Why use a credit card for spending abroad?
You could, of course, choose to pay for things with your debit card.
But the big benefit of using a credit card is that you’re protected if there are any issues with purchases you make over £100.
Under Section 75 of the Consumer Credit Act, you can claim compensation either from the merchant or your credit card provider.
You may also be able to earn cashback on your purchases, both in the UK and abroad, by using certain credit cards.
Always pay in local currency
Travel credit cards are great – providing you pay in the local currency.
Shops and restaurants abroad may offer you the chance to pay in pounds.
This is known as ‘dynamic currency conversion’ and means you’re likely to get a terrible conversion rate, ruining the benefits of your credit card.
Always, always opt to pay in the local currency.
Now, let’s take a closer look at the credit cards that don’t charge you for using them abroad.
Halifax Clarity Mastercard
The Halifax Clarity card (representative APR 19.9%) won’t charge you for purchases anywhere in the world.
If you make any cash withdrawals, you won’t be charged a fee, but you will be charged interest from the date the withdrawal is made – so you should avoid using this card at an ATM if possible.
With Barclaycard Rewards (representative APR 22.9%), you don’t pay any fees on purchases abroad and get 0.25% cashback on all spending.
You can avoid non-sterling purchase fees as long as you pay in the local currency.
The credit card also doesn’t charge interest on cash withdrawals abroad (in local currency) – as long as you pay off your balance in full every month.
The Santander Zero Mastercard (representative APR 18.9%) offers fee-free spending and cash withdrawals worldwide.
It also offers 12 months interest-free on purchases (just remember interest on cash withdrawals is charged as soon as you take the money out).
With the Santander Zero credit card, you can also earn up to 15% cashback at selected retailers through the Retailer Offers programme.
You can check out loveMONEY’s review of Santander Zero here.
Creation Everyday Mastercard
At 12.9%, Creation’s credit card has the lowest interest rate among the credit cards listed in this article.
The credit card offers no fees on spending or cash withdrawals abroad, but interest will be charged from the date of withdrawal until it is paid in full.
What challenger banks offer
Challenger banks Starling and Monzo don’t charge foreign spending or ATM fees, but Monzo limits you to £200 cash withdrawals every 30 days (for countries outside the European Economic Area).
After you hit this limit, a 3% charge on withdrawals applies.
Revolut is mainly fee-free and uses the interbank exchange rate, which it claims gives better rates. You can withdraw up to £200 a month anywhere in the world, but you’ll be charged a 2% fee for any withdrawals over this amount.
Metro Bank won’t charge fees for spending or cash withdrawals in Europe only.
For more information, take a look at The best debit cards to use abroad.
Prepaid currency cards
Another option is prepaid currency cards.
The great thing about these cards is they allow you to load up your card with funds before you jet off abroad, as well as when you’re out there, making it easier (in theory) to stick to a budget.
Certain cards don’t charge you for making purchases overseas or for withdrawing cash.
And because these cards are prepaid, there’s no need to worry about interest rates. What’s more, you’ll generally get a competitive exchange rate. But they do come with some fees, so read the small print carefully.