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