Millions of us are guilty of taking our usual credit cards with us when we travel abroad, racking up expensive foreign exchange and withdrawal fees every time we spend or take out cash.
Many providers charge a foreign usage loading fee of up to 3% every time you spend abroad, plus a further 2.5% when you make cash withdrawals.
But there are several credit cards designed specifically with foreign use in mind which don't impose such steep charges, so there's no need to end up with a nasty bill when you get home.
A word of warning though - if you are considering taking out a credit card specifically for use overseas, remember to apply as soon as possible, as applications can take up to four or five weeks to process.
You should also make sure you clear your balance in full as soon as possible when you get home - otherwise the interest on your spending is likely to wipe out any savings on charges you might have made.
Here, we take a look at some of the best credit cards for your summer holiday spending... .
Halifax Clarity Card
This card is one of the best for use overseas, as it doesn't have any foreign exchange fees and doesn't charge for cash withdrawals either. However, you will be charged interest on the amount withdrawn even if you clear your balance in full.
That said, cash withdrawals are charged at an annual percentage rate (APR) of
12.9%, which is much lower than the rates charged by many other cards. So, for example, if you withdrew £200 in cash, you'd be charged around £2 a month in interest.
The card also has a low representative APR of
12.9% variable on purchases.
This card is only for people aged over 50, and has no foreign exchange loading fees, although it does charge a minimum fee of £2 or 2% of the amount taken out for cash withdrawals.
You don't, however, pay any interest on cash withdrawals provided you repay your balance in full. If you aren't able to do this, this card has a representative APR of just
11.9% variable on purchases. Cash withdrawals are charged at 19.6% APR.
Post Office credit card
This card also has no foreign exchange loading fees anywhere in the world, but there is a minimum £3 charge, or
2.5% of the amount taken out, every time you withdraw cash from an ATM.
You will also be charged
24.1% APR on cash withdrawals even if you repay your balance in full, so you should try and use this card for purchases only if possible.
Interest on purchases is charged at a representative APR of
16.9% variable. Santander Zero
The Santander Zero card has no foreign usage fees anywhere in the world, but you will only be able to apply for it online if you are an existing Santander customer. Otherwise you will have to apply in one of Santander's branches.
The other drawback of this card is that you have to pay interest on any withdrawals, even if you repay in full, although there are no additional cash withdrawal fees on top of this.
Cash withdrawals are charged at
27.9% APR, which is pretty steep, so again you're best off using this card to pay for items rather than to take out cash.
The card has a representative APR of
19.9% variable on purchases.
At first glance, this card appears to trump its competitors, as it doesn't impose any foreign exchange fees, and also doesn't have any cash withdrawal charges. Even better, if you pay off your balance in full, you won't be charged interest on your cash withdrawals either.
The card also comes with worldwide family travel insurance, but there is a £5 monthly fee, so over a year, the card will set you back £60. The travel insurance covers up to six children and two adults under the age of 65, and it includes 17 days of winter sports cover a year.
If you aren't able to clear your balance immediately, the card has a representative APR of
20.1% variable on spending and charges 24.9% APR for cash withdrawals.
This card offers
0% for three months on new purchases and after that has a representative APR of 15.9% variable.
As you spend with the card in the UK, you earn a certain amount of fee-free spending abroad enabling you to use it when travelling without extra charges.
You earn this fee-free overseas allowance at a ratio of five to one, meaning if you spend £2,500 in the UK, you can spend £500 abroad without paying commission or overseas usage fees. However, even if you don't use the card that much in the UK, it still has one of the lowest commission charges at
To help people build up their allowance, until 31 July 2011 all purchases abroad will be commission-free and purchases in any currency will go towards your commission-free allowance.
The card does, however, have a cash withdrawal fee of
2.5% of the amount withdrawn, with a minimum charge of £3. You are also charged 27.9% APR on cash withdrawals even if you repay your balance in full.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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