Using Credit Cards and Debit Cards Abroad

For many of us, using either a debit or credit card to pay for goods or services abroad has become common place. Before you make a payment or travel abroad it is worth taking some time to check whether the card you are planning to use is the most economical option.

Credit Cards

The best type of credit card will be the one offering the best exchange rate and the lowest fees.

There are specialist travel credit cards available on which you can accumulate air miles, which is brilliant if you are a frequent flyer. You will also need to check the rate you will receive on currency conversions and also what interest you will be charged if you do not pay off the balance in full every month.

Some credit cards offer 0% on purchases which means you do not pay interest on anything that you buy for a certain period of time.

Debit Cards

Similar to a credit card you can use your debit card abroad in exactly the same manner as you do at home, you can use it to pay for hotels, restaurant bills, buying petrol or for shopping.

It is better to make cash withdrawals on your debit card rather than your credit card whilst abroad.

Look out for the following fees:

• Cash Withdrawal Fee – On any money withdrawn from an ATM or taken as cash back. Try to refrain from withdrawing money using your credit card wherever possible and use your debit card instead.
• Interest charge – Applicable to purchases on a credit card. These can be implemented immediately after a purchase or when the balance owed on your card has not been paid back in full at the end of the month.
• Loading Fee – Typically between 2-3% a loading fee is added on top of the amount you want to convert into another currency. For example if you wanted to convert £100 into Euros and there was a 3% loading fee it would actually cost you £103. Again gains from a good exchange rate can be lost if a large loading fee is charged.

REMEMBER: Always contact you card provider to notify them that you will be using your card abroad.

Should I leave my cards at home

The answer to this is no. It is best to carry a combination of travel money, a currency card and either a debit or credit card with you whilst aboard. Your credit or debit card will enable you to get access to additional money in the event of an emergency or allow you to purchase any additional unplanned items you may find. 
Spending on a credit card also gives you better security as many offer free purchase protection.

Caution

Recently we have found that some credit and debit card providers offer a dynamic currency conversion which allows you to see the exact price of goods paid for abroad in your own currency.

Whilst this a useful planning tool, the card providers typically offer a poorer exchange rate leaving you feeling rather short changed!

Some providers will ask you if you would like this service whilst others use it as standard when their card is used abroad. Find out before you sign on the dotted line.