The cheapest credit cards for your holiday spending

Holidaymakers could be in for a nasty financial shock if they don’t pack the right plastic when they go abroad this summer.

Credit and debit cards can carry massive charges if you use them overseas, so if you’re not careful you could be hit with big bills just for withdrawing cash, or for using your card to pay for something while you’re on holiday.

Most cards add a ‘foreign load fee’ which is usually around 2.99%. So if you spent £100 on a family dinner at a nice restaurant and paid for it by card, you’d be charged £103 once the load fee has been added.

If you want to take money out of a cash machine, not only will you have to pay this load fee but you’ll be hit with a withdrawal charge too. This charge is usually 2.99% of the amount withdrawn (or a minimum of £3) but can be as high as 5% (or a minimum of £5).

You’ll also be charged interest on the amount you’ve withdrawn (that’s on top of the cash withdrawal and load fees!) from the word go, even if you clear your balance in full that month. And, finally, because it's a cash withdrawal (known as a cash advance), the interest rate is also likely to be higher (around 27%, compared to a typical 18%).

The good news is, however, that several credit cards are specially designed with holidaymakers in mind. And you still have time to apply for one if you want to avoid these charges this summer. Here’s our rundown of the top five credit cards to take abroad in 2014 – and the plastic you should avoid at all costs.

 1. Halifax Clarity Credit Card

The Halifax Clarity credit card is a real winner as it has no fees to use it anywhere worldwide – even withdrawing cash from an ATM. And if you can’t pay off your spending immediately, the card has a low representative annual percentage rate (APR) of 12.9% (variable). Although you may be charged a higher rate if your credit rating is less than perfect.

 2. Capital One Classic Extra

Is your credit score just average to good? If so the Capital One Classic Extra card is a great idea for overseas spending because it doesn’t have any load fees wherever you use it in the world.

You may still want to avoid making cash withdrawals though, as there’s a 3% charge (minimum £3 fee) while interest is charged at a hefty APR of 34.9% (representative and variable) – even if you pay off what you owe in full at the end of the month.

On the plus side, however, you get a £10 annual bonus if you pay on time every month, and you earn 0.5% cashback on all your spending.

 3. Post Office Platinum Credit Card

If you want a card with low overseas charges this year, and you’re also looking to move a balance from an existing credit card, the Post Office Platinum Credit Card is hard to beat.

It offers 0% on balance transfers for the first 18 months and 0% on purchases for the first three months, and has no fees for overseas spending. There is a 2.5% charge if you use the card to make a cash withdrawal (minimum £3 fee).

If you are transferring a balance onto this card, and you act before July 31, the balance transfer fee, which is normally 2.98%, is reduced to just 0.7%. After the introductory period finishes, this card has a representative APR of 17.8% (variable). 

4. Saga Platinum Credit Card

If you’re aged 50 or over, the Saga Platinum Credit Card is well worth a look for this year’s summer holiday spending. It has no load fees worldwide, although if you want to make a cash withdrawal, there is a 2% charge, (minimum £2 fee). But, provided you clear your balance that month, there is no interest payable on cash withdrawals made overseas. Even if you aren’t able to do this, the card has a low representative APR of 11.9% (variable) on any purchases, or 19.6% on cash withdrawals.

You’ll also get a 0% introductory rate on purchases and balance transfers for the first nine months, subject to a 3% balance transfer fee.

 5. Nationwide Building Society Select Card

If your main current account is with Nationwide (that’s a FlexAccount, FlexDirect or FlexPlus) you’ll be eligible for the Select Card. It has no charges for overseas spending and also offers a 0% introductory rate on balance transfers for 26 months (in return for a balance transfer fee of 2.4%).

This card is competitive for purchases too, offering 0% on your spending for the first 15 months, as well as 0.5% cashback on all your sterling purchases. After the introductory periods finish, this card has a pretty decent representative APR of 15.9%.

If you’re planning on making lots of cash withdrawals while you’re away, bear in mind that there is a 2.5% fee charged each time you take money out, with a minimum fee of £3. That's on top of the higher interest charged on withdrawals even if they are repaid in full straight away.

Cards to AVOID when overseas

That was the best, but what about the worst cards to use while you are away this year? Be careful if any of these are living in your wallet!

  • The AA’s credit card, has a 2.99% load, and then charges 5% on cash withdrawals, with a minimum charge of £5. Interest is charged at 27.9% on cash withdrawals, even if they are paid off in full.
  • American Express also imposes hefty fees, and again has a 2.99% load, with cash withdrawals charged a 3% fee, with a minimum £3 charge. Interest is again charged at 27.9% on cash withdrawals.

There are plenty of debit cards you should avoid using on holiday too.

  • Lloyds Bank debit card is one of the worst, with a load of 2.99% plus £1 on any purchases. Cash withdrawals are charged a further fee of 1.5%, with a minimum charge of £2 and a maximum charge of £4.50.
  • Halifax’s debit card also has steep fees, with a foreign load of 2.75% plus £1.50 every time you make a purchase, and a cash withdrawal charge of £1.50 per withdrawal.

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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