Cards can be the cheapest way to pay for things and withdraw money from cash machines abroad, but only if you use the right one. Using your usual credit or debit card might result in expensive overseas fees. You could save a lot by getting a special ‘travel-friendly’ credit, debit or prepaid card before you go.
Overseas card fees and charges – what you might pay
Check the cost of using your credit or debit card overseas. Some cards are designed for travellers – others could give you a nasty surprise.
Using your debit card
Foreign usage fee
Most standard credit or debit cards charge a fee for using the card abroad, typically around 3%. This means that a purchase of £100 would cost you £103 including the fee.
Cash withdrawal fees
Most debit cards charge you for using a cash machine overseas.
They’ll typically charge up to 3% and this may be subject to a minimum amount. Some cards charge a flat cash withdrawal fee instead of a percentage fee.
So a foreign cash withdrawal could cost you a 3% foreign usage fee as well as a 3% foreign cash withdrawal fee, adding £6 in charges to a £100 withdrawal from the cash machine.
Using your credit card
Along with the foreign usage fee you might also be charged interest, even if you pay off the bill in full at the end of the month.
Usually with a credit card you only pay interest if you don’t pay off the bill in full at the end of the month. But this doesn’t apply to cash withdrawals where almost all cards will charge you interest from the moment the money comes out of the machine. This means you should avoid using credit cards to withdraw cash – whether in the UK or overseas.
Imagine using a credit card to take out £100 at the cash machine.
With the worst kind of card you might pay:
- £3 extra for the foreign usage fee.
- £3 for the cash withdrawal fee.
- £2 interest before you pay off your bill.
That’s a total of £8 in fees, just for getting out a little cash. If you did this three times whilst abroad the total cost could be £24.
And remember, you get hit with these charges every time you use your card.
With the best kind of card you would barely pay anything.
Some have very low fees for foreign purchases, or none at all – and these kind of credit cards can be great for doing your spending with.
But even if your card doesn’t charge a fee for overseas cash withdrawals, you should probably avoid using it at the cash machine, as you will be charged interest.
Like using a credit card in the UK, any purchase you make abroad on your credit card will still be covered under Section 75 of the Consumer Credit Act.
How to choose the best card for your trip
Some cards have no extra charges at all for using your card abroad. There are a number of banks that offer debit and credit cards with no fees for either purchases or cash withdrawals overseas.
Several comparison sites cover cards for use overseas, and you can get expert recommendations from Which?, MoneySavingExpert.com and Fairer Financeopens in new window.
What to look for in a good deal
If you already have a debit and credit card, find out how much your bank or provider will charge you for using them abroad.
This information is usually available online or you can call your bank to find out.
Once you know the charges on your current cards, you will have a better idea of what a good deal would look like.
You can then use the comparison sites mentioned above to find out what card will give you a better deal.
Remember not to focus on just one charge. Some providers might have a low foreign usage charge, but charge a lot more for cash withdrawals or vice versa.
Similarly, if you’re someone who pays off their bill every month and doesn’t take out cash, the interest rate of a credit card isn’t as important.
For this reason, you should also think about how you should use your cards to minimise fees.
For example, will you avoid charges by paying with your card rather than using it to withdraw money?
Stay safe when using your card overseas
Before you leave
- Only take cards you plan to use. Leave the others in a safe place at home.
- If your cards are registered with a card protection agency, make sure you have their phone number and your policy number with you.
- Note down the emergency phone number for your cards – it’ll be on the back of the card. Keep the numbers separate from your cards, in case they get lost or stolen. It’s better to write down the +44 number than an 08** number, as the second type might not work from abroad.
- Tell your card provider or bank where you’re going and give them your contact details (including a mobile number). If you don’t, they might think you’ve been a victim of fraud and cancel your card. It might be worth taking another card from a different bank, if you have one, so you’re not stuck for cash if your main card is blocked.
Once you’re abroad
If you pay by card, pay in the local currency. Don’t let the retailer charge you in pounds – you could end up with a poor exchange rate.
- Always shield your PIN when using a keypad or cash machine, just as you would at home.
- Never give your PIN to anyone else – even if they claim to be from the police or your bank.
- Keep your eyes on your card. Never let it out of your sight when you pay, especially in bars and restaurants.
- Only use your credit or debit card if it has low international usage fees. If your card charges a fee each time you use it abroad, use cash, your credit card or prepaid card instead.
- Withdraw lots of cash at once. If you do it in bits you’ll have to pay lots of fees instead of just one. Thus us unless you have a card with no transaction fee for cash withdrawals abroad. Take out enough for several days, carry what you need and leave the rest securely where you’re staying.
- Choose to pay in the local currency if you’re given the option of that or pounds. It’ll probably cost you less, since most retailers won’t give you a great exchange rate.
When you get home
- Pay off your credit card bills in full on the repayment date – don’t bring debts back from holiday.
- Check your statements. If you find any transactions you don’t recognise, let your card provider know right away.
Prepaid travel cards
Prepaid cards can be a cheap way to manage your money when you go overseas. Simply load the card with money before you leave and use it like a debit card.
Some of these cards will charge you for withdrawing money from a cash machine. Others might have monthly fees or an extra charge if you don’t use the card in a set period of time, for example a year. For this reason, it’s important you read the small print.
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