Travel credit cards
Between expensive last-minute flights and all-inclusive hotel packages, lavish foreign holidays have always been a reliable way to blow a hole through the family finances. When it comes to spending money though there is one way you can pinch the pennies - namely by taking out a specialist travel credit card to get around so-called transaction fees.
Why do I need a travel credit card?
As above, the big advantage of using a travel card as opposed to your every day credit or debit card is that you won't have to pay any transaction fees.
Typically banks will charge you somewhere around 3% of your purchase when you use your card overseas - which can really add up when you factor in taxi journeys, restaurant and bar tabs and the occasional supermarket jaunt.
Travel cards are also optimised to be used abroad - meaning that you can always spend in the local currency without having to convert to sterling.
How do they compare to debit cards?
Holidaymakers using their bogstandard debit cards overseas will encounter many of the same issues faced by those equipped with credit cards, insofar as they will still have to pay transaction fees both on purchases and cash withdrawals.
The advantage to using a debit card, of course - both at home and abroad - is that you don't have to worry about paying any interest or missing a bill and getting hit with unexpected fees.
It's also a lot easier to keep a watch on your spending with a debit card, as you'll be made aware by your bank as soon as you start going into overdraft.
Can I pay and withdraw with a travel credit card?
The short answer here is that it depends on the terms of the particular travel credit card you take out.
In general though you should avoid withdrawing cash with a travel card, in the same way you would with your normal credit card in a foreign country.
The reason for this is that while travel cards never charge any fees when you're spending at a store, restaurant or taxi they do sometimes take the obligatory 3% when you're using an ATM.
Which providers offer travel credit cards?
As with any credit or debit card, it always pays to shop around before you sign on the dotted line. To help get you in the right ballpark, here are some of the leading travel cards currently available in the UK.
Santander Zero Credit Card
Pros
- 0% non-sterling transaction fee AND 0% non-sterling withdrawal fee - so you can spend and take out cash at your leisure
- Same transaction terms in and outside of Europe
Cons
- APR of 18.9%, which is also applied on ATM withdrawals
Metro Bank Credit Card
Pros
- 0% non-sterling transaction fee and 0% non-sterling withdrawal fee in Europe
- APR is a rather more generous 14.9%, so you have a little more breathing room in terms of interest accrued
Cons
- Transaction fees are only waived in Europe, so trips further afield will incur 3% charge on any expenditures and withdrawals - which is more or less the same as most bogstandard credit cards
Barclaycard Rewards Card
Pros
- No transaction fees or interest on expenditures and withdrawals overseas (providing bills repaid on time)
- Same transaction terms in and outside of Europe
- Visa cards - so will be accepted almost everywhere without issue
Cons
- APR of 22.9% is on the hefty side, so savings made on transaction fees could come back to bite you elsewhere
NatWest Credit Card
Pros
- No transaction fees on overseas purchases
- One of the best APRs on the market at 9.9%, making it ideal for those who haven't experienced using a credit card before
Cons
- Interest rates and additional fees can be high if not repaid on time (so ensure you set up a direct debit to stay on top of things)
- 3% fee will apply when making ATM withdrawals