How to avoid fees using credit cards abroad
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
30th November 2020
2 minute read
Are you planning on going abroad this year? Whilst it’s exciting jetting off to another country, there is always planning that needs to go in to make sure you have the accommodation booked, transfers arranged, and excursions scheduled.
The last thing is spending money, which is where a credit card comes in handy. If you can spend using a credit card that has no foreign transaction fees, it means you won’t have to pay extra every time you spend on holiday.
Read on to find out how you can get your hands on the best credit card to use abroad, and everything you need to know about avoiding transaction fees whilst on holiday.
Why use a credit card abroad
Whilst many travellers head for the bureau de change at the airport before they fly to get cash and travellers cheques out, there are many more that will simply opt for using their credit or debit card on holiday.
Using a credit card on holiday is generally safer, so you aren’t carrying a bundle of notes around at all times. In addition, if you choose to pay in the local currency on a card, you will always get a preferable exchange rate over exchanging at the airport.
If you would rather avoid using cash, it’s worth seeking out a credit or debit card that will allow you to spend for free while on holiday. You will usually have two options:
- Travel credit card – these specialised credit cards will come with free spending abroad and a favourable exchange rate when spending in the local currency
- Current account debit card – some current accounts such as Starling will offer a debit card where spending is always fee-free whilst abroad. Make sure you always read the terms to check if you have a limit on how much you can spend without paying fees
How do credit card fees work?
Credit card fees are usually outlined in the summary box document, allowing you to see where you might be charged extra for performing certain actions. They include:
- Non-sterling transaction fees – this is usually charged at a percentage of the transaction itself. This will usually be deducted from your balance within a few days
- Load fee – this is the charge that occurs when an exchange needs to happen between one currency and another. It can sometimes be applied twice; once from the card provider (HSBC, NatWest, RBS) and once from the issuer (Visa, Mastercard, AMEX)
- ATM withdrawal fee – you will be charged a flat fee for withdrawing cash so it’s always worth avoiding doing this, especially on credit cards
How to avoid fees on holiday
Start off by getting a credit or debit card that will allow you to avoid foreign transaction fees completely, meaning you can pretty much spend on holiday without having to worry about extra charges. Then, use the following tips to avoid any further fees:
- Don’t withdraw cash – since you will always get a flat fee with most cards you use, it’s worth avoiding withdrawing cash completely if you can help it
- Avoid buying travel money with your credit card – given that you can get a better exchange rate by spending in the local currency, steer clear from getting cash out using a credit card altogether
- Never pay in sterling – whenever you pay on your card, always choose to pay in the local currency as it always works out cheaper for you and helps you avoid further transaction fees. Your provider will usually do the exchange and it will be better than any other method
Start comparing travel credit cards
Make sure you start comparing travel credit cards with plenty of time to go before your holiday, as there are plenty of providers that have them available.
It’s always worth checking your eligibility using our moneymatcher tool first, as this will show you the likelihood of being accepted, without affecting your credit score.