Travel credit cards

Top cards for travelling abroad
One of the cheapest ways to spend abroad

If you’re gearing up for an international journey or frequently shop on overseas websites, using a specialist travel credit or debit card is among the most cost-effective methods to spend money abroad, as it offers near-perfect exchange rates globally. This guide highlights the best travel cards, which ones to steer clear of, and how to verify the charges applied by your current card.

• Top travel credit and debit cards
  Chase – fee-free + 1% cashback
  Halifax Clarity – fee-free + £20 cashback
  Barclaycard Rewards – fee-free + 0.25% cashback
  Currensea – links to your bank account + £10 cashback

How do travel credit and debit cards work?

Most credit and debit cards allow for international spending, but often impose a fee for this service. While your card provider benefits from nearly optimal exchange rates, it typically applies a foreign transaction fee (referred to as ‘non-sterling transaction fees’) of around 3%. Consequently, £100 in foreign currency would actually cost you £103.

Additionally, some debit cards impose a flat fee (usually between 50p and £1.50) for every overseas transaction, regardless of the transaction amount. Withdrawing cash abroad often incurs extra fees and unavoidable interest charges on credit cards. For more detailed information, refer to hidden holiday spending charges.

The silver lining is that there are specialized travel cards available that do not charge these fees, allowing you to enjoy the same near-perfect exchange rate as the bank.

A specialist card can save you over £100 per holiday

Here’s a breakdown of how much spending $1,000 can cost in pounds (based on five $100 cash withdrawals and 20 transactions of $25 each on cards). This analysis was conducted when the exchange rate was approximately $1.28 to £1, but the main point remains valid regardless of the current exchange rate: identifying the most cost-effective payment methods.

• Top specialist credit/debit card, repaid in full: £779
• Top prepaid card: £779
• Cash via the cheapest bureau (picked up in London): £786
• Cash from M&S on the high street (non-cardholders): £792
• Using a debit card with a spending charge: £833
• Changing cash at the airport (not pre-ordered): £909

As illustrated, the cost differences are significant. The best strategy is straightforward: apply for a specialist overseas card and use it for all your transactions abroad.

Check if your card charges foreign transaction fees

Never use any card for spending abroad without checking the costs first. Use our tool to determine the expenses of using your current card before packing it in your suitcase. Then, compare those costs with our recommended travel cards that don’t charge fees, ensuring you have the most economical way to spend on your travels.

Beware using any of the cards below overseas

Let’s be clear: avoid using the cards listed in this section for international spending. Unless you are making purchases in euros within the EU, Iceland, Liechtenstein, or Norway, the following cards will impose an additional fee of 50p to £1.50 on top of their standard exchange-rate charge.

For example, if you purchase an item in the USA for the equivalent of £5, the final cost could rise to £6.60 due to the associated fees and charges of the worst-performing cards.

Travel card need-to-knows

Before heading on vacation, it’s important to understand how credit and debit cards function internationally. Mistakes can be costly, so make sure to read the following tips. Even if you only have time to skim through the headlines, doing so can help save you money.

1. Always Pay Off Your Credit Card Balance in Full Each Month

   When using a credit card, it’s crucial to always pay off the entire balance every month.Specialized credit cards for overseas use can be the most cost-effective way to spend while on vacation, but they can become one of the worst options if you lack the discipline to clear the balance regularly. Adhere to this fundamental rule:”Arrange a direct debit to repay the full amount each month; otherwise, the interest charges will outweigh the benefits of favorable currency rates.”Be aware that direct debits might be labeled ‘inactive’ if the card hasn’t been used for 13 months. Therefore, if your vacations are more than a year apart, verify that the direct debit is still active.

2. Always Opt for the Local Currency When Paying Abroad

   When traveling abroad, whether you’re at a hotel, a shop, or an ATM, you may be asked if you’d like to pay in your home currency or the local currency. It’s best to select the local currency. If you choose your home currency, the retailer will handle the currency conversion, often at a less favorable rate than your card issuer.If you have a premium travel card, always opt for the local currency. This way, your card issuer handles the exchange, usually offering a much better rate.For those using a standard credit or debit card, the decision can be more nuanced. Occasionally, the card machine will display a ‘non-sterling cash fee.’ If this fee is below 2.5%, paying in your home currency might be more advantageous. However, if the fee exceeds 2.5%, it’s better to choose the local currency.

3. Spending is Almost Always Cheaper Than Withdrawing Cash When You’re on Holiday

   When you’re on holiday, using a top overseas credit card for spending is almost always cheaper than withdrawing cash. Even if your card doesn’t have cash withdrawal fees, you will typically incur interest charges on the withdrawal until you pay it off.This situation is even more pronounced with non-specialist credit cards. Not only will you face the non-sterling transaction fee on all foreign transactions, but you’ll also incur a fee and interest on any cash withdrawals.With debit cards, spending remains the more economical option. While there is no interest on cash withdrawals, there is often a fee in addition to the non-sterling transaction fee when using an ATM.Post-Brexit, a growing number of overseas ATMs have started imposing higher fees, so it’s essential to stay vigilant.

   Should I Withdraw My Travel Money in the UK or Overseas?

   If you plan to use a specialist overseas card for withdrawing cash, it’s better to wait until you’re abroad. However, if you intend to use a regular card or exchange pounds upon arrival, there’s no certainty you’ll secure a better rate. Typically, exchanging money at hotels offers poor rates. It’s generally safer to use services like TravelMoneyMax to get the best rate while still in the UK.

   Does Withdrawing Cash on a Credit Card Affect My Credit Score?

   Cash withdrawals on a credit card are recorded by credit reference agencies. Although they might not significantly impact your score on their own, they can be detrimental if you have a poor credit history or are planning a major credit application soon.

   Given that withdrawing cash on a credit card is usually costly, lenders might interpret it as a sign of financial distress, potentially harming your chances of loan approval.

   For more detailed information on the pros and cons, refer to our guide on Withdrawing Cash on a Credit Card.

4. Not all cards offer the same value – Visa’s exchange rates are generally marginally better than Mastercard’s, but the difference is minimal

   When you make purchases abroad, your bank utilizes an almost perfect exchange rate. The transaction is processed using Mastercard’s, Visa’s, or Amex’s wholesale rate, all of which are very close to the spot rate suggested by currency markets (the ideal rate).In a comparison over a few months, Visa had a slightly superior exchange rate on 91 occasions, while Mastercard had a better rate 72 times. The variations were very small, often amounting to just a few pence per £100 of currency – so there is little difference between them.Most banks will then charge you for processing the exchange, which can include a non-sterling exchange fee of up to 3%. To avoid these extra costs, it’s advisable to use one of the specialist cards mentioned in this guide, as they do not impose additional fees.

Top travel credit and debit cards

Here are some of the finest options for utilizing overseas – each boasting zero exchange fees during transactions, while the cream of the crop additionally grants exemption from fees and interest on cash withdrawals made abroad.

We’ve categorized each card as either Mastercard or Visa, as this can marginally affect their exchange rates (generally, Visa tends to offer slightly more favorable rates – check out the comparison between Mastercard and Visa rates).

Top travel credit and debit cards – what we’d go for

All of our top choices provide the convenience of fee-free spending overseas and ATM withdrawals, yet each presents unique advantages. Your preference among them will hinge on what features matter most to you.

It’s important to highlight that, in case of any issues with purchases made abroad, credit cards offer more robust protection compared to debit cards – credit cards provide Section 75 protection, while debit cards offer the lesser but still valuable chargeback protection.

• Standing out as our preferred debit card, Chase offers a 1% cashback on most expenditures, even abroad where it boasts a nearly flawless exchange rate. To continue receiving the cashback after a year, you’ll need to deposit £1,500 per month. Its accompanying boosted 5.1% AER saver ranks highly, albeit with a 1% AER bonus slated to expire on January 16, 2025, thereby lowering the rate. Opening a new bank account is a prerequisite, but the process is straightforward, requiring only an ID check rather than a full credit assessment. ATM withdrawals are capped at £1,500 per month.
• Halifax Clarity emerges as our favored credit card choice. It offers a £20 cashback incentive for making your initial purchase, regardless of its value, within the first 90 days of obtaining the card. However, be aware of the interest charges ranging between 23.94% and 29.94% on ATM withdrawals, making it more suitable for spending rather than cash withdrawals.
• Barclaycard stands as a credible alternative in the realm of credit cards. While lacking an introductory cashback offer, it provides a continuous 0.25% cashback. Additionally, it allows interest-free withdrawals overseas, provided you clear the balance IN FULL each month. This could be advantageous for heavy spenders prioritizing interest-free cash withdrawals.

Top alternative options

Below, you’ll find additional options if none of the previously mentioned ones meet your needs – each stands out in its own way and doesn’t entail any charges for international use, though some may apply interest or have ATM fees/limitations.

• Through our referral link, newcomers to the Currensea Mastercard debit card can enjoy a £10 cashback after spending £100 or more in any foreign currency within the initial six months. The Currensea card operates with a slight variation compared to the other credit and debit cards highlighted here: it’s linked to your existing bank account via Open Banking. Consequently, when you make purchases or withdraw funds using the Currensea card, it debits your linked current account in pounds (via direct debit), cleverly sidestepping the non-sterling transaction fees and ATM charges imposed by most banks.

While exchange rates for popular currencies such as euros and US dollars may be marginally less favorable than those offered by the aforementioned cards, the difference is negligible. Additionally, if you appreciate the convenience of a card linked to your current account, the cashback offer is an added perk. You can find comprehensive details in our Currensea review.

• With the First Direct Mastercard debit card*, all overseas expenditures and ATM withdrawals are exempt from fees and interest charges, and you even receive a generous £175 if you decide to transfer your existing bank account – surpassing the benefits of the previously mentioned cards for all but the most extravagant spenders. This card has consistently ranked at the top or near the top in all customer service surveys we’ve conducted. Furthermore, if there’s an issue with a purchase made overseas using this card, you may qualify for chargeback protection.
• Starling’s Mastercard debit card offers fee-free overseas transactions and ATM withdrawals (with a maximum of six withdrawals per day and a daily limit of £300). Similar to Chase mentioned earlier, it only necessitates an ID check rather than a full credit assessment. For detailed insights, refer to our Starling review.
• The Visa debit card from the new app-only bank Kroo is completely free of charges for international spending. However, ATM withdrawals abroad are only free up to £200 per month (a 3% fee applies to any amount withdrawn beyond this limit), and according to its website, ATM withdrawal fees will be introduced starting from October 31st. Additionally, Kroo offers an attractive 4.35% AER savings interest rate on balances up to £500,000 and only requires an ID check for account opening. Explore our comprehensive Kroo review for more information.

What are the alternatives to travel credit and debit cards?

If you’re not in the market for a fresh credit or debit card but still aim to make the most of your spending power, there are alternative avenues worth exploring.

• Consider prepaid travel cards as an option. These allow you to preload them with funds and secure a favorable exchange rate in advance. While some may come with hefty fees or impose charges based on exchange rates, alternatives like Revolut and Wise often provide competitive deals, sometimes even matching or surpassing the offerings of traditional cards. For a comprehensive overview and our top recommendations in prepaid travel cards, delve into our detailed guide.
• Prefer dealing in cash? This can be particularly handy in instances where cards are not accepted. Utilize our TravelMoneyMax tool, a useful resource that enables you to compare exchange rates and identify the most advantageous options for your holiday currency.

Want to complain about your card provider?

If you find discrepancies in the charges from your credit card company, such as being billed incorrectly, assessed interest unfairly, or experiencing poor service, you shouldn’t hesitate to take action.

Initiating a conversation with your provider is a sensible first step to resolve the issue. However, if this approach doesn’t yield results, there’s another avenue available to you: the Resolver, a free complaints tool. This tool serves as a platform to organize and address your concerns. Should your credit card company remain unresponsive, Resolver facilitates the escalation of your complaint to the impartial Financial Ombudsman Service, providing you with recourse to seek resolution.