<Guides
  • >
  • Travel Money>
  • Guides>
  • Travel money: should I get a travel credit card?

Travel money: should I get a travel credit card?

Joel Kempson
Written by Joel Kempson, Personal Finance Writer

26 August 2020

Using the best credit card for travel can solve a lot of traditional holiday problems. You don’t need to think “how much money can I travel with?” or worry about where to find the best exchange rate. It might not be for everyone, though, so we’ve put together the things you need to know.

woman-cycling-bike

Why do I need a credit card for travel?

Quite simply, you can save a lot of money with a travel credit card. If it’s your main card on holiday, then you can potentially save a fortune in fees. Specialist travel cards do not charge fees for foreign spending, unlike most everyday credit cards.

Over the course of a long holiday, or even a short city break, these fees can make all the difference to your budget. By using your standard credit card overseas, you can potentially open yourself up to being charged a host of unexpected fees.

Most non-specialist credit card providers charge transaction fees, cash withdrawal penalties and even additional interest rates — even if you pay off your balance on time and in full.

If your travel credit card is not your main spending tool, it could still be a crucial low-cost alternative in case you run out of cash or need to make a big purchase.

Either way, it is always worth comparing your options to make sure you have the best deal for you — whether that’s cash or plastic.

Are travel credit cards cheaper than cash?

At the time of writing, spending 100 USD on a Mastercard will cost you £76.60, while you would need to exchange £78.98 to get 100 USD with Post Office travel money.

Exchange rates offered by any provider will vary depending on a whole host of factors, so credit cards may not always be cheaper, but they are almost always a strong option.

It is important to remember that only specialist travel credit cards will beat cash, as everyday cards will likely charge fees of around 3% on all foreign currency transactions.

What are the best credit cards for travel?

Mastercard’s exchange rate will usually beat Visa’s, but it is important to compare the best travel credit cards available to find the right one for you.

Generally, Visa is more widely accepted, so consider where you are going and what you are going to be using your travel credit card for (everyday spending, cash withdrawals etc.) when you make your choice.

Could I use a travel debit card instead?

Travel credit cards are not the only alternative to cash, as many credit card providers now also charge low to no transaction and withdrawal fees.

For example, Starling Bank does not currently charge transaction or cash withdrawal fees. They also do not run a full credit check, meaning opening an account might be easier than getting a credit card.

It is also important to know that using a credit card involves borrowing money, often with high interest rates if you do not meet repayments. If you don’t think you will be able to pay back what you borrow on time, or you are unlikely to be approved for a credit card then it may not be the option for you.

Therefore it is worth also doing a comparison to see if a cheap travel debit card can meet your needs.

Travel money: credit card basics

What exchange rate will I get?You will be charged your provider’s exchange rate on the day of processing, not the day you spend. It usually takes a few days to process a transaction, so if you checked the rate when you paid, there is a chance you will be charged a slightly different amount.
Does my provider need to know I'm abroad?Some providers need to know you are abroad, otherwise they might freeze your card when you try to use it. This is usually done as an automatic security measure. To avoid any doubt, it’s best to give your provider a call before you use your card abroad.
What if I use my card online?Your specialist travel card can also be handy if you are making a purchase online in a foreign currency. Standard credit and debit card providers will likely charge a fee for buying something in a foreign currency — even if you do it from your own living room. A specialist card would charge you the same fees as if you were abroad — usually nothing.

Money.co.uk’s top tips for spending abroad

Some credit and debit cards charge up to 3% for foreign transactions. Over the course of a holiday, or if you have to make a big purchase, this can really hit your pocket hard. Think about your travel money options before you travel to avoid falling back on your costly everyday plastic.

When you use the wrong card abroad or pay over the odds for foreign cash, you are effectively paying to spend money. A $100 purchase can cost you different amounts depending on how you pay, so make sure you know what you’re spending.

Cash is still an important part of most economies around the world and bringing cash abroad with you can be really useful. However, taking a suitcase full of cash on holiday is dangerous and unnecessary. Many specialist cards allow free cash withdrawals, meaning you can spend just as you would at home.

If you are given the option to pay in pounds abroad, it usually means the retailer will exchange your currency instead of your provider. This will leave you potentially facing a surprising bill, as while you don’t know what the exchange rate will be, it will likely be worse than your provider’s.

Credit cards charge interest if you do not pay them off in full every month — and travel credit cards are no exception. Set up a direct debit to pay them off in full every month or risk having your travel money savings outweighed by hefty interest on your repayments.

Credit cards are not the best option for everyone and all travel credit cards are not the same. Make sure to compare to find the options with the best rates and charges, or look for a travel debit card instead — which can sometimes be the best option.

Spending abroad can be costly, so make sure you compare the market for the best exchange rates available on your travel money before jetting off.

Compare travel money

You may also like