Can you use a credit card abroad?
Although it is possible to use credit cards abroad, credit card providers will often charge you fees, like currency conversion and transaction fees.
Before using your card abroad, it might be a good idea to check these fees, make sure you’re aware of any extra charges, research exactly what you’d need to pay back, and ensure you are aware of any potential penalties.
We've put this holiday guide together to help provide you with more information when using your credit card abroad.
Credit card fees abroad
When you use your credit card abroad be aware that there is often a currency conversion fee, also known as a non-sterling transaction fee, that is applied to each transaction. This is often between 2.5% and 3%, but can be as high as 6%, depending on the credit card provider. This could mean a transaction costing you the equivalent of £100 in a local currency could cost you £106 if you use your credit card.
Mistakes to avoid while using a credit card on holiday
If you decide to use your credit card on holiday, avoid common mistakes by considering the following:
Be aware of cash withdrawals
Depending on how your card works, you may be charged a fee for withdrawing cash on your credit card. If you need local currency, consider taking it with you. A cash withdrawal from a credit card can also have a negative impact on your credit score.
Have your provider’s contact details
Knowing how to get in touch with your credit card provider whilst you're on holiday can be reassuring, especially in the case of an emergency. Their phone number is normally found on the back of your credit card. Consider making a note of this in your phone, just in case your card gets lost or stolen.
Prepare for emergencies
Being prepared for any emergency that affects your ability to use your credit card, especially on holiday, might be a good idea. Consider taking cash in the local currency as a backup, as well as an alternative credit card.
If you have a problem with something you buy on your card, remember that credit card purchases between £100 and £30,000 may be covered under Section 75 of the Consumer Credit Act 1974. So, it might be worth getting in touch with your card provider to see if they can help.
Using your Vanquis Card abroad
Many people use credit cards to make purchases on holiday. This can be an option, especially if your credit card has free foreign usage, but there can also be things to watch out for.
Here are some tips to consider:
- Tell your card provider before you go
Credit card companies might block a card payment if they see it as suspicious. It could be a good idea to let your card provider know you’ll be going away, so they know you’re using your card abroad.
- Check any charges
You might want to check if there are any credit card charges for making a transaction whilst on holiday. This is sometimes a percentage of the transaction amount or a specific £ value, but there are some card providers that don’t charge for foreign transactions.
- Check which currency you’re paying in
You might want to consider paying for goods in pound sterling, if that’s an option. Some providers charge a ‘non-sterling transaction fee’, but this can often be avoided if you pay in pound sterling, rather than the local currency. Just be aware the retailer or merchant can set their own currency conversion rates, which are sometimes poor, so it can be hard to know for sure the best way to pay.
Currency considerations
Understanding the local currency and how it will impact your spending can be helpful when it comes to helping you budget within your credit limit, tracking your finances, and saving you money abroad.
Some of the key considerations are:
- Know the exchange rates
Understanding how much money you’re going to get for your pounds, as well as researching the cost of activities abroad, can help you budget for your trip and hopefully avoid unnecessary spending and charges.
- Consider getting foreign currency before you go away
Think about shopping around for the best conversion rate ahead of time. This way you can buy your currency beforehand, which might help you avoid potential fees. You might be charged for using a credit card while you’re abroad, so having some foreign currency in cash could be beneficial.
- Understand any fees
With good planning, you might be able to avoid certain fees. However, should you need to use your credit card more than you’d hoped to while you’re abroad, it might be worth checking which fees you may be subjected to from your credit card provider.
Is it better to use cash or credit cards on holiday?
Having the option of both might be a good idea. Taking both cash and a credit card can give you more flexibility. Let's say you've just enjoyed a great dinner and ask for the bill. You search your wallet and find your cash isn’t enough to cover the bill. Your credit card gives you another way to pay.
Again, you may visit a local market where the vendors only accept cash. Having both a credit card and cash could give you extra peace of mind while you enjoy your holiday.
Budgeting for your holiday spending
It can be easy for costs to quickly increase when you’re planning a holiday abroad, which is why it might be a good idea to have a budget in mind and a plan in place. This could help to make sure you don’t go over your spending limit and end up with a big payment left on your credit card.
- Research where you’re going
If you have an idea of where you’d like to go, doing some online research on the average cost of a holiday to this destination could be helpful. You could find out where the main attractions are, then set aside spending money for meals out, activities and other holiday costs like car rentals. You could then establish a price range to make sure everything you do is within budget.
- Timing is everything
When you know where you are going, decide on when. It can be more expensive to go during school holidays (although sometimes this is unavoidable) so consider checking if you can save money by switching your dates around.
- Look at accommodation options
The cost of accommodation can depend on the option you choose. Many resorts offer a variety of accommodation levels; from self-catering where you pay for all your own meals, up to all-inclusive when all food and drink is included. Self-catering can give you more flexibility around how much you spend on meals (and eating out), but some all-inclusive deals can be cheaper over a whole holiday.
- Track spending with your holiday credit card
You might find you can afford the flights and accommodation for a particular place, but what about spending money? Food & drink, trips & excursions, and even smaller costs like tips and sunbeds can all add up. You could go back to your original budget and try to split this into different categories to work out how much you’d need.
- Need insurance?
Even with a budget in place, we all know the unexpected can sometimes occur. So, another part of your holiday budget could be making sure you have travel insurance in place. It can help cover the cost of lost luggage and any accidents or illness abroad.
FAQs
Is it better to use cash or card on holiday?
Since many credit and debit card providers charge currency conversion fees, you might consider using cash. It could still be worth checking the exchange rate you got a when swapping your pounds for local currency, to ensure it is a better deal than the potential card-based fees and exchange rates.
Some credit or debit card providers don’t charge for transactions abroad. So, it might be worth considering using them over cash.
However, using a credit card at any time comes with certain responsibility; like not exceeding your credit limit and ensuring you make timely repayments when you do spend.
Is it more expensive to use my debit or credit card whilst I'm abroad?
Sometimes, credit card fees can be higher than debit card fees when buying goods abroad.
However, the best value card to use can depend on a variety of factors. For example, a merchant’s own currency conversion fees, and temporary holds you may be subject to, could have an influence on the final cost.
Can I buy local currency with my credit card?
While it is possible to buy local currency with your credit card, this is considered to be a cash withdrawal. Cash withdrawals from a credit card often come with additional fees, as well as interest, and can have an impact on your credit file (Credit card providers often notify credit reference agencies when a cash withdrawal is made from a credit card).
Are there benefits to using my credit card abroad?
Although subject to fees, using your card abroad might be more convenient and your transactions are covered by a secure level of fraud protection, should something go wrong.
