay it all off right away, focus on clearing it as soon as possible and within the interest-free period, if you have one.

As with all credit cards, it pays to be aware of how much borrowing using a travel credit card will cost you in total. If your repayments are too small, the interest will quickly wipe out any savings you made while abroad. One way to make sure you don’t miss a payment while you’re away is to set-up Direct Debits or standing orders to automatically pay bills. When it’s affordable, this can be a good idea whether you’re at home or on holiday.

“I want to keep my money safe when I travel”

Any transaction you make with a credit card, including a travel card, between £100 and £30,000 could be protected by Section 75. The protection is there whether you’re abroad or in the UK - conditions apply.

That means you can claim money back from your credit provider if your travel company or supplier goes under. This could be especially useful if you plan to make big purchases on your credit card, such as flights or hotel rooms, as you might not have the same protection if you pay by debit or cash.

It’s a good idea to let your bank know about your travel plans before you set off and give them your contact details, otherwise they might suspect overseas purchases are unauthorised and freeze your card. That’s not what you want when you’re moments away from hiring a banana boat or paying for a bungee jump.

If you’d prefer to not pay on credit, you could opt for a prepaid card. You can only spend as much as you load onto it and it can be preloaded with multiple currencies if you’re visiting several countries in one trip. When you withdraw money, watch out for top-up or ATM fees.

What's next?

If you’re thinking about your next holiday and how to keep costs down when you’re there, read our guide on how to travel cheaply.