Using credit cards for holidays

Using a credit card to purchase your holiday and for your spending when you're abroad

Key points

  • If you pay for a holiday by credit card you may have extra protection under the Consumer Credit Act
  • Other benefits include delayed payment and any rewards offered by your card – but not all travel companies will accept credit cards
  • Think about taking out a card that doesn't charge fees for overseas use
  • Always pay in the local currency 
  • There'll almost always be a fee for withdrawing cash on a credit card

Should I pay for my holiday with a credit card?

Saving up for a holiday is usually the most sensible option. But you might save money by paying for your holiday using a credit card . If you haven’t got all the money upfront, using a credit card means you can still take advantage of cheap flights and deals by booking in advance.

Before you even consider using a credit card to pay for your holiday, make sure you find out the cost and check that the credit limit of your chosen card will cover it.

You can estimate the cost of your holiday by:

  • tracking flight prices
  • monitoring hotel prices
  • comparing credit deals

then decide if you should pay with a credit card.

Does using a credit card give me extra protection?

Buying your holiday using a credit card often gives you the benefit of protection under section 75 of the Consumer Credit Act. 

If anything goes wrong, like cancellation or your tour operator going bust your credit card provider will be as liable as the retailer for refunding you. You’ll qualify for this protection if what you’re buying costs between £100 and £30,000.

This cover can be particularly valuable when holidaymakers are organising their own trip and they book flights and accommodation separately, or if they're going on a break that's not Air Travel Organisers' Licensing (ATOL) protected.

The protection applies even if you've only made a part-payment on the credit card - a deposit, for example. It won't apply if you pay by debit card.

Section 75 protection also might not apply to a holiday bought through a travel agent which is ATOL protected. Although you’ll be able to look to ATOL instead if anything goes wrong.

What’s covered by Section 75 if you pay by credit card?

There are a few pitfalls to relying on Section 75 protection when you pay for a holiday by credit card. Here’s what is and isn’t covered:


  • The cost of your flights if the airline goes bust
  • The cost of your holiday if the holiday company goes bust
  • Additional expenses or consequential loss. For example, if you had to buy more expensive flights to get home after an airline failed

Not covered

  • In some cases, if you buy a ‘flight only’ from a third party, such as a travel agent, you might not be able to make a claim. That’s because the third party was only contracted to provide the tickets and not the flight
  • Any costs that you didn’t have to incur. For example, if you decided to extend your stay after the airline went bust (longer than you needed to) you’d be unlikely to be able to claim for extra costs

How much interest will I pay?

Delaying the time when you actually have to come up with the cash to pay for your holiday might be one of your reasons for paying on plastic, but consider the interest.

If you take a long time to repay, the amount of interest you pay could cancel out a lot of the benefits of paying by credit card.

If you’re using a 0% on purchases card, make sure you cover at least the minimum repayments each month and plan to pay off enough to clear the entire balance by the time the 0% interest period ends.

If it’s not a 0% card, aim to clear the balance in full each month.

Using credit cards abroad

Don’t make the mistake of thinking there are no fees or charges for using your credit cards overseas – even if it has lots of travel-friendly features.

Only a few cards offer commission-free purchases abroad, and there’s almost always a charge if you want to withdraw cash. Avoid using cash machines abroad. Instead use cards for purchases in restaurants, with tour operators and at attractions.

Always repay your balance to minimise the interest you’ll pay on your holiday purchases. A direct debit is an easy way to make sure you keep on top of any repayments.

Additional travel perks with credit cards

Some credit cards are tailored especially to travellers too. They include perks like travel accident insurance, travel medical insurance, travel cancellation insurance, lost luggage cover and travel delay cover.

Find a credit card for using abroad

If you compare credit cards through GoCompare you'll be presented with a table showing all available cards.

You'll then be able to narrow down your search and choose to see just cards with 'no fee for using abroad'.

Cut the cost of using a credit card abroad

Use these tips to make sure your travel credit card saves you money

  1. Look out for ATM/foreign transaction fees

    These fees can be in the region of £3 for every £100 withdrawn, so make sure you consider that before using the cashpoint

  2. Remember the interest on cash withdrawals

    Some cards will have 0% balance transfer or 0% purchase rates. But this rate doesn't apply when you withdraw cash. For cash, the interest applies from the day you withdraw it

  3. Get the best exchange rates on travel cash

    The rate on cash withdrawals on a credit card can be 11% APR or even higher and is calculated from the time you withdraw the money

How to claim money back on credit cards

If you pay for something on your credit card and there’s a problem, usually your first step should be to contact the company you bought the goods or services from. Give them a chance to put things right.

But if you’ve used your credit card abroad that might be difficult if there’s a language barrier or you don’t have contact details. In which case you might choose to go directly to your card provider to start a Section 75 claim or chargeback.

Explain that you’ve tried to contact the company you bought the goods or services from and what the response has been. Or explain why you haven’t been able to contact them.

Say what you’d like the credit card company to do, which will usually be to refund the purchase price into your credit card account. Be sure to state: “I am making a claim under Section 75 of the Consumer Credit Act”.

Keep a record of the letter or email you’ve sent.