In years gone by, foreign currency or travellers cheques were the way everyone carried their money when going overseas but times have moved on and the ease and convenience of credit cards has taken over.
However, whilst using a credit card abroad is undeniably the simplest option, many holidaymakers have had a nasty surprise when they have returned from their getaway, to find many extra charges and costs added to their bill.
If you don't have a credit card specifically designed to minimise credit card charges abroad, the chances are that using your flexible friend on holiday could cost you a lot more than you bargained for.
We take a look at how to pay on plastic overseas but also how to avoid foreign transaction fees.
Check the fine print
Just because your credit card is very competitive at home, offering low interest rates and great deals, doesn't mean the same will apply overseas. Unless your provider has specifically taken into account overseas trips, you could find that the same card which is so great in the UK transforms into a cash-hungry beast when you are abroad, gobbling up your hard-earned cash.
Finding a credit card with no foreign transaction fee is vital in order to avoid your holiday costing more than you planned and this may mean taking out a new credit card specifically for your trips.
Using credit cards that don't charge foreign transaction fees will make a significant different to your bill at the end of the month, but you also need to check what exchange rate will be used for overseas purchases. This might sound like a lot to check but it should be clearly set out in the terms and conditions of the credit card. Some providers don't use the regular exchange rates and instead, cream off a significant chunk of profit by charging more. If this is the case, you need to find another provider, even if the actual foreign currency transaction fees are zero.
Compare the market
Prepaid cards have recently come to the fore, with several being marketed specifically for use overseas, offering not only no transaction charges but also an excellent exchange rate, making them a viable option for many holidaymakers. However, the annual fee which applies to some cards can deter those who only plan on going overseas very occasionally as it can wipe out its cost-effectiveness.
For this reason, finding a credit card with no foreign currency transaction fees as well as a competitive exchange rate is still the best choice for many people. A comparison table could help you identify the best credit card for overseas travel, both in terms of APR and charges.
By taking the time to compare credit card charges abroad you could end up with more money in your pocket which ultimately means more money to enjoy your holiday with!