If you’re heading overseas on holiday or on a business trip, getting a travel credit or debit card could be one of the cheapest ways to spend while abroad.
Often, a regular bank account debit card will charge you hefty fees and a poor exchange rate if you use it abroad for a transaction or cash withdrawal. However, there are lots of cards out there that do away with these fees.
In this article, we outline the best payment cards to use when you’re abroad plus whether it is better to use a credit card or debit card, plus the top prepaid travel money cards.
We explain:
Read more: Best rewards credit cards
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What exchange rates are used?
When you pay on most debit and credit cards, the Visa or Mastercard exchange rate is used.
This is very close to the market rate – so you should not be caught out inadvertently paying extra because you have been given a poor exchange rate.
However, there are a small number of cards that set their own exchange rate – like Revolut*. So you need to be careful to ensure you understand the true cost if you use a card like this.
All the cards in this guide use the Visa or Mastercard exchange rate.
Read more: What’s the best way to transfer money internationally?
The best travel debit cards
Here we list two banks which offer debit cards that might be worth considering if you’re travelling abroad.
Chase also doesn’t charge fees for withdrawing cash while overseas, though you’re limited to withdrawing £500 per day. When abroad you can withdraw up to £1,500 a month.
Chase carries out a “soft” credit check when you apply, which cannot affect your credit score unlike an application for a credit card.
This account gives 1% cashback on your everyday debit card spending for your first year, including abroad. The maximum cashback you can earn in a month is £15. Cashback exceptions apply.
Chase also pays 4.1% AER with its linked easy-access savings account, but you can beat this with another savings provider.
You can earn 1% interest on money held in a Chase current account. It also offers 5% AER with its round-up account.
If you’re new to First Direct, the bank will pay you £175 to switch to its 1st account. Find out more about the bonus, including how to qualify.
First Direct is also renowned for its excellent customer service, making this a decent option if you’re looking for a new current account.
It offers fee-free purchases abroad, and foreign cash withdrawals are fee-free up to a maximum of £300 a day.
Like Chase’s current account, Starling Bank carries out a “soft” credit check when you apply, so it doesn’t affect your credit score.
Best credit cards to use abroad
Below we list a number of credit card providers that might be worth considering if you’re heading abroad.
Plus, there are no foreign-use charges for withdrawing foreign currency at an ATM or paying for goods or services, such as a restaurant bill.
But try not to withdraw cash from an ATM on the card: while Halifax won’t charge you a fee, the local machine might.
Interest will also start to accrue from the day the funds leave your account. Some providers offer a grace period – 56 days for Barclaycard Rewards.
If you are abroad, you can withdraw cash from an ATM or buy your souvenirs without any fees. It doesn’t charge interest on spending abroad or cash withdrawals as long as you repay the balance in full each month.
It also offers a simple 0.25% cashback on spending that, while not the best on the market, is still good when you add it to all the other benefits. There’s no annual charge for the card.
The card has an APR of 25.9%.
It charges one simple and low representative APR of 14.9%, and has no annual fee.
There are no foreign-use fees if the card is used in Europe. Watch out as you will be charged a 2.99% fee for withdrawals and spending outside the continent.
It has no specific fees for spending abroad, plus a nifty tool allowing you to put aside an emergency savings pot, should you need it on your travels.
Depending on your credit rating, you could initially be offered a credit limit of between £200 and £2,000. There is a range of potential APRs, from an above-average 24.9% to a high 34.9%.
The main downside is the £3 flat fee for cash withdrawals home or abroad.
Best prepaid travel cards
A prepaid travel card lets you load money and exchange for different currencies before you go away. You can then use this card to spend or withdraw cash while abroad.
You can’t spend more than you have loaded onto the card. It effectively works like a debit card that doesn’t have an overdraft.
Below we list a provider that offers a prepaid travel card that might be worth considering if you’re heading abroad.
However, it does charge a conversion fee. Check out its calculator to see how much you could pay.
You can also only withdraw two lots of £200 per month before being hit with fees. After that, it charges 50p per withdrawal. There’s also a 1.75% fee on any amount you withdraw above £200.
So again, if you plan to make lots of cash withdrawals then you might be better off with Chase or Starling.
Bear in mind there is also a £7 fee to have the card delivered.
Honourable mentions
While these cards don’t rank as market-leading options in their respective categories, they’re still decent options for some travellers.
When you sign up for this card, you’ll receive 25,000 Avios points after spending at least £3,000 in the first three months of card membership. More information on Avios points can be found in our guide, but essentially the 25,000 bonus will get you a return journey to Rome via economy class.
In addition to this, if you spend £10,000 on your card over the year you’ll earn a companion voucher in any cabin. This means if you book a first class trip to New York you’ll receive a second ticket for your partner or friend to join you. If you’re travelling by yourself, you can knock 50% off the Avios price paid for your flight.
Other perks include earning three Avios points for every pound spent through British Airways, one and a half Avios points on all other purchases, and 9,000 Avios points for inviting a friend to join the programme.
The card comes with one of the most expensive APRs on the market of 113.1% variable because it has an annual fee of £250. The purchase rate of 31% is the same as some of Amex’s other options.
Is it better to use a credit card or debit card abroad?
As long as you find the best – and cheapest – credit card or debit card to use abroad, it’s often a matter of personal preference. It’s worth bearing in mind that using a credit card abroad does give you Section 75 protection, which can get you your money back when things go wrong.
However, you’ll need to go through a ‘hard’ credit check when you apply for any credit card, which could affect your credit worthiness.
Lots of current accounts, including Chase’s, only carry out a ‘soft’ check which does not affect your credit score. So if you have a poorer credit history, it could be worth opting for a debit card.
The costs when using a typical debit or credit card abroad, and not a specialist travel card, can add up. According to Moneyfacts:
- Purchases on a £50 spend on a typical card:
- A debit card, can charge £1.38
- A credit card, can charge £1.50
- ATM usage on £250 withdrawal using a typical card:
- A debit card, £11.88
- A credit card, £14.95 (before interest is applied)
If your current account comes with a great debit card for use abroad, then you may want to use that.
Look for:
- No fees for spending or withdrawing cash abroad
- A competitive exchange rate
However, if using your bank account looks like it would be quite expensive and you don’t fancy switching, it may be easier to apply for a specialist travel credit card than to open another account.
Read more: Best premium bank accounts
Watch out for credit cards and ATMs
Unless you opt for a bank that offers fee-free current accounts that do not charge for using a debit card in Europe, which include Chase Bank and Starling Bank*, you need to be wary when using an ATM with a debit card.
You can expect even bigger charges when withdrawing cash from a machine using a credit card and that is before interest is applied. Some will charge interest from the day the money leaves your account – even if they may boast of fee-free withdrawals.
Other cards, like Barclaycard Rewards, offer a grace period without charging interest, meaning that you shouldn’t pay any cash withdrawal fees or interest if you clear your balance in full each month.
Safety abroad
Credit cards also tend to be safer to use abroad. If your debit card is hacked or stolen while away, then the money in your account is at risk. This is not the case with a credit card as only the money up to your credit limit is at risk.
There is also something called Section 75 of the Consumer Credit Act. If you have a problem with a purchase of between £100 and £30,000, at home or abroad, the credit provider is jointly liable with the retailer. So if your claim is approved, you should get your money back.
You may be able to use a scheme called chargeback if you paid with a debit card or a credit card for purchases of any amount, not just over £100. Here your bank can claw back the money from the retailer’s bank, although the retailer can dispute the claims.
Read more: Best travel insurance providers
You have fewer rights than under Section 75 because that is enshrined in law and chargeback is not.
The advice if you are traveling is always to have a back-up card with you. A prepaid travel card could be a good option too.
If you are planning a trip away, you might want to make sure you are covered. Find out what you can expect from a good travel insurance policy.
Exchange your money for foreign cash
Sometimes you’ll need cash for your trip abroad. Not all merchants accept card payments and cash can offer a degree of flexibility. That’s why you might want to consider exchanging some of your holiday budget into foreign currency.
Leaving this to the last minute is often a mistake, especially if you use the bureau de change in the airport. These providers typically hike their fees and charge a premium because your options are limited at this point, so give yourself time beforehand to research the best currency exchange offers around.
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