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What’s a travel credit card?
If you’re going abroad on a trip, travel credit cards can be the cheapest way to spend while you’re there.
Travel credit cards work like standard credit cards but don’t charge hefty fees for using them abroad as many standard credit cards do.
You can use a travel credit card to make a fee-free purchase and pay the balance back later. If you don’t pay off the balance in full each month, you might be charged interest.
Some travel credit cards might also let you withdraw cash from an ATM while you’re abroad without paying a fee, although these are rarer.
The very best cards might even allow you to earn cashback or rewards for spending on them while on holiday.
You can use a no-foreign-transaction-fee credit card in most shops, restaurants and other businesses or at ATMs.
Many businesses have signs to advertise which credit cards they accept. You’ll know you can use your card if its logo is on display.
Typical fees faced when using a standard credit card overseas
Non-sterling transaction fees
Buying something when overseas with a standard credit card - or even online from a non-UK website - generally sees you hit with a non-sterling transaction fee. This adds about 3% to your purchase price, often with a minimum amount per transaction of £3.
Cash withdrawal fee
Also known as a “cash advance”, this fee can be applied at home as well as abroad if you take out cash at an ATM. You’ll usually be charged around 3% of the amount withdrawn with a minimum fee of about £3. This means you could be hit with both the non-sterling transaction fee and the cash withdrawal fee when using your card overseas. You could also be charged interest on top. The cash advance fee also applies when buying foreign currency on a credit card.
Are travel credit cards the best way to spend money while abroad?
Credit cards with no foreign transaction fees are often the cheapest way to buy something while abroad.
That's because the exchange rate you get is about the best you can find as a member of the public — with the Visa and Mastercard rates almost identical to those currency traders use for international transactions.
Another major benefit is that you get automatic purchase protection on things you buy worth more than £100 and up to £30,000 thanks to UK credit card laws.
However, credit cards for travel won’t be the most suitable option for everyone. One of the big drawbacks is that they often don’t offer 0% deals on purchases, which means that unless you clear your balance each month, you’ll pay interest on all your holiday spending.
Some credit cards might also charge monthly or annual fees, and if you’re late making a repayment or miss it completely, fees also apply. Missing payments risks hurting your credit score too.
Not everyone will be accepted for a travel credit card. To get the best deals, you usually need a good credit record. You also need to apply for your credit card in plenty of time.
Fortunately, there are plenty of alternative options to consider. The first is a specialist bank account. Many digital-only providers, such as Starling and Revolut, offer bank accounts with debit cards that are free to use overseas, and you’ll benefit from the Visa or Mastercard exchange rates while spending.
In addition, a travel bank account generally does not charge you anything for cash withdrawals (neither fees nor interest) – although some come with a limit on how much you can take out of the ATM.
Another option is a prepaid travel card. These can also be free to spend on and make cash withdrawals with, but you won’t always get the best exchange rate with them.
However, if you can find one that doesn’t charge a fee for loading or holding money on it and that comes with Visa or Mastercard exchange rates, it will be as cheap as using a travel credit card.
Bear in mind that however you pay for items, if the retailer offers to convert the payment into pounds rather than the local currency, ask to stick to the local currency. Retailers typically offer poorer exchange rates, so if you pay in pounds sterling, you’ll pay more for your purchase than expected.
Finally, it’s worth taking a small amount of travel money with you to cover any expenses that can’t be paid for on plastic.
How to choose the best travel credit card for you
Compare travel cards
Check for fees
Check the exchange rate
Apply in plenty of time
Our featured deals
Our editors have picked out some of our best travel credit card deals.
Representative example: The standard interest rate on purchases is 28.9% p.a. (variable), so if you borrow £1,200 the Representative APR will be 28.9% (variable).
“Cashback on everything you buy and no fees overseas - including for ATM use - make this one of our top picks.”
Representative example: The standard interest rate on purchases is 34.9% p.a. (variable), so if you borrow £1,200 the Representative APR will be 34.9% (variable).
“Zopa's credit card offers fee-free transactions abroad. However, it charges 34.9% APR on purchases, which falls on the high end of the spectrum relative to other cards.”
We are classed as a credit broker for consumer credit, not a lender.
How does an eligibility checker work?
Eligibility tools, like that used by our partners at Uswitch, match you with the credit cards you're most likely to get based on your circumstances.
It then tailors the results depending on what you're looking for - a travel credit card, for example.
Using an eligibility tool means that you can rule out cards you're less likely to qualify for ahead of time, so you won't hurt your credit history by putting in applications that are later rejected.
That's because it uses a “soft search” credit check when comparing cards, which doesn't appear on your credit file to anyone except you.
Check eligibility and compare our best travel credit cards
FAQs
What is the best way to avoid foreign transaction fees?
The best way to avoid foreign transaction fees is to look for a credit card or debit card that waives these fees. Some cards won’t charge for foreign purchases or cash withdrawals abroad, so compare your options carefully. Remember that with a credit card, you will need to pay off the balance in full each month to avoid paying interest, unless it offers an introductory 0% on purchases deal.
Is it cheaper to use a credit card or cash abroad?
Whether it’s cheaper to use a credit card or cash abroad will depend on a range of factors. If your credit card doesn’t charge foreign transaction fees, you pay off your balance in full each month to avoid interest, and your card offers a competitive exchange rate, it could be a cheaper option than cash. It’s also much safer.
Are my purchases protected abroad?
Yes, credit card providers' own protection schemes, Section 75 and the Chargeback scheme can protect purchases made abroad.
Can I withdraw cash on my credit card abroad?
Yes, you can withdraw cash on your credit card, but it’s best not to because you usually have to pay overseas credit card fees and interest. Here is how much it could cost you.
Where can I use my card?
You can use a credit card overseas in shops, restaurants and other businesses or at ATMs.
How many credit cards should I have?
There is no limit to the number of credit cards you can have, and having cards for different uses can suit some people. However, too many credit cards can hurt your credit record. Work out how many is too many here.
Could I use a prepaid card instead?
Yes, you could use a prepaid card instead. Although some charge you for using the card abroad, there’s no interest charge, and some come without international fees.
What is dynamic currency conversion?
Dynamic currency conversion is when a retailer converts your purchase into your own currency (pounds sterling) rather than keeping it in the local currency. However, the exchange rate will be much poorer, so if you’re given the choice, always stick to the local currency.
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