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Best credit cards to use abroad

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Most people take a credit card when they travel abroad on business or pleasure. And why not? A card can be an easy and convenient way to pay for goods and services, whether you want a meal in Milan or a hotel in Hawaii.

A credit card can also be handy if you want to splash out while you are away – and if it is lost or stolen, you can cancel the card immediately and organise a replacement.

Foreign fees

But credit cards can be costly to use overseas, so it’s important to choose your card with care. Most firms charge a foreign transaction or usage fee when you spend with a credit card abroad. The costs vary, but a fee of 3% is not uncommon. So, if you stay in a hotel and the bill comes to the equivalent of £300, the card company could load the cost by £9. 

You should bear in mind that the fees also apply if you make a non sterling purchase while you are in the UK, perhaps if you are shopping online.

The amounts might seem small, but they can soon mount up, particularly if you use your card regularly over a two-week holiday. 

Cash withdrawals abroad

Watch out if you withdraw cash from an ATM with your credit card while you are abroad. The typical charge for cash withdrawals from a foreign ATM is 2.5%. In other words, withdraw £200 and the transaction will cost £5. 

What’s more, you’ll be charged interest from the moment you withdraw your money, even if you pay off your balance in full that month.

Best holiday credit cards

Travellers and holidaymakers should therefore select a card that charges low or no fees for foreign transactions or cash withdrawals. A number of card issuers offer good deals if you plan to use your card abroad. The MBNA Everyday Plus American Express credit card, for example, charges no foreign transaction or cash withdrawal fees.

The card charges a low rate of 7.4% pa (variable) on purchases, cash withdrawals, balance transfers and money transfers, but remember if you make a cash withdrawal, you’ll be charged interest from day one. The card has a representative rate of 7.4% APR (variable)*

Another option is the Halifax Clarity credit card which again has no foreign transaction or cash withdrawal fees, but its interest rate is higher at 18.95% pa (variable). The card has a representative rate of 18.9% APR (variable)**.

Credit cards can be costly to use overseas, so it’s important to choose your card with care.

Credit cards are widely accepted around the world, but not in every country, so you should check before you travel. It is also a good idea to take money in a variety of different forms if you are travelling abroad. Some cash is useful for when you arrive at your destination, but don’t take too much as it is risky and your travel insurance will only cover cash up to a certain amount.

Currency cards

Pre-paid currency cards are growing in popularity. You simply top up the card with your chosen currency and then spend the money when you are abroad.  Pre-paid cards are also a good alternative if you have a poor credit history and don’t qualify for a credit card. Watch out for charges, though, as some firms levy application and top-up fees.

You can compare holiday credit cards on MoneySuperMarket’s free independent comparison service. It’s a great way to find the best deal for your holiday spending. 

*Representative example: If you spend £1,200 at a purchase interest rate of 7.4% pa (variable) your representative rate will be 7.4% APR (variable).

**Representative example: If you spend £1,200 at a purchase interest rate of 18.95% pa (variable) your representative rate will be 18.9% APR (variable).

 

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