If you’ve ever used a credit card overseas, you’ve probably noticed a raft of charges on your monthly statement, including fees for “non-sterling transactions” and withdrawals.
These costs can really add up if you are a frequent credit card user, but the good news is that some providers offer credit cards that are specifically designed with overseas travel in mind and so don’t impose these fees, meaning you can spend abroad without being hit by hefty charges. Another option regular travellers might want to consider is to use a prepaid travel card, which allows you to load up on local currency at a set conversion rate.
In this article, we explain the ins and outs of both travel credit cards and prepaid cards, and list some of the best available options right now.
How do travel credit cards work?
Most credit cards will allow you to spend abroad as normal, but your provider may well charge you extra, citing the cost of converting money into local currency (even though providers normally get near-perfect conversion rates). This charge is typically about 3%, which might not sound too much on its own, but if you make a lot of card purchases on your travels, costs can stack up really quickly. Many credit and debit cards will charge fees just to withdraw cash overseas as well.
Travel credit cards cut out these fees, meaning you get the same conversion rates as your provider when your transaction is processed. If you are using one of these cards and you are asked if you would like to pay in pounds or the local currency, always pick the local currency, as this will let you take advantage of this optimal rate – if you choose pounds, you will be subject to the seller’s conversion rates instead.
Paying with a credit card means that you will have extra consumer protection on purchases between £100 and £3,000, so you should be able to get your money back from the provider if something goes wrong (such as damaged goods or cancelled events) and you can’t get a refund from whoever you purchased the goods or services from.
Be mindful of withdrawing cash when you’re abroad, even with one of these cards. Paying by card directly tends to be cheaper than taking money out of an ATM, as you’ll often start being charged interest immediately on the latter, even if your travel credit card has no withdrawal fee (though some cards remove these interest charges as well).
Even with interest, however, withdrawing money using a travel credit card still tends to beat the fees you would incur by withdrawing cash with a debit card. Our article Travel money: where can I find the best exchange rates? includes more information on the best places to buy foreign currency before you go.
As with any kind of credit card, if you’re taking out a travel credit card to use overseas, you should remember to pay it off in full every month to avoid getting hit with interest charges. Set up a direct debit to make this repayment automatically – if you’ve done this before on the same card, make sure the direct debit is still in place and hasn’t been marked “inactive” since last time.
What are some of the best travel credit and debit cards at the moment?
Here’s our rundown of some of the best travel credit and debit cards available at the moment:
Barclaycard Rewards Credit Card
What you get:
- No fees on overseas spending or cash withdrawals
- No interest on cash withdrawals if paid back in full
- 0.25% cashback on most spending
- Five months free access to Apple Music, Apple Arcade, Apple News+ and/or Apple TV+
- 28.9% interest on spending and withdrawals if not repaid in full
Apply: Online at Barclaycard
Halifax Clarity Credit Card
What you get:
- £20 cashback on your first spend within 90 days (but only if you apply for the card by 3 July 2024)
- Fee-free ATM withdrawals up to £500 a day (but you’ll be charged interest at 23.94% to 29.94% even if repaid in full)
- Interest-free spending if you pay off your balance in full each month
Apply: Online at Halifax
First Direct Mastercard (debit card)
What you get:
- Free £175 if you switch
- £250 0% overdraft
- No fees or interest on overseas spending or cash withdrawals
Apply: Online at First Direct
Chase Debit Card
What you get:
- 1% cashback on most UK and overseas spending for two years for at least a year (max £15/month)
- No fees on overseas spending or cash withdrawals (up to £1,500 withdrawals per month)
Apply: Online at Chase
How do prepaid travel cards work?
If you’re concerned about fluctuating conversion rates, you could consider using a prepaid travel card. These cards let you load money onto them in your chosen currency before you leave at a set exchange rate, which is usually competitive and is set by the provider. You can then use it for spending and withdrawing while abroad.
Of course, the downside of prepaid cards is that if the pound strengthens after you’ve already converted your money, you won’t see the benefits. However, if it weakens further, then you’ll get more bang for your buck. A prepaid card can be a good option if you want certainty around your travel budget as you’ll only be able to spend the amount that’s loaded on the card.
Bear in mind as well that prepaid cards aren’t accepted everywhere, so you should be sure to have at least one alternative payment method with you just in case.
Learn more about prepaid travel cards in our article Prepaid cards explained.
What are some of the best prepaid travel cards at the moment?
Revolut
What you get:
- Supports 35 currencies
- No load fee
- £4.99 card delivery fee
- First five cash withdrawals overseas (max £200 free per rolling month) are free. You will be charged 2% after this amount (min £1).
Apply: Online at Revolut
Wise
What you get:
- Supports 54 currencies
- £7 card delivery fee
- Two free cash withdrawals overseas per month, up to £200/mth. You’ll be charged 1.75% after this for withdrawals of 50p or above
Apply: Online at Wise
Zing
What you get:
- Supports 20 currencies
- No delivery fee and you also get one free replacement
- One free withdrawal a month, subsequent withdrawals £2 each
Apply: Online at Zing
Finally…
Read more about other travel costs that could catch you out in our article 7 hidden travel costs to watch out for, and about all the different kinds of credit cards you can choose from in our simple guide to credit cards.
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