If you're planning to use your plastic for spending whilst abroad, beware it could be costing more than you think.
Which credit card do you have in your wallet? Or do you have a number hiding in there? Whichever ones you use, you may be interested to learn that all cards are not equal. In fact, when it comes to using them abroad, yours could be costlier than you think!
Withdrawing cash abroad
Most of us expect to be charged to withdraw money from a cash machine with a credit card, whether in the UK or abroad, but some cards are more expensive than others. Nationwide and the Comic Relief charity card charge 1.5% (minimum charge £1.50). But the CITI Classic Plus card's minimum charge is a whopping £5 expensive if you've only withdrawn £20 in Euros!
Remember, also, that if you withdraw money with your credit card the interest starts accruing there and then there is no interest free period.
Purchases
You may think that handing over your card in a shop or restaurant is the same as in the UK, and that you may even get a better exchange rate. But take a closer look at your statement can you see something called a 'Forex' payment? That's the handling or 'loading' fee or foreign currency conversion charge - some banks even hide this charge in a terrible exchange rate instead. The typical fee is 2.75% and it's slapped onto every non-sterling purchase and cash withdrawal you make.
So it's clear that these charges can build up fast. But which are the most expensive cards to use abroad? The following table shows that all of the big players charge you to both withdraw cash, and for purchases.
| Provider | Fee for cash
withdrawals | Min. charge for
cash withdrawals | Withdrawal
limit | Charge for
foreign usage |
|---|
| Royal Bank of Scotland | 2% | £2.00 | £500 | 2.65% |
| Barclaycard | 2% | £2.00 | £500 | 2.75% |
| HBOS | 2% | £2.00 | £300 | 2.75% |
| Lloyds TSB | 2% | £2.50 | £500 | 2.75% |
| MBNA | 2% | £2.00 | £500 | 2.75% |
| HSBC | 1.5% | £1.50 | £300 | 2.75% |
All of the above cards charge the foreign usage loading fee, and cash withdrawal fee and if you consider that's 2.75% extra on top of each of your transactions, those few pounds soon add up to a lot!
But we have to remember why we like to use our cards abroad - ease of use, flexibility - and they reduce our need to carry huge amounts of cash. So what's the solution?
I'm afraid you can't avoid being charged to withdraw cash with a credit card. Consider taking travellers' cheques or foreign currency with you (although you won't get such a good exchange rate) or withdraw cash using a debit card. The charges are similar to a credit card, but you won't get charged interest straight away, assuming of course your account is in credit! One notable exception is the Nationwide, whose current account customers can withdraw from ATMs abroad using their debit card for free.
But you can avoid paying the foreign usage loading fee by picking your card carefully take a look at the following table of Moneyfacts current best buy cards for foreign usage:
Best buy credit cards for foreign usage
| Provider | Fee for cash
withdrawals | Min. charge for
cash withdrawals | Withdrawal
limit | Charge for
foreign usage |
|---|
| Nationwide BS | 1.5% | £1.50 | £250 | 0% |
| Comic Relief | 1.5% | £1.50 | £500 | 0% |
| Lombard Direct | 2% | £2.00 | £300 | 0% |
| CSMA (Visa) | 1.5% | £1.50 | £300 | 0%/1% |
| CSMA (M/card) | 1.5% | £1.50 | £300 | 0.25% |
| Caravan Club | 1.5% | £1.50 | £300 | 0%/1% |
| SAGA | 1.5% | £1.50 | £300 | 0%/1% |
| Liverpool Vict. | 1.5% | £1.50 | £300 | 0%/1% |
CSMA (Visa), Caravan Club, SAGA and Liverpool Victoria charge 0% within the EU and 1% elsewhere.
All of the cards above with the exception of the CSMA MasterCard do not charge a loading fee for use in the EU (note that the CSMA Visa card doesn't charge either which may influence your choice).
However, if you're more likely to travel to distant shores, choose Nationwide, Comic Relief or Lombard Direct, as they do not charge a loading fee for use worldwide.
So if you like to travel and prefer to use your credit card abroad, consider switching to a card that doesn't charge a foreign usage loading fee - you could save yourself a lot of money!
You can apply for the Nationwide card, plus other 0% credit cards, in our Credit Card Centre.
