The Best Credit Cards To Use Abroad
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If you're anything like me, you'll already be counting down the weeks until your summer break. Research has shown that millions of us actually spend more time picking a holiday than we do choosing our next home.
However, there's at least one aspect of holiday planning that still doesn't get the attention it deserves: which credit cards to take abroad.
It's important you do a bit of research before you jet off, because lots of credit cards come with sneaky foreign usage charges.
So, I'm going to highlight the tricks you should watch out for, and I'm also going to point out the very best of what's left.
What to watch out for
Foreign currency loading fee: Most card issuers charge this ‘foreign currency conversion' fee if you spend on the card abroad, or even buy from overseas websites.
Typically, it adds around 2.75% to the cost of your purchases abroad. So for example, if you spend $400 (around £200) shopping in New York, you'll be charged an extra £5.50 if you pay using one of these credit cards.
Have a look at the table below to find out which cards don't make this sneaky charge.
Dynamic currency conversion rate: Using the right credit card abroad can save you paying extra when you get embroiled in this confusing process.
Basically, the dynamic currency conversion rate can apply when an individual foreign retailer, or ATM, gives you the options of either paying in sterling, or in the country's own currency.
If you opt for sterling, you're subject to paying a conversion rate decided by the retailer. This is instead of the foreign currency loading fee.
The problem is, this conversion rate may not be immediately apparent until you've made your decision -- so you don't know whether you're paying more or less than what your credit card would be charging.
Read Be Careful With Your Credit Card Overseas to find out more about this practice.
You can avoid the whole nasty dilemma by opting for a card with no foreign currency loading fee -- and then choosing to pay in the country's own currency.
Cash withdrawal charges: Whether you're in the UK or abroad, you should only ever use your credit card to withdraw cash in a real emergency (and this doesn't mean when you're drunk...).
This is because card issuers typically charge you 2.5-3% of the amount withdrawn -- with a typical minimum charge of £2-3. So If you're only withdrawing £10, you'll still be charged between £2 and £3. Extortionate!
Most cards' cash withdrawal fees are the same whether you're at home or abroad. I mention them here because we're usually more vulnerable to these sort of financial hiccups when on holiday. We're in unfamiliar surroundings, we don't know where the nearest bank is, and we're generally more relaxed and ‘off our guards'.
So -- remember to convert enough currency before you jet off, so you don't have to withdraw cash when you arrive at your destination!
The best of what's left
There aren't many cards which don't charge a foreign currency loading fee. Here's the best of what I've found.
Card | Foreign currency loading fee | Cash withdrawal fees | Extras? |
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Nationwide Visa Classic/Gold Cards
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None
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2.5% of amount withdrawn (minimum £3)
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0% on balance transfers for 10 months (2.5% fee applies) and 0% on purchases for 3 months
Operates positive payment hierarchy
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Post Office Classic/Platinum Mastercard
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None
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2.5% of the amount withdrawn (minimum £3)
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0% on balance transfers for 10 months (2.75% fee applies) and 0% on purchases for the 3 months
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Saga Platinum Visa Card
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None in the ‘Visa Europe' region*;
1% charge in all other countries
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2% of the amount withdrawn (minimum £2)
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0% on balance transfers for 6 months (2% fee applies) and 0% on purchases for 6 months
Operates positive payment hierarchy
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Thomas Cook
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None
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2.99% of the amount withdrawn (minimum £2.99)
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0% on balance transfers for 9 months (2.99% fee applies)
and 0% for on purchases for 3 months only at Thomas Cook |
As you can see, Nationwide's and Saga's offering get extra brownie points, because unlike most of their competitors, they operate positive hierarchy payment systems. This means that your most expensive debts (those charging the highest interest) get paid off first.
Saga's new Platinum Visa Card is only available if you're 50 or older - and it's worth pointing out that they do charge a foreign currency loading fee (albeit a fairly low 1%) if you're spending outside of the ‘Visa Europe' region.
And I wouldn't recommend the Thomas Cook card if you think you might be forced to withdraw cash (spot the higher fee) or for new purchases (which aren't 0% unless you're actually spending at Thomas Cook).
Overall, I think Nationwide's offerings pip the rest to the post. Whichever you choose, an added bonus of using a credit card abroad is that you're afforded extra protection by Section 75 of the Consumer Credit Act - read all about it here.
Happy holidaying!
More: The Cheapest Holiday Hotspots Uncovered | When Booking Last Minute Is Worth It
Or are you looking for the best balance transfer credit card? Visit The Fool's Credit Card Centre to help find the best deal for you.
*‘Visa Europe' region includes Andorra, France, Italy, Portugal, Austria, Germany, Latvia, Romania, Belgium, Gibraltar, Liechtenstein, Slovakia, Faroe Islands, Monaco, San Marino, Bulgaria, Greece, Lithuania, Slovenia, Cyprus, Greenland, Luxembourg, Spain, Czech Republic, Hungary, Malta, Sweden, Denmark, Iceland, Netherlands, Switzerland, Estonia, Republic of Ireland, Norway, Turkey, Finland, Israel & Poland.
