Travel credit cards

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What’s a travel credit card?

If you’re planning to splash the cash on your next holiday or regularly shop online from companies based outside of the UK, a travel card could be the financial secret weapon you’ve been looking for.

Of course, a regular credit card can be used to spend when you’re travelling, however you’ll be charged extra, and it can really add up. Typically, you’ll be charged a fee for every transaction you make and for withdrawing money from an ATM.

A travel credit card won’t usually charge you for spending or the fee will be a lot lower, so you’ll have more money for your holiday.

Person paying with credit card

How do travel credit cards work?

Most standard credit and debit cards will charge you a fee of between 2.5-3% on every single purchase you make that isn’t in pounds sterling. It may not sound like a lot, but as your holiday goes on it can really eat into your budget.

A travel credit card won’t charge, or if it does it will be a very small fee compared to your standard credit card. This means that you’ll pay closer to the exchange rate for your purchase because the card provider isn’t adding fees on top.

You can apply for one in the same way as a normal credit card, so you’ll be subject to a credit check to see whether you’re eligible financially. Try using our smart search, which will find the cards that you’re more likely to be accepted for before applying, minimising the chance of having a failed application on your credit history.

You’ll also have a monthly bill, which you’ll want to pay off in full to avoid paying costly interest.

Before you set off on your next holiday, make sure you contact your card provider to tell them when and where you’re going. This will stop them from assuming your card has been stolen and potentially blocking your card.

What types of charges are there?

Although it’s cheaper to spend on a travel credit card when you’re abroad, there are still fees to consider when choosing the right one for you. You may be charged for:

  1. ATM withdrawals

    You may be charged to take money out at a cash machine when outside the UK

  2. Transactions

    If you’re charged for transactions on your travel credit card while abroad, it will likely be a very small fee

  3. Cash advances

    This is when you purchase foreign currency on your card

Advantages and disadvantages of a travel credit card

Before taking out any credit card, it’s important to weigh up the pros and cons. So, here’s what you need to look out for when choosing a travel credit card:

Pros

  • You can borrow money easily to make purchases while on holiday or foreign websites without having to pay expensive fees
  • You can choose to pay in the local currency rather than pounds sterling, giving you more for your money
  • You won’t need to carry huge amounts of cash around with you on holiday and if your card is stolen, you can easily cancel it
  • As with all credit cards, you’re protected under section 75 of the Consumer Credit Act. This means that if a retailer or trader fails to fulfil your order or it’s faulty, you can make a claim with your card provider

Cons

  • There’s always a risk of debt piling up if you don’t use your credit card responsibly. Pay off your balance in full each month to get the most from your card
  • Keep an eye on your credit limit. You could be charged if you go over it
  • You’ll need to fulfil the eligibility criteria to even be considered for a travel credit card. If you apply for a credit card and it’s rejected, it will negatively affect your credit score
  • Withdrawing money on a travel credit card can still be costly, so think about visiting the bureau de change before your trip to get some cash if you think you’ll need it

Top tips to save money on your travel credit card

Once you’ve chosen the right travel card, try using these top tips to save money on your spending:

  1. Always spend in the local currency

    When asked whether you’d like to pay in sterling or the local currency, choose the latter. Your card will do the exchange rather than the retailer, so you’ll get a more favourable rate

  2. Pay it off in full each month

    If you don’t do this then you risk the interest wiping out what you’ve saved in fees

  3. Try not to withdraw cash abroad

    Even if you have a card that doesn’t charge for ATM withdrawals, you’ll still be charged interest until you pay the amount you’ve withdrawn off

  4. Keep to your budget

    Just because you’re using credit rather than cash doesn’t mean you should spend more than you can afford. Decide on a budget before you travel and stick to it, so you’re not struggling to pay it off when you get back

Frequently asked questions

Yes, you’ll have protection on all purchases costing between £100 and £30,000 on your credit card. This allows you to make a claim against your credit card provider if any goods or services that you buy aren’t delivered and the retailer or trader refuses to refund you.

It’s unlikely that you’ll be accepted for a travel credit card if you have a poor credit history as you’ll need to pass a credit check. Always try our smart search tool before applying.

Spending abroad on your debit or regular credit card will usually result in costly charges, so you may want to think about using a prepaid travel card if you’re not able to get a travel credit card.

You load it up with pounds sterling or the local currency of the country you’re visiting and then you’re free to use it like a standard debit card. You can only spend what you’ve loaded onto the card, which means you can’t borrow money.

Yes, it’s possible to withdraw cash from an ATM. However, it’s not the cheapest way to make purchases and spending on your card instead will save you money.

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