If you’re hoping to travel abroad this year, it’s a good idea to plan ahead and consider what you use to pay for stuff overseas.
Some credit card providers promise 'fee-free spending’ abroad. But, if you use your credit card to withdraw cash overseas you could get charged up to 5%, which is a big problem for travellers, particularly outside of Europe.
Luckily, there are a number of cards that also allow fee-free cash withdrawals.
It's worth noting you'll usually get charged interest on cash from the day you withdraw it, so you'll want to pay off your balance as soon as possible to minimise the cost.
Keep in mind the exchange rate each card offers may be different (Mastercard's exchange rate is generally better) and you might want to take that into consideration when comparing deals.
Why use a credit card for spending abroad?
You could, of course, choose to pay for things with your debit card.
But the big benefit of using a credit card is that you're protected if there are any issues with purchases you make over £100 (up to £30,000).
Under Section 75 of the Consumer Credit Act, you can claim compensation either from the merchant or your credit card provider.
You may also be able to earn cashback on your purchases, both in the UK and abroad, by using certain credit cards.
Always pay in the local currency
Travel credit cards are great – providing you pay in the local currency.
Shops and restaurants abroad may offer you the chance to pay in pounds. This is known as 'dynamic currency conversion' and means you're likely to get a terrible conversion rate, ruining the benefits of your credit card.
Always opt to pay in the local currency.
Now, let’s take a closer look at the credit cards that don't charge you for using them abroad.
Barclaycard Rewards Card
With the Barclaycard Rewards card (representative APR 28.9%), you don’t pay any fees on purchases abroad and get 0.25% cashback on spending.
The credit card also doesn’t charge interest on cash withdrawals abroad as long as you pay off your balance in full every month.
But you’ll need a good credit history to apply and need to have a personal income of over £20,000 a year, so this card might not be an option for everyone.
Halifax Clarity Mastercard
The Halifax Clarity card won't charge you for spending abroad if you pay off your balance in full every month.
If you make any cash withdrawals, you won't be charged a fee, but you will be charged interest from the date the withdrawal is made – so you should avoid using this card at an ATM if possible. The rate you pay will be between 23.94% and 28.94%.
What challenger banks offer
Challenger banks Starling and Monzo don't charge foreign spending or ATM fees. But Monzo has limits on how much you can withdraw fee-free, depending on the account.
For example, you can make unlimited fee-free cash withdrawals in the European Economic Area (EEA) with a free account but only if Monzo is classified as your main bank. Otherwise, you can withdraw £400 fee-free every 30 days before you pay a 3% fee.
Outside the EEA, you can take out £200 for free every 30 days, but you’ll be charged 3% for over this amount.
If you have a Plus or Premium account (a monthly fee applies), withdrawals are fee-free in the EEA. Outside the EEA, you can withdraw either £400 or £600 for free every 30 days, but if you exceed this, a 3% charge on withdrawals applies.
Revolut is mainly fee-free and uses the interbank exchange rate, which it claims gives better rates.
Revolut charges a 2% fee (minimum £1 per withdrawal) once you either withdraw £200 or make five ATM withdrawals in a month.
If you have Revolut Premium or Metal, you’ll get a higher ATM withdrawal allowance, but these accounts have a monthly fee.
Metro Bank won't charge fees for spending or cash withdrawals in Europe only, plus there are no card transaction fees in the Single European Payments Area (SEPA).
The Chase current account doesn’t charge you for using your card abroad and offers 1% cashback for a year (although a cap on cashback or minimum deposit may apply), plus access to a savings account offering 4.1% interest. Customers can also earn 1% interest on balances in their current account.
You can check out loveMONEY’s review of the Chase current account here.
Virgin Money’s M Plus account offers fee-free spending and cash withdrawals worldwide and a 2.02% rate on up to £1,000.
You’ll also get access to a linked savings account offering 3.55% interest on up to £25,000 (2.52% interest on balances over this amount).
New bank Kroo does not charge for payments in foreign currency. It also doesn't charge you for using ATMs overseas until 30 April 2024 but after this date, it charges a 3% fee for cash withdrawals abroad of over £200 in a calendar month.
Prepaid currency cards
Another option is prepaid currency cards.
The great thing about these cards is they allow you to load up your card with funds before you jet off abroad, as well as when you’re out there, making it easier (in theory) to stick to a budget.
Certain cards don’t charge you for making purchases overseas or for withdrawing cash.
And because these cards are prepaid, there’s no need to worry about interest rates. What’s more, you’ll generally get a competitive exchange rate. But they come with some fees, so read the small print carefully.
Check out The best UK prepaid cards for spending abroad for more information.
Still not found the right card for you? View our complete guide to credit cards to see all your options.
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