Using credit cards abroad

Who doesn’t love going on holiday? And the last thing you want to be worrying about is what sort of charges your credit card’s racking up behind your back as you merrily spend away on more cerveza and patatas bravas you probably didn’t need.

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Considerations before using your credit card abroad

You’ve packed your swimming trunks and your best flip flops, so what’s next? Thinking about your finances might seem really un-holiday like but did you know that most credit card companies charge you for using your ‘flexible friend’ abroad. It’s a bit like being taxed for having fun – so think about the following to ensure you don’t get caught out:

  • Does your current credit card charge you for use abroad?
  • Do you know what a ‘dynamic currency exchange’ is?
  • Who are you going to call if your credit card is lost or stolen?
  • Do you understand the charges for withdrawing cash?

Now, chances are your answers were probably some shoulder shrugs and a ‘no’ but knowing the answers could save you lots of money and hassle, so it’s time to brush up and keep reading.

credit card

The best credit card to use abroad

The best cards to use will be the ones that charge you minimal ‘extras’. Your regular credit card may charge you what’s known as a ‘foreign usage fee’ or non-sterling transaction fee– it’s a fee that’s added on every time you use your card when you’re abroad and it could be 2% to 3% of the transaction.

On top of this, your card provider might also charge you interest for purchases made abroad (even if you pay your bill off in full). Plus, some cards will apply another ‘flat fee’ to each foreign made transaction. So before you know it, that bargain new sarong might have cost you several pounds more than you thought.

Of course let’s not forget, the cardinal sin of holiday money is taking out cash on your (cue menacing music) …credit card. Not only will you typically be charged for using a foreign cash machine, you could be charged interest as soon your notes leave the hole in the wall.

So before you pack your speedos, invest some time in checking the details on your existing credit card and comparing the market for the cards that won’t charge you the earth for being used abroad.

What should I look out for using my card abroad?

When you buy something on holiday, you might be asked whether you want the transaction made in the local currency or in Sterling – this is a dynamic currency conversion. It’s tempting to opt for Sterling – it’s what you know and when you’re put on the spot, it’s the easiest thing to say. But don’t. It’s more than likely that the exchange rate used won’t be great and you’ll end up paying more for your purchase. Always use the local currency and let your card provider work out the exchange – you’ll probably get a far better rate.

If you decide to take your debit card with you, familiarise yourself with any fees charged for cash withdrawals. While there may not be any interest charges for taking cash out on your debit card; you might face charges for using a cash machine abroad. If you need some cash, either take a stash with you or take more than you need out at the machine to last you a few days to save on further transaction charges.

Credit card security – top tips

When you’re on holiday, it’s easy to get a bit slack on security – let’s face it, we’re not used to much sun over here so feeling the heat can make even the most safety conscious of us a bit giddy. Always keep your credit card safe – perhaps it’s time to dig out that dodgy old bum bag from the 80s? Shield your pin number from prying eyes and only take out the cards you intend to use.

Make sure you have the emergency phone number of your credit card provider so you know who to call if your card’s lost or been stolen. It’s also worth telling your card provider where you’re going so that they expect some use abroad – otherwise you could end up with your card being declined because your provider thinks it’s been nicked and the thieves are living it large at your expense.

Finding the best card

Finding a card can be tricky, there are lots on offer and quite frankly it’s bamboozling. Which is why we’ve made it easy to search and compare credit cards, just tell us what you’re looking for and we’ll take it from there – see? It’s simples when you comparethemarket.com

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