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How to use your credit card abroad

Looking to keep costs to a minimum and enjoy a hassle-free trip abroad? Working out how to use your credit card effectively while on international trips could be a good place to start. Doing so can lead to significant financial savings, as well as less chance of a stressful experience when abroad.

Many credit cards charge fees for transactions made in currencies other than sterling, which could mean that it is worth having a travel credit card. Meanwhile, being prepared in terms of having the right information to hand could make an international trip run more smoothly.

Here are some of the key considerations to consider both before and during international trips.

Planning a smooth trip

Before travelling, it is a good idea to inform your credit card issuer of plans to go abroad. This will reduce the chances of a credit card being frozen by the issuer for security reasons. It’s notable that many issuers no longer require this, but it doesn’t hurt to check.

Likewise, it is worth making a note of the relevant credit card issuer contact numbers and keeping them in a safe place while abroad in case the card is lost or stolen.

As well as having a credit card, it may be prudent to carry a small amount of cash. As in the UK, some retailers may not accept credit cards, while cash may be required for amenities such as parking or refreshments.

Using your card

With credit cards being accepted in a wide range of locations across the world, using a credit card abroad may appear to be little different in terms of its practicalities when compared to using it in the UK.

Encouragingly, Section 75 of the Consumer Credit Act applies internationally, and means that the credit card issuer must take the same responsibility as a retailer if something goes wrong with a good or service that costs £100 or more.

However, a key difference between using a credit card abroad versus using it in the UK is the currency that is used. Consumers may be asked if they wish to pay in the local currency or in sterling when using their card. Very often, when choosing to pay in sterling, your charge will be subject to a poor exchange rate by the retailer’s bank. As such, it may be cheaper to elect to pay in the local currency where possible, since this could ensure that a better exchange rate is received.

Avoiding unnecessary fees

Many credit cards charge a non-sterling transaction fee when payment is made in a foreign currency. Typically, this is around 3% of the total amount spent. Over the course of a holiday, this can add up to a significant amount. Likewise, some credit cards charge a fee for withdrawing cash in a foreign currency, which is also often around 3%.

As such, it could make sense to avoid unnecessary fees through having a travel credit card. It offers low, or sometimes zero, fees for paying or withdrawing cash in a foreign currency. In many cases travel credit cards do not have an annual fee, so they could be worth having as a second credit card in order to benefit from potentially more favourable interest rates and rewards on non-travel credit cards while in the UK.

Verdict

Using a credit card abroad is generally a similar process to using it in the UK, with it being a popular method of payment in a wide range of countries across the world.

However, taking steps to prepare for the possible loss of a credit card may be worthwhile. Carrying a small amount of cash and informing a credit card issuer in advance of a planned trip could also make using a credit card abroad a smoother process.

Some credit cards can be costly to use abroad, so it may be worth considering a travel credit card. Likewise, paying in a local currency may help to keep costs down.

While considering all of the above may not be a priority when planning a trip abroad, doing so could make the experience more enjoyable and less stressful.

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