How to Find the Best Travel Credit Card For You
Using a travel credit card is one of the cheapest ways to spend money abroad because it shouldn’t charge extra fees for transactions or withdrawals.
The last thing you want when you're on holiday is to end up paying more than you need to use your credit or debit card. But when you use your normal debit or credit card, you could be hit with several fees, including for taking cash out at the ATM, making transactions in shops and restaurants, or exchanging your money.
If you use a specialist travel credit card you could avoid these extra fees.
Here we explain everything you need to know about travel credit cards for the next time you go away.
How do travel credit cards work?
Travel credit cards work in the same way as ordinary credit cards but usually waive the fees your standard credit or debit card will charge when you use them overseas. These include foreign transaction fees and cash withdrawal fees, which can be as much as 3%.
» MORE: About credit cards
What is the cost of using a credit card abroad?
When you use a travel credit card abroad, you shouldn’t be charged anything extra but you will still be charged interest on the money you borrow if you don’t pay off the card in full by the date specified on your statement.
If you use the specialist card to withdraw money at a cash machine, you’ll usually be charged interest from the moment you take the money out, as you would with an ordinary card, but you shouldn’t be charged a fee for the actual withdrawal.
The interest charges on these cards can be high and likely will wipe out any savings you’ve made by using the card in the first place, so it’s important to clear the card balance in full each month. Setting up a direct debit is the easiest way to do this so you won’t ever forget.
When you use the card abroad, if you’re given the choice of what currency to use, you probably want to choose the local option to get the best exchange rate possible.
Why do you need a travel credit card?
A specialist travel credit card should be cheaper than using your normal credit or debit card.
Choosing a credit card over a debit card also gives you an extra layer of protection from, what’s called section 75 of the Consumer Credit Act. This applies to anything bought on the card worth between £100 and £30,000.
How to apply for a travel credit card
The kind of travel credit card you can apply for will depend upon your credit history. As with standard credit cards, the most competitive cards are usually only available to those with a good credit score.
This is because lenders will check your credit history when you apply for a credit card to see how likely you are to pay the money back. Every time you make an application for a credit card, or any type of credit, these checks are carried out and recorded on your credit history. If lenders see too many credit applications, they may suspect you are struggling with your finances and turn you down.
For this reason it’s worth using a free eligibility checker beforehand, available on many price-comparison sites. These checks don’t affect your credit score and are a quick and easy way to see which cards you’re likely to be accepted for, before you apply.
When you make the application you’ll need to enter details including your address and salary, and you’ll usually be required to supply some forms of identification.
How to choose the best travel credit card for you
The credit card market is extremely competitive and there are a lot of options to choose from. When looking for a new travel credit card you should examine the costs and fees involved, including those for taking out the card, using it abroad and making cash withdrawals, and the interest rate.
Does my credit card give me travel insurance?
Some credit cards come with extras, such as 0% periods for purchases or balance transfers. It may even be possible to find a travel credit card which includes travel insurance. This is often the case with premium cards, although these can also have a monthly or annual fee. It’s also worth remembering that there are lots of travel insurance policies on the market, so the one attached to a credit card might not be the best option for you.
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Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more