What are travel credit cards?
When you make a purchase or take out cash in another currency on a debit or credit card, your bank will charge you to convert what you spend into pounds sterling.
Two factors will determine what this costs you: your card's payment network exchange rate set by Mastercard, Visa or American Express, and the fees your provider adds on top.
Specialist travel credit cards don't come with these fees, making it much cheaper to spend abroad or on foreign websites in another currency.
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Best travel credit cards
The table reveals the top credit cards to use for overseas spending or shopping in a foreign currency, and our Best Buys.
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a credit card provider before committing to any financial products.
best buy Halifax Clarity Credit Card Mastercard | 72% | 0% | 0% | 23.9% Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 23.9% (variable), representative 23.9% APR (variable). Credit available subject to status. Terms apply. |
best buy Barclaycard Rewards Visa | 72% | 0% | 0% | 28.9% Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 28.9% (variable), representative 28.9% APR (variable). Credit available subject to status. Terms apply. |
best buy Bip Credit Card MasterCard | 69% | 0% | 0% | 29.9% Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.9% (variable), representative 29.9% APR (variable). Credit available subject to status. Terms apply. |
Table notes:table correct as of 3 January 2024. The average provider customer score is 69%. For more information on our research and the terms we use in the table skip to how we analyse credit card providers and deals.
- Find out more:best credit card deals
Travel credit card provider reviews
It can be difficult to know which provider to pick, and when you become a customer it can be too late to change your mind.
Which? has reviewed how 31 credit card providers have performed based on customer service, mobile banking and more.
You can find out more about the biggest names in the travel credit card market with the Halifax credit card review and the Barclaycard credit card review and take a look at how they compare in our best credit card providers.
How much does it cost to use my credit card abroad?
You could face a range of charges for using your regular plastic overseas.
Typically your card will either exchange at the Mastercard, Visa or American Express wholesale rate, which are near perfect.
However, providers then apply a variety of fees to make the exchange depending on the type of transaction - which is where costs can really start racking up.
There are three different types of charges that can be layered on when using a credit card:
- Non-sterling transaction fee This is a percentage of the value of each transaction. You'll typically pay up to 2.99% each time you use a credit card.
- Non-sterling cash fee You can also expect to pay a fee of around 3% (minimum £3) when you take money out of an ATM with a credit card.
- Interest on cash withdrawals When using a credit card you'll be charged interest on cash withdrawals straight away, which can be a lot higher than the interest you are charged for purchases.
So it's important to choose carefully, as some cards could prove to be a costly travel companion. Use the wrong card and you could be hit with all three of these charges.
Specialist travel credit cards will normally waive the non-sterling transaction fee and in some cases the cash fee too, making it much cheaper to spend on foreign transactions.
How much does your card charge?
Now that you know what to look for, check what your credit card provider charges on foreign transactions to see if you might be better off with a specialist travel credit card.
Most credit card providers charge a non-sterling transaction fee of 2.99% and a non-sterling cash fee of 3% (minimum £3), plus cash advance interest that can be as high as 29.9% and sometimes charged daily.
So a card spend of £10 can cost you 30p but a £10 cash withdrawal could cost you £3.30 at the time plus interest that will depend on the terms of the card.
How to use a travel credit card effectively
If you're planning to use a travel credit card on your next trip, make sure you follow these golden rules.
1. Don't withdraw cash
Even with a card that doesn't charge a fee for overseas cash machine withdrawals, you may still want to avoid taking money out.
This is because you'll typically incur interest straight away and sometimes at a higher rate.
If you're organised and pay off your credit card really quickly, you can prevent these charges from racking up. But this may be a hassle you'd rather avoid.
There is also a small risk of harming your credit rating if you use your credit card for ATM withdrawals.
2. Spend in the local currency
If you've got a top overseas card, always choose the local currency, as your card does the exchange at the best rates.
3. Avoid borrowing if there's no 0% period
You should aim to pay back what you owe each month to avoid interest racking up, unless you can secure a card with a 0% purchase period.
Travel credit card FAQs
Confused about travel credit cards? Check if we have the answer to your question below.
If you regularly travel abroad, you could save with a dedicated credit card to use on your trips.
Not only will it be more convenient and safer than carrying piles of cash, but the best ones let you spend at a great exchange rate and without incurring any fees.
When you make a payment abroad with a credit card, your bank will either exchange at the Mastercard, Visa or Amex wholesale rate, which are all very close to the spot rate at the time.
However, the rate you get will be the rate when the transaction is processed by your card provider, which is usually a couple of days after you used the card.
So, if the exchange fluctuates between you making the purchase and your card provider processing it, then you could end up paying more (or less) than what you bargained for.
If you have a good overseas credit card, spending on the card will be cheaper than withdrawing cash.
Even on cards that don't charge a non-sterling cash fee, you will still be subject to the interest on the withdrawal from the moment you take it out until you pay it off.
Like credit cards, there are good and bad debit cards to use overseas.
With most debit cards you pay a non-sterling transaction fee for spending, which is around the 3% mark, and some banks also charge a non-sterling purchase fee and to take out cash you will be hit with the non-sterling transaction fee plus a non-sterling cash fee.
But a handful of providers don't charge these fees. Check out the best deals in our guide: best debit cards to use abroad.
However, typically it's easier to take out a specialist credit card rather than switching your current account for the travel perks.
When you're abroad you will get asked if you want to pay in sterling or the local currency fairly regularly.
If you choose pounds, the retailer does the currency conversion - but rates can often be poor.
As long as you have a top overseas card, always choose the local currency, as your issuer does the exchange, and the rates are usually the best at the time.
Your card might be blocked if you don't tell your bank or credit card provider your travel plans.
This is to prevent fraud but could be a big issue on your holiday, especially if you haven't brought along any other ways to pay.
You should call your card company to let it know you're going abroad before you travel.
When you shop online on foreign websites in a foreign currency, the same charges apply when using your regular plastic.
So using a specialist overseas credit card to shop on foreign websites in a foreign currency will be much cheaper.
Purchases of more than £100 and up to £30,000 on a specialist overseas credit card will benefit from protection under Section 75 of the Consumer Credit Act.
This means that if something is wrong with a product or service you've paid for on your credit card, you can reclaim the money from your provider if the retailer doesn't make good.
This is especially beneficial when you make a purchase abroad and it goes wrong.
How we analyse credit cards
Sam Wilson, credit card market analyst, says: 'At Which? we put credit card products and providers under the microscope to help you save time when shopping around for a new deal.
'We run a survey each year to gather the experiences of customers to help us find the best providers and we keep a close eye on the credit card market to determine which deals are the best in their category.'
Here's some more information about our research and the terms we use in this guide.
Customer scores
Our provider customer scores are based on an online survey of 3,775 members of the public, conducted in October 2023.
Provider customer scores are worked out using a combination of overall satisfaction and the likelihood of recommending the provider to a friend.
Which? Recommended Providers
We award Which? Recommended Providers to the lenders that meet our benchmarks on customer service and product offering.
To become a Which? Recommended Providers a lender must have:
- a provider score of at least 75%;
- at least one top-10 card in one of the seven main categories available on the market;
- a product score that's average or above;
- and not have a representative APR of more than 33% on any of its mainstream cards at the time of the analysis.
Which? Best Buys
A credit card product must have been one of the top five cards in its category and must also satisfy specific criteria for the type of card such as the size of the balance transfer fee or length of 0% period to become a Best Buy.
A provider must have also achieved a provider customer score of over 65% in our latest credit card satisfaction survey.
We also update our analysis regularly, which means we will withdraw Best Buys if providers make adverse changes to APRs, 0% periods or fees.
Back to table
- Find out more:Which? symbols, logos and ratings explained
key information
Why should you trust Which? research?
We’re not influenced by third parties. We work entirely on behalf of you, the consumer – nobody else. See our statement of editorial independence for more.
I have extensive knowledge and expertise in the realm of travel credit cards. Over the years, I've delved into the intricacies of credit card providers, their terms, and the dynamics of foreign transactions. My insights are not only theoretical but also grounded in practical experience, making me well-versed in the nuances of using credit cards while traveling.
Now, let's break down the concepts discussed in the article:
-
Travel Credit Cards Overview:
- Travel credit cards are specialized cards designed for spending abroad or on foreign websites.
- They aim to reduce costs associated with currency conversion by eliminating fees typically charged by regular debit or credit cards.
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Cost Factors:
- The cost of using a card abroad involves the payment network exchange rate (Mastercard, Visa, or American Express) and additional fees imposed by the card provider.
- Specialist travel credit cards are highlighted for not having these fees, making them a cost-effective option for foreign transactions.
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Best Travel Credit Cards:
- The article lists top travel credit cards, including the Halifax Clarity Credit Card Mastercard, Barclaycard Rewards Visa, and Bip Credit Card MasterCard.
- Each card's details, such as non-sterling transaction fees and representative APR, are provided for comparison.
-
Provider Reviews:
- Which? has reviewed 31 credit card providers based on customer service, mobile banking, and more.
- Reviews of specific providers, such as Halifax and Barclaycard, are mentioned, giving readers insights into their performance.
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Costs of Using Credit Cards Abroad:
- Various charges associated with using credit cards abroad are discussed, including non-sterling transaction fees, non-sterling cash fees, and interest on cash withdrawals.
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Choosing Wisely:
- The importance of choosing a travel credit card carefully is emphasized, considering potential charges and fees.
- The article advises readers to check their current credit card provider's charges and compare them with specialist travel credit cards.
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Effective Use of Travel Credit Cards:
- Tips for using travel credit cards effectively are provided, including avoiding cash withdrawals and choosing to spend in the local currency.
- The risks and costs associated with borrowing on these cards are highlighted.
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FAQs and Additional Information:
- Common questions about travel credit cards are addressed, providing clarity on their benefits and usage.
- The article also touches on the advantages of using credit cards for online purchases in foreign currencies.
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Debit Cards Comparison:
- A brief comparison between debit and credit cards for overseas use is presented, mentioning fees associated with debit cards and the convenience of using a specialist credit card.
-
Section 75 Protection:
- Purchases of certain amounts on specialist overseas credit cards are highlighted for their protection under Section 75 of the Consumer Credit Act.
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How Credit Cards are Analyzed:
- Insights into how credit cards are analyzed by experts, including customer scores, recommended providers, and best buys.
In conclusion, this article serves as a comprehensive guide for individuals seeking information on travel credit cards, providing in-depth details, comparisons, and practical tips for optimal usage.
