If you’re gearing up for that long-awaited overseas trip or frequently find yourself browsing through international websites for that perfect purchase, then you will undoubtedly benefit from securing a travel-specific credit or debit card. These gems can be your ticket to snagging nearly unbeatable exchange rates wherever you venture. Join us as we guide you through the crème de la crème of travel cards, those to steer clear from, and the little tricks to understand your card’s charging structure. Here’s everything you need to know!
Understanding the Dynamics of Travel Credit and Debit Cards
When abroad, most standard credit and debit cards will indeed allow you to splash some cash, but it comes at a cost. Even though these card providers have access to almost perfect exchange rates, they tend to slap on a pesky foreign transaction fee, also known as a ‘non-sterling transaction fee’, which generally hovers around the 3% mark. Consequently, acquiring £100 worth of foreign currency would set you back £103.
But wait, there’s more: numerous debit cards will impose a flat fee (ranging from 50p to £1.50) with every overseas transaction, regardless of its value. Moreover, pulling out cash could incur fees and inevitable credit card interest.
Nevertheless, we bring good tidings! Specialist travel cards exist that waive these extra charges, offering you the same near-ideal rates the banks enjoy.
The Cards to Avoid for Overseas Transactions
We cannot stress this enough: avoid using the following cards when you’re spending money overseas. Barring transactions in euros within the EU, Iceland, Liechtenstein, or Norway, these cards levy a hefty 50p to £1.50 transaction fee on top of their regular exchange rate charge, which can make even small purchases exceedingly expensive.
- Halifax (2.99% exchange mark-up)
- TSB (2.99% exchange mark-up)
- Bank of Scotland (2.99% exchange mark-up)
- Lloyds Bank (2.99% exchange mark-up)
Top Choices for Travel Credit and Debit Cards
Choosing the top card can be quite the conundrum, with our front-runners all promising no extra charges for overseas spending and ATM withdrawals. Here’s a rundown on the best options, depending on your preferences:
Barclaycard: As one of the travel credit cards of choice, Barclaycard captivates with interest-free withdrawals, complemented by a continuous 0.25% cashback. Additionally, it offers robust Section 75 protection for purchases exceeding £100, granting stronger safeguards compared to debit cards.
Chase: Securing the top spot for debit cards, Chase entices with a 1% cashback on the majority of purchases for at least a year. Although it necessitates opening a new bank account, the process is quite straightforward, demanding just an ID verification instead of a comprehensive credit check. However, do take note of the £1,500 monthly limit on ATM withdrawals and potential chargeback protection on overseas purchases.
First Direct: This option not only offers a lucrative £175 bonus when you transfer your existing bank account but also consistently ranks at or near the pinnacle in customer service polls across the board. Just like Chase, it may provide chargeback protection for your overseas purchases.
Other Noteworthy Travel Debit and Credit Cards
If the above options don’t quite tickle your fancy, fret not! We have gathered some close contenders that offer fee-free overseas spending, albeit with certain limitations or ATM charges. Let’s explore:
Currensea Mastercard: This card brings a unique proposition, allowing you to link it to your current bank account, thus avoiding non-sterling transaction and ATM fees, albeit at slightly inferior rates compared to other options. Get the full scoop in our Currensea review.
Starling’s Mastercard: Not only does it offer fee and interest-free overseas spending and ATM withdrawals (capped at six per day and £300 daily), it also simplifies the acquisition process with just an ID check for verification.
Halifax Clarity Mastercard: This emerges as a strong alternative to the Barclaycard, with the caveat that ATM withdrawals attract an interest of 22.9% to 28.9%, making it more suited for direct spending rather than cash withdrawals.
What Are the Options Besides Travel Credit and Debit Cards?
Should the idea of acquiring a new card not appeal to you, there are still ways to stretch your pound, euro, or dollar further. Consider these alternatives:
These cards enable you to preload a certain amount at a locked rate. While some might have hefty fees or take a margin on the exchange rate, options like Revolut and Wise offer fairly good deals, potentially rivalling traditional cards. These are always well worth looking into.
If you find yourself in a place where cards aren’t accepted readily, cash may be your best option. Cash is always a reliable and handy source of finance for things like taxis, tips or small purchases that would otherwise incur a transaction fee charge.
So, gear up, choose wisely, and make your overseas adventure not only memorable but also light on your wallet! Happy travels!
Information correct as at 12th September 2023
Picture Credit: Canva