When traveling abroad, having your credit and/or debit cards with you can be both a convenience and a lifeline in emergency situations. It can also, however, cost you dearly. We explore the options for you, so that you don’t get a nasty shock when you get your card bill on your return.
Are the Charges Obvious?
Whilst you may think that credit card charges abroad are pretty obvious, some are however a bit more under most card user’s radar. Detailed below are the 3 main fees related to using your credit card abroad.
Exchange Rate Loading Fees
These loading fees are actually added onto the exchange rate by the bank when card users make foreign transactions. The card exchange rate, as dictated by Visa or MasterCard’s wholesale rate, is often very competitive, but once the exchange rate loading fee has been added the rate may not be so good!
Possibly the most worrying part of exchange rate leading fees is the fact that they don’t normally appear on your credit card statement.
These fees can be avoided however – for example the post office card does not use these fees.
Foreign Spending Fees (for when you are on a foreign spending spree!)
Some debit cards carry a flat rate charge on all foreign transactions. Other banks do not do this. Again, check the www.creditchoices.co.uk site for more information about who does apply these charges, and who does not.
Charges for Withdrawing cash while abroad.
Banks tend to make a considerable amount of money out from foreign cash withdrawals. They do this in various ways, some of which are detailed below:
- Usually you are charge somewhere in the region of 2% of the withdrawal amount, or a minimum fee of £2.
- As soon as you withdraw the cash, you will be paying interest on the money
- Because of the way that most credit card repayments are tiered, you will pay off your cheaper debt first, meaning the expensive debt (ie. The cash withdrawals you make) will be the last thing to be paid off.
- Often you will be charged a higher interest rate than your standard APR.
Should I take my credit cards abroad with me, or leave them at home?
Having your credit cards with you whilst abroad, as stated at the start of this article, can be very useful. For example, if you are in an emergency situation, having your plastic friend with you can get you out of trouble quick, whether you pay a breakdown company, hire a car, or book a hotel… the plastic in your pocket can save the day when things go wrong abroad.
One thing worth noting however is that if you do not tell your bank that you are going abroad, then they may put a stop on the card when they see foreign transactions. For this reason, we recommend you always tell the bank where you are going, and when.
It is also advisable to take your card providers contact details with you, especially if they use 0870 or 0845 numbers, as these may not work when dialed abroad – so ask them for their international numbers.