Finding the right travel credit card for you. 

Travel credit cards are a great way to get the best rates when abroad. Read our guide to find out how to use them and why they’re useful when travelling. 

What is a travel credit card?

Designed to be used when abroad, travel credit cards are cards that don’t charge you a fee when used outside the UK. 

Most standard credit cards will charge you when you use them in another country, typically an average of 3% of each foreign transaction. This means when you spend £150 overseas on a card that isn’t a travel credit card, you’ll be charged an extra £4.50.

Using a travel credit card can help you avoid paying these fees and give you a near perfect exchange rate when paying in the local currency, making them one of the best credit cards to use abroad. 

How does a travel credit card work? 

Travel credit cards work the same way other credit cards do. 

  1. You use the card to make a purchase, typically in a store or restaurant.
  2. You then have to pay back the amount borrowed. If you’re unable to pay back the total amount borrowed, there’s a minimum monthly repayment that you’ll have to pay.
  3. After a month has passed, any overdue balance you have will start to build interest, with the rates based on the card’s APR.

The longer you leave your balance unpaid, you’ll pay more in interest. Because of this, any saving you make on foreign transaction fees, will no longer be a benefit, so if you use a travel credit card, have a plan on how you’ll repay any purchases you make

For example, if you’ve been on holiday and used a travel credit card to pay £200 for five transactions, you would have saved around £13 compared to standard credit cards. However, if you don’t pay off what you’ve borrowed within a month, you’ll have to pay interest on your overdue amount. 

If your card has an APR of 22% and you only pay £125 back within a month, you’ll have to pay around £16 worth of interest on top of the remaining £75 owed, with the amount of interest increasing the longer you leave it unpaid. 

This demonstrates that by not paying off what you’ve borrowed in full within a month, the interest you have to pay can cancel out any potential savings, even when using the best travel cards. 

Why use a travel credit card? 

Travel credit cards are an excellent way to save money abroad because no fees or charges are eating away at your budget, making your money go further. 

The exchange rate with travel rewards credit cards offer a near-perfect exchange rate. This can prevents you from having to pay more than necessary when you’re abroad. 

Travel credit cards are also an alternative to carrying large quantities of foreign currency around with you while you’re on holiday, meaning your money is safer.

Travel credit cards come with Section 75 protection, meaning any purchases over £100 are protected if anything goes wrong.

The majority of travel credit cards don’t have withdrawal fees, saving you money if you need to get money from an ATM.

Some travel credit cards also offer rewards for frequent travellers such as points for flights and discounts on travel insurance. 

How much do travel credit cards cost? 

Travel credit cards usually don’t charge annual fees to keep the account open. So, if you’re spending on the card and repay what you’ve borrowed within a month, it shouldn’t cost you anything to use. 

Travel credit cards can charge reasonably high rates of interest. If you’ve used your card to purchase goods and haven’t paid the balance back within a month, interest will be applied to what you owe. 

Taking a long time to repay your balance will increase how much you need to pay back, making the total cost of using your card more expensive. To avoid this cost, repay your balance as soon as you can. 

Instead of fees, some travel cards may apply immediate interest on the amounts you’ve withdrawn, similar to what standard credit cards do. If you take a long time to repay what you’ve withdrawn, you’ll be charged high interest rates

Because there are no fees, withdrawing cash from a travel credit card that charges interest is cheaper than using a standard credit card.

Can I withdraw cash with a travel card? 

You can withdraw cash with a travel credit card, and the majority won’t charge you a fee. This makes withdrawing from travel cards a great way to get access to cash when abroad, as it’ll be one of the cheapest ways to do so. 

When withdrawing cash with a travel credit card, make sure you’re prepared to repay it quickly to avoid paying large amounts of interest. Many cards will charge interest on cash withdrawals instantly, and you can even be charged daily. If unpaid for a few days, the interest can make withdrawing through your travel card expensive. 

Are there any alternatives to travel credit cards? 

Using a travel credit card is one of the best options for foreign travel; however, they’re not your only option. 

Digital bank accounts

Some challenger banks, which are new banks with a digital approach, won’t charge you fees when you use your account abroad. This can be really handy, especially if you haven’t got the best credit rating and cannot get a travel credit card. 

Using a debit card from a digital bank account when abroad is more straightforward than using a credit card because it removes the need to repay a balance, making your money easier to manage. 

Not all challenger banks will be fee-free, so be sure to check. Many challenger banks will also offer near-perfect exchange rates, but make sure that yours does before using it aboard.

Cash

Although having a card can be safer and more convenient than carrying cash, having some when you’re abroad can still be helpful, especially if you’re travelling to countries where certain credit cards aren’t widely accepted. 

Always get your foreign travel money in advance of your trip because you’ll get the best exchange rates when you order your cash online. You’ll avoid having to pay expensive fees that are common when exchanging currency at the airport. 

Prepaid travel cards

A prepaid travel card is a card that can be pre-loaded with money before you travel. 

They’re a great way to avoid bringing lots of cash with you, and you can only spend the amount you’ve pre-loaded onto it, helping you stick to your budget.

One of the main reasons travellers get prepaid travel cards is because an exchange rate is locked in. Every time you purchase or withdraw cash, you’ll use that exchange rate.

What are the benefits of travel credit cards?

  • There are no fees when using the card abroad for spending, which can help you get the most out of your money
  • They have one of the best exchange rates when you pay with local currency. This can make your money go a little further
  • They’re potentially safer than carrying around a lot of cash
  • It’s easier to track your spending because you’ll be able to see how much you’re spending in pounds
  • Some travel credit cards will reward you with points for flights and discounts off travel insurance 
  • You’ll get section 75 protection meaning any purchases over £100 will be protected if something goes wrong 

Are there any downsides to travel credit cards? 

  • They may not be accepted everywhere, so you’ll have to consider this before travelling. A few countries don’t accept credit cards from the major card networks, so cash may be best in these situations. 
  • The exchange rate isn’t locked in, so it changes daily. This makes it challenging to know exactly how much you’re likely to pay. 
  • Because these are credit cards, you’ll likely have a credit limit which will be determined by your credit rating. This can limit the amount of money you can spend if your limit is low. 
  • Some cards charge admin and annual fees, which can increase their cost. 

Travel credit cards FAQs

Are travel cards covered by section 75?

Like all other credit cards, travel cards are covered by section 75, no matter where they’re used.

Section 75 is a clause in the 1974 Consumer Credit Act where your card company must refund you the value of any items bought that are faulty, didn’t arrive or breached the terms of service in another way. 

With section 75, credit card purchases between £100 and £30,000 are covered.

Can I get a travel credit card with bad credit?

Bad credit is a term used to describe a poor credit history. You’ll likely need a mid to high credit rating to get a travel credit card. 

To be approved for a travel credit card, you’ll need to improve your credit rating by taking positive actions to improve your credit report.

Should I pay in pounds or use the local currency?

You should always pay in the local currency when using your card aboard. 

When paying at a shop, restaurant, hotel, or when withdrawing from a cashpoint overseas, you’ll likely be asked if you want to pay in pounds or the local currency when you use your card. 

If you pay in pounds, the retailer does the currency conversion instead of your card provider. As a result, the conversion rates are often poor, leaving you out of pocket. 

When you pay in the local currency, your card will do the conversion. The conversion rate should be unbeatable if you have one of the best travel credit cards. 

 

More Credit Card Options

We compare a range of credit cards to help you find the right cashback credit card, 0% interest credit card, rewards credit card, money transfer credit card or credit card for bad credit for you.