Information About Using Credit Card Abroad
The way we pay for our products, services and goods abroad has certainly changed over the past few years. Long gone are the days when the good old travellers’ cheques are the most popular choice to travel with. Cash is always going to be a popular option for many travellers but in today’s world, there is a much easier and more convenient way to pay for the goods and services we purchase whilst we are away on holiday and that is the good old plastic and friendly Credit or Debit card.
Cost Of Using Credit Card Abroad
However, although the Credit or Debit card may be a quick and convenient way to make your purchases or access your local currency, it does have its hidden costs which sadly many people do not realise. The large fees that the banks charge you for making purchases abroad can amount to a significant sum at the end of your holiday and an unexpected cost if you are not aware of these fees. These large fees can be charged every time you make a transaction or withdrawal whilst you are away! The frightening thing about this is, if you use your card a lot throughout your holiday, you will have a accumulated a fair amount of fees which will need to be paid upon your return.
Familiarise Yourself With The Fees For Using Credit Card Abroad
Although Credit and Debit cards are a really useful and convenient way to make purchases when you are abroad, the bottom line is very simple.
“If you intend using your Credit or Debit cards on your travels, ensure you are familiar with the fees you will incur every time you use them.”
If your bank charges you for each transaction or withdrawal you make, then try to find a bank card that does not charge you for using your credit card abroad. If it does, make sure it is the minimal charge possible.
What Fees Are Charged When Using Your Cards Abroad
Credit Card Charges Abroad
Every time you use your Credit card abroad whether it is purchasing goods and services or a cash withdrawal from an ATM, your card provider or bank may charge you. These fees are known as a ‘Foreign Loading Fee‘ or ‘Foreign Exchange Commission’ and depending on which card you use abroad, you can be charged up to nearly 3% of the total amount spent. On a withdrawal you can be charged up to 3% of the amount withdrawn or it can be a set fee for each withdrawal.
In some cases, when you use your card to withdraw cash at one of the ATM’s abroad, you could actually be hit with 3 separate charges. These charges could be the banks exchange rate, Foreign Exchange fee and the withdrawal fee of up to 3% or a set fee.
Remember: If you use your Credit card to withdraw cash abroad, you can incur interest from the moment you make the withdrawal!
Although these are the most common fees charged by the card provider or banks, there are other fees that may be charged. Some cards will incur interest charges from the moment you make a purchase or cash withdrawal, even if your balance is paid off in full upon return.
Advantages And Disadvantages Of Using Credit Card Abroad
There are both advantages and disadvantages of using your Credit cards abroad. As we have mentioned earlier, the main disadvantages of using your credit cards abroad is that you can incur fees every time you use them. However, although there are disadvantages of using your cards abroad when you travel, using your cards can also have advantages.
Credit Card Protection While Abroad
Using your credit card to purchase large ticket price goods and services over £100 will provide you with extra protection on those purchased items. Any purchases over £100 and up to £30,000 will be protected under the consumer credit act. This means that purchasing services and products such as flights, hotels, show tickets, day trips, tours, ski lift passes, ski hire etc.. on your Credit, will provide you with additional protection should you encounter any problems with your purchases.
Having a Credit card with you while you are abroad, can be a great item to have as a backup in an emergency and will provide you with peace of mind.
Tell Your Bank You Will Be Using Your Cards Abroad
The banks are trying to increase their security on Credit card fraud and as a result, are clamping down on activity abroad that they see as suspicious. If they see that your Credit card is being used abroad in a foreign and you have not informed them you will be away, they may stop all transactions and block your card from being used simply because they think it could fraudulent activity. To prevent this from happening whilst you are abroad, you should always inform your bank or card provider and let them know that you will being going away, where you are going and that you intend using your cards whilst you are away. This will then ensure you can use your cards whilst you are away without them being blocked and any transaction being stopped.
Take Your Credit Card Details With You
Always take your Credit Card details with you and also take the Emergency number to call if you card is lost and stolen.
Take More Than One Card
If you intend on taking your Credit card abroad with you and intend using for the majority of your purchases, then you should ensure you have a backup in case anything happens to your card. The last thing you want to be whilst you are abroad is to be without money or without any form of making payment. If possible, take more than one card just in case it is lost, stolen or is blocked.
Money Saving Tips For Using Credit Card Abroad
Take Some Local Currency With You
Don’t just rely on your cards when you travel, take some local currency with you. Anything can happen to your cards whilst you are away and if you take some local currency with you, you will not be caught short. Cards can easily be lost or stolen and can also be refused in shops, restaurants or bars and ATM’s can be out of order which will result in you having no money! Exchange some money before you travel and this will ensure you have currency to buy any essentials when you arrive.
Tip: Never exchange money at the airport because you will receive a really poor exchange rate.
Check Your Bank Or Card Providers Fees
You should always check and familiarise yourself with your banks or Credit card providers ‘Terms and Conditions’ regarding using your Credit card abroad. If the fees are high, try to avoid using those cards and look for a card that does not charge fees for overseas spending or only charges a minimal amount.
Withdraw Larger Amounts
If your bank charges a minimum set fee or minimum percentage for each withdrawal you make, it is better to withdraw larger amounts of money when you visit the ATM. This will reduce the amount of times you withdraw cash and will save on those fees. If you only withdraw small amounts of money, it will mean you need to make more visits to the ATM and this will result in you having to pay more fees.
Use A Pre-Paid Card
There are now several pre-paid Credit cards available on the market and these are really good cards to have. Pre-paid cards allow you to top them up before you travel and then use them just like any other card to purchase your goods and services whilst you are away. The beauty of the pre-paid cards is that you cannot over spend on them and you will have already paid before you go, so you will not have any balance to pay off on your return home. It also means that you will not need to carry large amounts of money with you. You can also top up the pre-paid cards online which means you can top them up wherever you are in the world.
When Using Credit Card Abroad Pay In Local Currency
If you have the option, always pay in the local currency. Many retailers will ask whether you want to pay in GBP Sterling or in the local currency and if you get asked which one you would prefer, choose the local currency.
Check Your Statement When You Get Back After Using Credit Card Abroad
This sounds crazy but you should always check your Credit card or bank statements when you return home from your travels for any fraudulent activity. Yes, it does happen and more commonly than you would think and more often than the Credit card providers and banks would like. Check your statement to ensure that there are no additional items on your statement that you did not purchase. Whilst you were abroad.
Taking your Credit or Debit cards to use abroad certainly has its benefits but it can also have its disadvantages due to the cost of using them whilst you are abroad. Always ensure that you are familiar with the fees you will be charged if you use your Credit card abroad and ensure you choose a Credit/Debit card that has the minimal charges or better still, has no charges at all for foreign transactions and withdrawals or using credit card abroad.