Should I use my Credit Card Abroad?

If you are going abroad on holiday you may wonder what the best way is to pay for things. There are different methods that you can use including a credit card and it is worth thinking about what might work the best for you.

Credit Card

Using your credit card can be very convenient. You will find that most shops will accept a credit card form any country because they will be able to process the payment like they would any other credit card. It means that you can shop in the same way that you probably do at home which will make it very easy to use. Credit card issuers are careful to protect you against fraud, so if you do not normally use your card abroad, make sure that you tell them that you will be. If you do not, they may freeze your card and this could mean that you are left with no way to pay for anything which could make things really difficult. Even if you do tell them, it could be wise to take their phone number or have a way to contact them online so you can get in touch with them in case there is some sort of problem.

The big disadvantage of using the card abroad is the cost. Many cards will charge fees for using the cards abroad though and this means that you could end up paying extra. This could be done by them giving you an unfavourable exchange rate – adding up to 3% on top so they can get the extra. If you use the credit card to withdraw cash you will start to be charged interest immediately, even if you pay off the full balance of money you owe each month, so bear that in mind as well.

Debit Card

This is likely to be accepted in shops in the same way as a credit card and can be used to withdraw cash. However, it is often cheaper to use it compared with a credit card but may not be acceptable everywhere and will not give you the insurance you get with a credit card. You will need to check though as the costs will vary between different cards and you will need to make sure that yours is cheaper, if you intend on using it.

Prepaid Travel Card

A prepaid travel card will allow you to pay money on to it before you travel and then spend it, like a credit card while you are away. When you credit them you lock in the exchange rate, which means that you can do it well in advance if you think that it is likely to get less favourable as you get nearer to the time of travel. Like credit cards, they are more secure than carrying cash and they are accepted in most shops. They can be a handy way to budget more easily on holiday as you will have a certain amount of money to spend and you will not be able to spend more than that.

Travellers Cheques

These may seem a bit old fashioned but they are a secure way to carry money abroad. You will have to find somewhere to exchange them for cash, but most big resorts will provide a facility that will be able to do that for you. Shop around for them though as you will find that the rates will vary so you may pay more than necessary if you do not search for the best price.

Cash / Currency

It is a good idea to have cash available in the local currency. This is because there may be some things that you can only buy with cash. Perhaps market stalls, small shops or even taxis may need payment by cash. This means that having some will be good. Shop around for a good exchange rate and try to avoid getting it at the airport as it is always more expensive there. Taking some with you can be cheaper than drawing it out abroad. You may be able to make cash withdrawals with your debt card but there will be a charge and you could use your credit card which will be even more expensive but you could find that it will be more secure than carrying lots of cash.

The options can be a bit confusing and unfortunately there is not one cheaper option that is secure and works for every situation. It will probably be the case that you will need to pick a mixture of options to suit your needs.

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