When heading abroad, you should never rely on cash alone. Not only would you be seriously stuck if your money were to be lost or stolen, but what if you were tempted by an extravagant souvenir or special meal out that your cash wouldn’t cover? That’s why you should always bring a card with you, but it doesn’t mean you should bring your everyday spending card…
What you may not know about your regular credit or debit card is that they’ll often charge you extortionate fees when using them abroad. Whether it’s making a cash withdrawal or a physical purchase, you could well end up spending far more than you bargained for thanks to ramped up exchange rates, load fees or a raft of other charges – and you’ll be hit every time you use the card.
These extra fees could include:
- Uncompetitive exchange rates for purchases and cash withdrawals
- A non-sterling transaction fee (otherwise known as the loading or conversion fee), which is added to the exchange rate with every purchase and cash withdrawal, typically around 3%
- A separate ATM/cash withdrawal fee
- Additional interest charges on credit cards, even if you pay off the balance
- An extra penalty charge for every instance of foreign use
When those fees are combined, and multiplied by the number of times you use your card abroad, you’ll soon see how your budget can spiral out of control – unless, of course, you use a card that’s been specifically designed for foreign use.
Fee-free foreign use
Cards designed for foreign use are just that – they know you’ll be using them abroad, so they don’t charge you any extra for it. You won’t find any additional fees levied when you make purchases or withdraw cash (and if you do, they’ll be far less than average), which could prove to be far more cost-effective. Just bear in mind that you should still try to avoid withdrawing cash using a travel credit card, as much like in the UK, you’ll be charged extra for doing so, so in this case you’ll probably want to opt for a travel debit card instead.
Mix and match
While there are a lot of credit cards out there that offer fantastic deals when used in the UK – 0% interest on purchases and cashback on your spending, for example, can prove to be great ways to help you manage your budget – the benefits are completely nullified when used abroad. Likewise, cards used for foreign use may not offer the best spending options when back on home soil, so you should always have specific cards set aside for each. That way, you can be confident that your plastic is working hard for you, no matter where you are in the world.