The 5 steps to make sure you don’t get stung by travel credit card fees
Going abroad can hit you with unexpected credit card fees and variable exchange rates.
There is a way to avoid this and that’s by using a travel credit card to ensure you are getting the best possible exchange rate.
For more specific detail about the best (and worst) cards available please see Money Saving Expert but here’s a quick guide.
1. Hidden fees
Travel credit cards will not incur any fees when you spend money abroad whereas if you use your normal debit card you could find yourself paying lots of hidden charges including:
- Non-sterling transaction fee (usually around 3%)
- Fees for withdrawing cash at all ATMs
- Interest fees
- Penalty charges on all transactions.
To see how ‘an EU ban on credit card charges could make your holiday more expensive’, please click here.
2. What will it cost?
Research from Money Saving Expert compared the actual cost of spending €1,000 and found:
- A specialist credit card repaid in full: £730
- Cash, via UK’s cheapest bureau: £736
- Cash from the Post Office: £754
- Using a debit card “from hell”: £810
- Change at the airport (Heathrow T1 Travelex, not pre-ordered): £830
That’s a difference of £100 or around 13%.
You must pay the balance of your travel credit card off every month or any savings you do make will be meaningless.
- To see some of the best and their associated costs, please check out – Travel Credit Cards. One of the cheapest ways to spend abroad
3. Credit v Debit
There are other advantages to using a credit card over a debit card including the fact that they are very easy to apply for and don’t require a change of bank or new account. If you only want to use it for one holiday you can simply cut it up when you get home!
Credit cards also give you protection against anything going wrong with your purchases; much easier than trying to take something back you bought when you were abroad!
You will, however, pay fees on cash withdrawals on all credit cards so make sure you read the small print.
- The following article offers valuable insight into this important decision – Travel money or prepaid currency card: which is best?
4. Pounds or Euros?
If you are given the option of paying your bill in pounds or euros always chose euros. If you chose pounds the retailer will be choosing the exchange rate and you will not benefit from your card’s low rates.
If, however, you are using a normal credit or debit card check the ‘non-sterling’ fee at the cash machine. If this is under 2.5% select pounds.
- To see how to identify the best available options, check out – How to get the best deal for your holiday money abroad
5. Don’t get stung by ‘cards from hell’
Money Saving Expert has a great guide to the worst cards to use abroad and we strongly recommend you take a look at this. Some charge as much as £1.50 per transaction which can add up if you’re buying drinks, snacks and other low-value products on a daily basis.
- To find the best cards to use aboard, please check out the following article – Best cards to use abroad
The Sales Pitch!
Whilst we might be all around great guys to write a post like this, our day job is helping people (with a damaged credit history) to find affordable finance.
Not relevant no problem, though we hope we helped you so you do not get tripped up by those pesky travel credit card charges ?.