Travel credit cards, also known as ‘overseas spending’ cards, are designed specifically for use abroad. Such cards usually have low or no fees for spending when you travel, and they also use favourable exchange rates.
Why use an overseas spending card?
There are many options for holiday spending, varying from cash and prepaid cards to credit or debit cards.
The benefit of cash is convenience – and it’s sometimes necessary to have physical notes or coins in certain destinations. But the downside is that you can be stung with costly exchange rates and you could lose your cash or have it stolen.
For this latter reason, many people simply do not feel comfortable travelling with significant amounts of cash.
Another option is to load money onto a prepaid card that can be used for shopping or withdrawing cash abroad.
These cards are considered a safer option as you can only spend the amount added to the card, and there is no risk of your card being cloned, as can happen with credit cards. However, some prepaid cards come with big fees and they can be hard to get for some currencies.
Some travellers use their normal everyday credit or debit card while on holiday, but this can trigger expensive fees for purchases and cash withdrawals. You could be charged between £1 and £1.50 every time you use the card, regardless of the transaction value.
Instead, a growing number of people are choosing to take out travel credit cards for their overseas spending.
Designed specifically for use abroad, the best travel cards come with zero fees for foreign transactions and offer a reasonable exchange rate. And don’t forget that credit cards come with protection from identity theft so if your card details are stolen and used, you shouldn’t be liable for any illegal spending.
What fees do I have to pay on travel credit cards?
There are three main fees that travel credit cards may charge:
Non-sterling transaction fee
Non-sterling purchase fee
Non-sterling cash fee
When you compare travel credit cards, you should consider how much each will charge for these overseas spending fees. Our credit card comparison tool highlights the foreign purchase fee for all travel credit cards (the amount you’re charged when you buy something with your card).
This rate is usually the same as the non-sterling transaction fee, but you should review the terms and conditions of each card to be sure.
When you look at the details of each overseas credit card, you’ll spot that some charge you for cash advances (ATM withdrawals) and others don’t – if you prefer to use cash abroad, this is an important fee for you to consider.
How much could I save with a travel credit card?
Some credit cards can charge a fee of up to 3% on anything you buy, but a fee-free travel credit card won’t. And while prepaid cards can sometimes compete with travel credit cards when it comes to low fees, some have ‘inactivity fees’ that charge you if you decide to leave a balance on the card but not use it until your next holiday.
If you don’t spend the full balance, you could also be charged a redemption fee to obtain the cash.
What are the best credit cards for travel?
Generally speaking, the best credit card for travel will be the one with the lowest fees and interest rate.
But there are other things to consider, too: if you’ll withdraw cash abroad, you need one that doesn’t charge a cash advance fee. If you want to review your spending in real-time then you need a provider with a decent app, and if you want to earn incentives when you shop, you’ll need a travel credit card with rewards.
When you compare credit cards with our Eligibility Checker tool you can see which cards you are most likely to be accepted for, and your results will show the travel cards with the lowest fees at the top of the list.
MoneySuperMarket data for 2017. Correct as of December 2017
Other points to consider
When you pay by card or withdraw cash abroad, you’re likely to be asked whether to accept the price in the local currency or convert it to sterling. While most people would instinctively choose to pay in sterling, you could be wasting money as they often use costly currency conversion fees – but check as this varies by card.
When you’re going abroad, make sure you let your bank know so your card doesn’t get blocked. You can usually report upcoming trips by filling out a simple form in your online banking. And make sure you take note of your bank’s helpline in case you have any problems while you are abroad.
Be sure you pay off your credit card balance in full, every month. If you do this, you should avoid having to pay any interest – because many cards come with a 50+ day interest free period.
You can check out all the best travel money deals on MoneySupermarket’s online comparison service.
We're free and independent, as well as offering exclusive deals you can't get anywhere else.
Moneysupermarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.