Using a credit card on holiday
Follow our top tips to find out the smart way to use your credit card on holiday.
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Can you use a credit card abroad?
Although it’s possible to use credit cards abroad, providers will often charge fees, like currency conversion and transaction fees.
Before using your card abroad, check the fees, be aware of any extra charges or potential penalties and research what you’ll need to repay.
Planning a trip? This handy holiday guide gives you everything you need to know about using your credit card abroad.
Credit card fees abroad
When you use your credit card abroad, be aware there’s often a currency conversion fee (also known as a non-sterling transaction fee) for each transaction. This is normally between 2.5% and 3%, but depending on the credit card provider, it can be as high as 6%.
This could mean a transaction worth £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, try to avoid common mistakes and consider 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, think about taking it with you. A cash withdrawal from a credit card can also have a negative impact on your credit score.
Have your card provider’s contact details – Knowing how to get in touch with your credit card provider while on holiday can be reassuring, especially if there’s an emergency.
Their phone number is normally found on the back of your credit card so make a note of it in your phone, just in case your card gets lost or stolen.
Prepare for emergencies – Being prepared for an 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 a different credit card if you have one.
If you have a problem with something you buy on your card, remember 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 contacting your card provider to see if they can help.
Using your credit 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 a few things worth keeping in mind before using your credit card abroad:
Tell your card provider before you go
Credit card companies might block a card payment if they think it’s 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 while 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 budgeting within your credit limit, tracking your finances and saving money abroad.
Some of the key considerations are:
Know the exchange rates – Knowing how much local currency you’ll get for your pounds – and checking the cost of activities abroad – can help you budget smarter and hopefully avoid unnecessary 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 useful.
Understand any fees – With good planning, you might be able to avoid certain fees. So if you need to use your credit card more than you’d hoped while you’re abroad, it might be worth checking which fees your card provider charges.
Is it better to use cash or credit cards on holiday?
Taking both cash and a credit card can give you more flexibility. For example, imagine you’ve just had a great dinner and the bill arrives, but there’s not quite enough cash in your wallet. That’s where your credit card comes in handy.
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 add up quickly when you’re planning a holiday abroad. That’s why it might be a good idea to set a budget and have a plan in place. It could help you stay within your spending limit and avoid being left with a big payment 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 things 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’re going, decide on the best time. It can be more expensive to go away 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 and drink, 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’ll need.
Need insurance?
Even with a budget in place, the unexpected can sometimes happen. So, another part of your holiday budget could be making sure you have travel insurance in place. This can help cover the cost of lost luggage and any accidents or illness abroad.
Check your eligibility
You may be in the market for a credit card but not quite know which one will suit you best. View our extensive range of credit cards, including our Vanquis Credit Builder Credit Card.
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Frequently Asked Questions
Is it better to use cash or card on holiday?
Since many credit and debit card providers charge currency conversion fees, you might want to think about using cash.
But it could still be worth checking the exchange rate you get when swapping your pounds for local currency, just to make sure it’s 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 could be a good idea to consider using them over cash.
However, using a credit card at any time comes with certain responsibility, like not going over your credit limit and making sure your repayments are on time.
Is it more expensive to use my credit or debit card abroad?
Sometimes, credit card fees can be higher than debit card fees when buying goods abroad.
But the best value card to use can depend on a number of things. For example, a merchant’s own currency conversion fees, and temporary holds, could influence the final cost.
Can I buy local currency with my credit card?
While it’s 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 interest and additional fees and can have an impact on your credit file. Just so you know, credit card providers often tell credit reference agencies when a cash withdrawal is made from a credit card.
Are there benefits to using my credit card abroad?
Although there can be 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.