What is a travel credit card?
Travel credit cards are designed to be used while you’re travelling or on holiday. They typically offer:
- Fee-free spending abroad
- Favourable exchange rates.
Some will even reward you for your holiday spending.
Travel credit cards could be one of the cheapest ways to spend money abroad. But taking on any new line of credit always requires careful consideration. We look at the pros and cons of travel credit cards, plus the alternatives.
Why get a travel credit card to use abroad?
Benefits of using a credit card that’s specifically designed to use abroad include:
A cheaper way to spend abroad
Travel credit cards could save you money while you’re away, compared to using your debit card or regular credit card. That’s because specialist travel credit card providers typically don’t charge you fees to use your card abroad.
When you use a debit card or a regular credit card abroad, you’ll typically be charged:
- A non-sterling transaction fee to convert the currency. This varies, but it’s typically up to 3% of the purchase amount.
- A purchase fee – charges vary but this could mean an extra 50p on every purchase abroad.
- A cash fee for withdrawing money abroad. This will typically be up to 5% of the amount withdrawn on top of the foreign exchange fees.
You’ll also have to pay any interest charged on your purchases and withdrawals, according to the terms of your credit card.
Earn rewards when you spend abroad
Some travel credit cards offer rewards when you use them abroad: for example, cashback on your spending.
Credit card protection abroad
Spending abroad is covered by section 75 of the Consumer Credit Act. So if you pay for goods or services on holiday that don’t materialise or are misrepresented, you may be able to claim your money back from the card provider.
This protection applies to purchases that cost over £100 but less than £30,000. However, you’re not guaranteed to get back what you spent. It depends on the terms of your credit card provider and the relevant payment network.
More secure than carrying cash
Carrying a large amount of cash around with you on holiday is risky. If it’s lost or stolen, you could be covered by your travel insurance, but typically only up to a certain amount.
If your credit card goes missing, you can cancel it as soon as you notice. And you won’t be liable for any illegal spending if your card details are stolen and used.
How do travel credit cards work?
Travel credit cards work in much the same way as regular credit cards, but they have certain features that make them well-suited to use abroad.
Features of travel credit cards
When you use a holiday credit card abroad, the payment will be converted into sterling based on the credit card network’s current exchange rates, with no extra fees added. And unlike other credit cards, they often offer favourable exchange rates.
As with other credit cards, holiday credit cards work best when you pay off the balance in full each month. Otherwise, the interest you’re charged could easily overshadow any savings you make in currency conversions and no fees.
Eligibility criteria for travel credit cards
To apply for any type of credit card, you’ll need to be 18 or over and a UK resident.
Credit card providers will also have their own eligibility criteria that they’ll use to decide whether to approve you for a travel credit card and what interest rates to charge, if any.
Credit card providers will look at your credit score to see how well you’ve handled other debts in the past.
They’ll also look at how financially stable you are, to see if you’ll be able to pay them back. They’ll assess your affordability by looking at your income and your outgoings.
Applying for a travel credit card
It’s a good idea to compare your options and find out what travel credit cards you’re likely to be approved for before you apply.
Applying for any credit involves a hard search on your credit file. Having several hard credit searches in a short period of time can have a negative impact on your credit score.
By using our credit card eligibility checker, you can compare travel credit cards from a number of providers and see how likely you are to be accepted for each one. And it won’t affect your credit score.
What are the alternatives to a travel credit card?
You can spend abroad using cash, prepaid cards, debit cards and credit cards. Each has its own advantages and disadvantages.
Cash: you might think this is the easiest option. But not everyone feels comfortable travelling with large quantities of cash, as there’s always the chance it could be lost or stolen.
Prepaid cards: let you lock in a competitive exchange rate and use the card like a debit card. Watch out for fees though – some prepaid cards charge an application fee of £5-£10 and might also charge for withdrawing cash, topping up or getting a replacement card.
Debit cards: you’ll likely be charged purchase fees for using your debit card abroad, along with foreign currency conversion fees and fees for withdrawing cash.
Travel debit cards: certain current accounts include travel debit cards that offer fee-free transactions abroad.
Credit cards: using a regular credit card abroad can mean paying fees on foreign purchases, which you could avoid with a travel credit card.
Travel debit cards vs travel credit cards: how do they compare?
One advantage of using a travel debit card is that you typically won’t be charged for overseas cash withdrawals.
Although some travel credit cards won’t charge a transaction fee to withdraw cash abroad, you’ll be charged interest instantly on any cash advances.
However, travel debit cards don’t offer the same purchase protection as travel credit cards. And they won’t come with the rewards offered by certain travel credit cards.
Holidays and trips abroad can put the squeeze on finances, causing people to dip into their overdrafts. If you need a buffer, applying for a travel credit card and paying it off every month could be a cheaper way of borrowing.
Prepaid travel card vs travel credit card: how do they compare?
Prepaid travel cards can make it easier to stick to a budget while on holiday as you’ll only be able to spend what you have loaded on.
Because prepaid travel cards don’t allow you to borrow, you won’t need to pass a credit check to apply for one. And you won’t have to worry about making repayments and paying interest.
However, prepaid travel cards do sometimes charge fees for transactions, transfers or withdrawals, or even for opening the card. And they may not be accepted by some shops or services.
And although they may be safer than carrying cash, they don’t offer the same purchase protection as travel credit cards.
Can I withdraw cash with an international credit card?
It’s possible to withdraw cash with a travel credit card, but it’s likely to be expensive.
Although some travel credit cards offer fee-free cash withdrawals abroad, you’ll normally have to pay interest daily on any cash withdrawn until you pay it off.
That means it’s likely to be cheaper to use your debit card for cash withdrawals abroad, unless you pay off the balance on your travel credit card in full immediately.
If you do need to withdraw cash abroad, you’re usually asked if you want local currency or sterling. Always pick the local currency as there are higher fees for converting to sterling.
How can I find the best card to use abroad?
To help you find the best travel credit card for you, here are some factors to look out for when comparing deals:
- What’s the APR? That’s what you’ll pay in interest and fees if you can’t pay off your balance in full each month.
- Does the card offer fee-free overseas spending? This is probably the main reason to take out an international credit card.
- If a credit card offers a promotional interest-free period or waives fees for a set period, make sure you know when the deal ends and plan for it accordingly.
- Bear in mind that travel credit cards may not be suitable for spending at home in the UK.
- Which travel credit card offers the best rewards? The best rewards credit card for travel may offer cashback on spending or other travel-related perks.
- Are you eligible? Check before you apply with our credit card eligibility checker.
What exchange rate do I get with a travel credit card?
Travel credit cards often offer competitive exchange rates, but always check these before you travel.
Bear in mind that exchange rates are constantly changing, depending on the supply and demand of currencies on the FOREX market. If you want to lock in a particularly favourable exchange rate, you may want to look at prepaid travel cards.
Frequently asked questions
Are credit cards that offer travel insurance worth it?
They may be, but it’s important to make sure the policy provides adequate cover for your needs. It’s also wise to weigh up the advantage of ‘free’ travel insurance against any disadvantages.
For example, credit cards that include the most comprehensive travel insurance may charge an annual fee. And they may have high interest rates.
And credit cards that include travel insurance might not offer the benefits of fee-free spending abroad that comes with travel credit cards.
What is dynamic currency conversion?
Dynamic currency conversion (DCC) is when an ATM or retailer abroad allows you to pay in sterling, rather than the local currency.
There’s normally a fee to process DCC transactions. And that fee will be on top of any foreign transaction fees charged by your credit card provider.
It normally works out cheaper to pay in the local currency, when offered the choice.
Do I need to let my bank know that I’m travelling abroad?
Although it’s not always required these days, it’s a good idea to tell your bank you’re travelling or your card may be blocked. At the very least, it’s worth checking your bank’s requirements. You can often let them know via your online banking account or app.
Can my credit card get blocked when spending abroad?
If you’ve told your bank you’re going abroad, your travel credit card shouldn’t be blocked. But it can occasionally happen because of security measures in place to protect you from fraud.
Your credit card should have an international contact number on the back in case you have trouble using it.
How can I ensure credit card security abroad?
Keep your credit card close and don’t reveal your PIN to anyone – shield the keypad when you make a withdrawal or key in your PIN.
If your card is lost or stolen abroad, let your card issuer know straight away.
It’s a good idea to note down your card issuer’s 24-hour emergency phone number and keep it somewhere safe with your travel documents. You should be able to quickly find these online too.
Visa has an app to help you if your card is lost or stolen abroad. It also has a list of emergency contact numbers.
Mastercard also has a list of global emergency contacts.