How to Use a Credit Card Abroad
Using a credit card can be one of the cheapest ways to spend money overseas, as long as you pick a card with no fees and clear the balance each month.
It may sound strange that a credit card could save you money, but in some cases using one is the cheapest way to spend money abroad.
There are lots of ways to pay for things when you’re abroad, and the cost varies considerably. Here we explain how to use a credit card abroad without getting stung by unnecessary charges.
How to use a credit card abroad
The first thing to check is the kind of card you’re using. Make sure the credit card does not add extra fees for transactions or cash withdrawals while you are away.
If you’re using your usual debit or credit card, for example, you might be paying fees for taking money out of a cash machine, exchanging the money and for every time you use it to buy something.
While some specialist credit cards do not charge any fees when you use them abroad, they still charge interest unless you pay off your bill in full each month. The interest is usually charged at the end of the month for transactions and immediately for cash withdrawals.
Therefore these cards are only useful if you remember to pay them off in full, which you can do easily by setting up a direct debit to clear the card.
What are the alternatives?
There are lots of alternatives for overseas spending, such as debit cards, prepaid travel cards and taking cash.
Cash can be high risk if your money is stolen, and if you’re changing money at the airport or hotel you might not get a great exchange rate. Using your existing debit card may be more convenient than arranging a separate prepaid card, but there are likely to be fees for using it.
The choice you make will ultimately depend on your circumstances, but before you do anything always check the small print so you fully understand the costs involved.
A credit card with no fees for overseas spending is another option but only consider this if you’re able to pay it off in full. Before you apply, it’s worth checking a free eligibility calculator to see how likely you are to be accepted before you apply. Most comparison sites of this service, as do some providers.
How to make sure you don’t get ripped off when using your card
If you’re unable to clear the credit card, you’ll begin paying interest and this is likely to wipe out any savings you’ve made from the fees. A prepaid travel card is another choice in this case, as you can't go into debt and you won’t need to pass a credit check to open one.
Ways to save money with a credit card
If you’re able to do all your regular spending with your credit card when you’re away, you should avoid paying any extra fees — if you have a specialist credit card with no fees attached.
Then, if you clear the card by the end of the month, there should also be no interest added.
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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