What is a travel credit card?

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If you are going, in addition to having your flights, accommodation and insurance in order, it is important that you take the correct plastic with you. So what is a travel credit card? And what are the advantages of using one? Here is the truth.

What is a travel credit card?

A travel credit card offers good exchange rates when you use it abroad.

It makes a lot of sense to have one, especially if you travel overseas a lot. Indeed, if you use a “standard” credit card abroad, you could be confronted with various fees and charges, such as:

  • Transaction costs other than sterling. These fees are generally around 3%.
  • Cash withdrawal fees. This is the cost of withdrawing from an ATM. The fees are generally 3%.
  • Expense fees. These are fees that you will pay every time you spend on the card. The fees can range from £ 1 to £ 2.
  • General interest charges. While you usually don’t pay interest on expenses if you erase your card before the end of the month, some cards will charge interest from the time you make an overseas withdrawal.

While not all standard cards apply all of the fees and charges listed above, if you don’t have a specialized travel credit card, you could add a significant amount to the cost of your trip.

What do travel credit cards offer?

A good travel credit card will offer 0% interest on all spending abroad. This means that you will not be charged any transaction fees other than Pound Sterling when spending abroad, as long as you completely erase the card by the end of the month.

It also won’t cost you a fixed “expense fee” every time you use your card for purchases abroad.

However, finding a travel credit card with no fees on overseas cash withdrawals can be trickier. This is because it can be costly for the credit card provider to offer free withdrawals. The reason is that they have to pay a fee to the owner of foreign ATMs every time you use them.

That said, some travel credit cards still won’t charge you a fee for making money withdrawals abroad. Instead, they can cap the amount of free overseas withdrawals you can make.

Other providers may charge interest on cash withdrawals from the time you withdraw money from an ATM, even if you pay off your balance in full at the end of the month. To minimize this cost, you can pay off your balance sooner by logging into your overseas credit card account.

Are you looking for a card abroad? Check out our guide to travel credit cards.

What exchange rate will I get?

While a travel credit card may offer 0% interest on spending abroad, and even withdrawals, your exchange rate will often depend on the payment network that issues your card.

The three major payment networks are Mastercard, Visa, and American Express, and all have their own exchange rates. This means that the logo on your card will determine the exchange rate that applies to you.

Still, it’s not something to worry too much about. To calculate exchange rates, these networks use a range of sources, including wholesale currency markets, so they are very similar. Therefore, it is probably not worth choosing a card based solely on the exchange rate of the payment provider.

Travel credit cards: what else do I need to know?

Before choosing a travel credit card, the following should be borne in mind:

  1. Debit cards can also be good abroad. Some debit cards, and even prepaid cards, may also offer use abroad at no charge. However, most don’t, so always take the time to check out charges abroad.
  2. If you have a choice, pay in local currency. Abroad, you may have the option of paying in pounds sterling. It will likely cost a lot more because you will be paying the retailer’s exchange rate.
  3. Travel credit cards are protected under Section 75. Any purchase over £ 100 that you make with your travel credit card will benefit from Section 75 protection, just like at home.
  4. You can use travel credit cards on foreign websites. If you use a website overseas, a travel credit card can help you avoid the fees.
  5. Travel credit card application will require a credit check. To find out which travel credit cards you’re likely to be accepted for before you apply, you can use our credit card eligibility checker.

For more travel tips, check out our article on Easy Ways to Save Money on Travel.

Looking for a premium travel credit card?

Some credit cards may charge an overseas transaction fee of up to 3%. To help you avoid these fees while on the go, we’ve put together our top rated travel credit cards which do not charge you any additional costs when you spend abroad.

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