Which is the best travel credit card?
You've booked your flights, reserved a hotel, but how are you planning to pay for all those other expenses once you get there? If you're opting for plastic then you'll need to read this. We've got all the info on the best travel credit cards to take on holiday, including which ones won't charge you for overseas transactions, plus tips on how to protect yourself from fraud and cash withdrawal fees.
What's the best credit card to use abroad?
Here are five top-rated travel credit cards, as of 2017, including no foreign transaction fee credit cards, and added benefits like cashback.
An overseas credit card with no fees for foreign transactions, the Barclaycard doesn't even charge you for withdrawing cash, provided you pay off your full balance at the end of the month. However, this is a limited-time offer - until August 2018 - after which you'll get charged if you're still using the card abroad.
This simple, user-friendly credit card offers permanent, fee-free cash withdrawals and no fees on foreign purchases. There's also a 24-hour online banking service, so if you pay your bill off as you go, you'll only get charged minimal interest on taking cash out abroad.
You can only apply for this card if you're already a Nationwide customer, but it has some tempting starting offers that might make it worthwhile if you're about to travel. The first 26 months comes with 0% on balance transfers, for the first 15 months you get 0% on purchases, and there's no annual or foreign purchase fees, full stop.
The Zero card has a few perks up its sleeve, in that you can claim up to 5 cashback offers of 25% at selected retailers. This is another credit card with no foreign transaction fees, though you may have to watch the interest on cash withdrawals, as it's charged at 29.9% until you pay it off.
Halifax are consistently well-reviewed in terms of credit cards you can use internationally, and the Clarity card comes without foreign transaction fees as standard. The interest rate for withdrawals is a little higher than some other cards, but you'll only be charged until you've cleared your bill.
Now you've picked the right credit card, but what are the benefits and how can you avoid paying overseas transaction fees?
Why use a credit card abroad?
Fraud protection is a big advantage to using a credit card abroad, rather than cash. Cards are monitored by the credit company, meaning they can report unusual activity if they suspect someone's stolen your card, or even block it (always let them know if you're going on holiday and where, in case they think your card is being used by someone else!) If you do lose the card, you should be able to get a replacement card pretty quickly, depending on where you are in the world.
What is Section 75?
When you use a credit card on holiday, you are usually protected under Section 75 of the Consumer Credit Act when you buy anything costing between £100 and £30,000*. This means that the credit card company is responsible for returning all or part of your funds if something falls through from the retailer's side, or it turns out that someone has being using your card fraudulently. You're on holiday - let someone else do the worrying for you.
Will I get charged for using these credit cards abroad?
Sorry to be the bearers of bad news, but yes, potentially. Some of the credit card companies listed above may charge the following fees:
Foreign transaction fees:
This is the charge that your credit card company will add to your bill if you use your card abroad. Usually it is 2.75% so a £200 purchase will actually cost you £205.50 instead. Never fear, there are credit cards with no foreign transaction fees out there (see our list above).
Dynamic Currency Conversion Rate:
This little beauty refers to whether or not your payment is in sterling or local currency. If, when presented with your bill, you choose to pay in sterling, then you could be charged a conversion rate by the restaurant or retailer (instead of the transaction fee) which is significantly higher than that which your bank would offer.
Will I get charged for withdrawing cash abroad?
Avoid this one if possible. Credit card companies will charge you between 2.5% and 3% for this with a minimum withdrawal fee of £2.50 to £3. Then, to add insult to injury, cash is usually charged at a higher rate of interest than standard purchases and begins as soon as it comes out of the ATM. Lastly, their final pound of flesh is taken if the card company operates a payment hierarchy system meaning that some providers leave payment of cash withdrawals till last so you will be paying interest for longer. Again, some specialist overseas credit cards, like the ones we've listed below, don't incur fees and only charge (a fairly low rate of) interest until you've paid your bill off.
Should I book my flight using a credit card?
Airlines can charge as much as 3.75% if you book your flights using a credit card. Recently, a few well-known names like Jet2 and Monarch have dropped their credit card fees but the majority of long-haul and budget airlines, including BA, Flybe, Ryanair and Emirates, still charge you extra to pay with a credit card. It certainly pays to check, considering you could be paying up to £10 more per person on a return flight. Generally-speaking, you won't get charged for using a debit card, though there are sometimes 'admin fees' to watch out for.
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*Published March 2017. Any prices, interest rates and benefits are correct only at the time of writing and are subject to change and/or availability.