Using Credit Cards Overseas
Whether you’re the type of person who spends their travel time searching for new species in the South American rainforest, or you prefer soaking up sunshine and sipping cocktails on white sandy beaches, paying more than you need to for your holiday spending is simply not cricket.
When you’re booking trips, sampling the local cuisine and seeking out appropriate holiday presents, additional credit card fees can start mounting, and seriously bump up your overall spend. So what’s a traveller to do?
The simplest way to avoid card charges overseas is to pack a specialist overseas credit card along with your sandals and swimwear or trekking gear. When using credit cards overseas, certain cards are tailored to travellers and can save you a bunch of cash that’s better spent on memories to treasure. Here’s what you need to look out for...
Why use a specialist overseas credit card?
When you travel abroad, using a credit card can be safer and more convenient than carrying cash. Easy to carry and able to be blocked if lost or stolen, credit cards are widely accepted and won’t take up much room in your favourite bum-bag.
There’s only one problem – most credit cards can incur hefty fees when used abroad. Along with a foreign transaction fee of a few percent, you’ll be charged a foreign exchange fee every time you use your card, even on smaller transactions.
Cash withdrawals on credit cards are always costly and along with a charge for cash withdrawal you’ll usually start accruing interest on the money you withdraw straight away. Plus, you will still be charged this interest even if you fully clear your balance by your payment due date. Don’t fancy paying all of those charges?
Seek and ye shall find…
Benefits of using specialist overseas credit cards
- Low currency loading fees
- More favourable exchange rates
- Some offer cashback or air miles
Overseas or holiday credit cards either charge low currency loading fees every time you use your card or none at all. This could save you a few pounds every single time you use your card. It’s also worth noting that the exchange rate you’re charged is the one accessed by your credit card provider.
These rates tend to be lower than those applied to debit cards and can often be significantly cheaper than changing cash at your local exchange bureau. Double saves all round. There are a few select cards that don’t charge for making withdrawals when you’re abroad either, though they will still charge interest from the point of withdrawal.
The best way to make sure you don’t overpay for the privilege of using your plastic while you travel is to clear your balance in full every month. This way you won’t pay interest, unless you’ve made withdrawals at a different interest rate. If you’ve got an introductory interest-free period on purchases, you’ll enjoy a little longer to clear your holiday spending.
Just be sure you don’t spend more than you can afford to pay back. Also, know how much you have to pay back each month, to get that balance to zero before your interest rate moves in the other direction.
Setting up a direct debit will ensure you don’t miss a payment or incur any late payment charges but if you don’t use your card for some time, your direct debit may not be active. For this reason, you should make checking your direct debit is still an active part of your pre-travel checklist.
Credit card perks
Finally, if you’re a fan of a credit card perk, you’ll be pleased to know some travel cards come with features such as cashback or the ability to clock up airmiles as you spend. You may even be offered a discount when purchasing your travel insurance with your card.
To help you fund future shopping sprees or adventures, cost effectively, be sure to check the value of any points collected. See if there’s any annual fee for holding the card, and always clear that card balance, so that you’re not paying interest that wipes out the value of your perk.
Not sure an overseas’ credit card is for you? See our guides to understanding credit cards, which credit card is best for me or find alternatives to credit cards here.
Compare overseas’ credit cards
Thinking it’s time you explore your travel card options? Put our MoneyMatcher’s sorcery into action and we will conjure up credit card deals tailored to your requirements. You’ll be able to see which cards you’re most likely to be accepted for without leaving a mark on your credit file. You can also compare rates and features to find a card that’s a great fit for you.
Don’t forget, you won’t always get the representative APR rate though at least 51% of those accepted will. And, if there’s a 0% purchase period, you might find you’re offered a shorter one of those as well.
Not sure an overseas credit card is the way you want to go? Why not continue your learnings with a lesson in prepaid cards? They’re handy for travelling too.