Travel credit cards

What is a travel credit card?

Travel credit cards are typically designed to make it cheaper for you to spend money overseas – and some may even reward you for travelling. These are not to be confused with currency cards (also known as travel money cards), which you load with money before setting off on holiday. Either can be a good solution if you need to spend money abroad without packing wads of cash in your suitcase.

How do travel credit cards work?

Most credit and debit cards will charge you a fee for making purchases or withdrawing cash abroad. What’s more, they may not offer a good exchange rate.

Travel credit cards usually don’t charge a fee for use overseas – and they often offer excellent exchange rates. They may charge higher interest rates, but as long as you pay the balance off in full and on time each month, they can be an ideal option for holidays – or even for buying from foreign websites.

Travel credit cards – what should I consider?

Wondering whether to choose an overseas travel credit card? Here are some key points to consider:

  1. There’s usually no charge for spending – Standard credit and debit cards often charge a ‘load fee’ of around 3% per transaction if you use them abroad – that’s an extra £3 for every £100 you spend. The best travel cards won’t charge you for making purchases overseas.
  2. There’s usually no charge for taking out cash – Travel credit cards typically don’t charge for overseas ATM cash withdrawals – whereas a standard credit card or debit card usually takes around 2-3% for each withdrawal.
  3. Best exchange rate in local currency – When paying by card abroad, always choose to pay in local currency rather than sterling. It means that your bank will do the conversion for you, and if you have a travel credit card you will get the best possible exchange rate. Paying in pounds allows the seller to use their own bank to do the conversion, which will probably be a lot higher.
  4. Pay bills off in full and on time – Travel cards are great for spending, but they tend to come with a high APR (annual percentage rate), and rarely come with introductory 0% purchase rate periods. So, try to pay the monthly bill in full and on time, to avoid high interest charges.

Applying for a travel credit card

Applying for a travel credit card is usually straightforward – you can typically do it online, or in person at one of the lender’s branches. You’ll need to fill in an application form, which usually asks about things like your personal details (e.g. name, date of birth, and address) and salary.

When the lender reviews your application, they may look at information from your credit report, as well as any data they already hold on you (e.g. if you’ve been their customer before), to decide whether to approve you. You can get an idea of how lenders may see you by checking your free Experian Credit Score – the higher it is, the better your chances of getting approved for the best deals.

What are my alternatives to travel credit cards?

Whether a travel credit card is right for you really depends on your needs and preferences – so, it’s helpful to understand all your options. Here are some alternatives to using a travel credit card:

Air miles credit cards

Some credit card companies link up with airlines to give discounts for flights, hotels and other travel costs. Examples include British Airways Avios, and Virgin White and Black. Your own bank account may also have travel reward offers.

Debit cards

A few debit cards allow fee-free spending and withdrawals worldwide – but to do that you would need to move your current account, which may be a step too far just for a holiday. Remember, if things go wrong (e.g. your flights are cancelled) or there’s a dispute, credit cards generally give you more protection than debit cards.

Currency (or travel money) cards

Currency cards – also known as travel money cards – aren’t the same as travel credit cards. They’re prepaid cards, meaning they allow you to load the card with money before you travel. There are no additional fees to pay once you’re abroad, and some currency cards will allow you to lock the exchange rate when you load it.

The benefits of using a currency / travel money card may include:

  • It can be easier and safer than carrying wads of cash when you’re on holiday.
  • It also gives you extra control of your spending budget, as you can only use the amount you loaded onto the card. But don’t worry about getting stuck without money – you can choose to top the card up when you’re abroad, which can usually be done online.
  • You don't have a credit check run on you when you apply for a prepaid currency card, whereas you will be credit checked if you take out a specialist travel credit card.
  • The cards are typically linked to the MasterCard/Visa networks, not your bank account, which gives you added protection.

Bear in mind that there can be fees and charges for application, replacement or inactivity – it varies by provider – and there may be upper limits on spending and withdrawals. We're a credit broker, not a lender†

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