The Best UK Travel Credit Cards

The Best UK Travel Credit Cards - ratewise
by ratewise

If you are planning to go on a vacation, then a travel credit card can be a solution for spending your money wisely while you are away. Travel credit cards are used the same way as you would use a normal credit card.

The only thing that is different about them is that the fees that they charge are lower than if you were using a normal credit card while abroad.

The way that these cards work is by making purchases with the card, then later paying the balance just like any other credit card.

It is simple to find the best travel credit card by just researching for a little while. You need to focus on finding credit cards with the lowest fees or better yet, no fees at all.

If you are able to find this kind of travel credit card, then it is possible for you to keep your spending under control while abroad.

Other features to keep in mind when looking for a travel credit card are perks. Try to choose credit cards that have cashback on spending, lower interest rates, or commission-free purchases when you are abroad. 

The pros and cons of travel credit cards

Advantages

Cash withdrawals.

Many travel credit cards allow you to withdraw money from an ATM while you are out of the country with no fee included. Keep in mind that the ATM itself might still charge a fee.

You will also be charged interest while withdrawing money even if you clear the balance every month. The best solution is to avoid withdrawing money from your credit card as much as possible.

Spending means getting rewarded.

Some travel credit cards give you rewards when you spend money. These rewards can be beneficial if you spend money in different parts of the world, such as travel rewards, and also cashback.

Satisfying exchange rates.

Exchange rates are very competitive when it comes to different travel credit cards. So be sure to shop around.

No foreign transaction fees are included.

These kinds of credit cards are designed to only be used abroad. They are specifically made so you do not have to pay any foreign transaction fees. 

Disadvantages

Monthly Fees.

Because many cards include rewards, you may need to pay a monthly fee in order to use them.

Not everyone is eligible to get a travel credit card.

You need to have a good credit score or a considerable amount of money in order to own a travel credit card.

High interest rates.

These cards usually come with high-interest rates. This means that unless you pay off your balance in full every month, you might end up paying a high-interest rates regarding the amount you spent.

Things to avoid when making payments overseas

Don’t pay in UK currency abroad.

When you are using a travel credit card you most likely will be asked if you want the transaction to be in the local foreign currency or in British pounds.

When buying currency, always keep in mind that you need to use a debit card or choose the withdrawing option.

The number one rule of making payments abroad is to never pay in British pounds. The reason behind this is because you might be charged extra fees by the store or bank for doing such a conversion.

Try not to get charged for withdrawing money.

If you are withdrawing cash while you are on holiday, then the best thing to do is to use a debit card or a specialized credit card to reduce fees as much as possible. Some travel credit cards charge up to 2.5% of the value you withdraw. 

Make sure to pay in full each month to prevent the consequences of paying a high-interest rate.

If you withdraw money from an ATM using a standard credit card you will pile up the interest in an instant as soon as you withdraw.

Avoid purchasing foreign currencies abroad with the credit card.

The bank of the credit card you own might see you purchasing currency as withdrawing money (like we mentioned before with ATMs).

So what these firms do is that they charge you a withdrawal fee. When buying cash it is always a good idea to use a debit card. 

Keep an eye out for fees.

Most cards charge a fee every single time you use it while you are overseas. As this might sound confusing the fees are categorized in many different ways including loading fee, exchange rate fee, or foreign purchase fee.

There are even some credit cards that will charge you as high as 3% in fees when you purchase something.

Cards that are specifically designed for foreign use do not charge foreign fees. Always check the terms and conditions of credit cards before applying for them and starting to spend overseas.

The difference between a travel credit card and a prepaid travel card

A safe way to spend money overseas is by using a prepaid travel card. This is because it is pre-loaded so you cannot overspend while you are on vacation and end up going over budget, or worse, in debt.

The prepaid travel card is also a great way to save money and use it if you are on a budget.

Even if the card is stolen or lost, you can cancel it in just a few minutes with the help of your card provider. 

Prepaid travel cards charge you before you are able to use them abroad. Although, they do not include interest fees when you use them. Some prepaid travel cards even come with no international fees. 

You need to keep in mind that before using the prepaid travel card you need to pre-fill it in order to use it. There is no way for you to borrow money from this kind of card while you are overseas. 

A great thing about these cards is that anyone is eligible to own them. You do not need a good credit score nor a considerable amount of money to purchase them.

However, a travel credit card is a great way for you to borrow money while you are on vacation. This gives you the ability to spend more in cases where you don’t have the funds until later on. It is a great choice if you want to make the most out of your vacation. 

Things that you need to know when spending abroad

Before going on holiday, there are a few things you need to know about debit cards and credit cards. Misunderstanding the way they work can cost you a lot of money.

If you want to lock in a rate, consider using a prepaid card.

Prepaid cards give you the ability to lock in a rate beforehand for some currencies. This lets you convert UK currency effectively before you leave the country.

Although, it is not certain if you are going to save money by buying the overseas’ currency in advance.

Cards are not equal. Check with the company offering the card before applying.

When applying for a travel credit card, be on the lookout for the Visa, MasterCard, or AMEX logo.

When comparing the exchange of these cards, the slightly better one is the MasterCard. Other than that, all cards are close when they come to fees and terms and conditions. 

Spending money abroad is always cheaper than withdrawing money.

The reason spending money is cheaper when you are on holiday is that even if your travel credit card has no withdrawal fees, you will most likely be charged high interest on the cash withdrawal.

A debit card can be the worst way for you to spend money overseas.

Be careful about how you use your debit card when making purchases abroad. If you use it the wrong way, a debit card could have extremely high charges.

Always do the proper research on what kind of fees debit cards charge before using them. Some cards can charge you fees of up to £1.50 even for something as inexpensive as £5.

This means that for a £5 purchase you can end up paying £6.50 considering the fee some debit cards charge.

Never leave a balance without paying in full every month.

If you use a travel credit card the wrong way you would be amazed at how much money you can lose. To prevent additional money loss from over-exaggerated interest rates that come with these travel credit cards. To avoid this, you need to pay in full every month.

If you are not disciplined enough to pay in full then you should consider the option of getting a prepaid travel card. You need to always follow one golden rule: set a direct debit for paying in full every month.

Do you get charged every time you use your credit card?

You won’t get charged immediately every time you use your credit card to make a purchase. But when you use your credit card you may be charged a fee if you withdraw cash at an ATM.

You’ll also be charged interest if you don’t make your credit card bill payments on time.

Does having several credit cards hurt your credit score?

Having multiple credit cards won’t hurt your credit score if you are able to keep your spending within your budget and you make your bill payments in full on time.

You have to know your ability to organize your finances and track multiple credit cards.

Is it better to cancel unused credit cards or keep them in the UK?

It is better to actually keep your unused credit cards open so you have a longer credit history and amount of credit available to you.

This will potentially raise your credit score and help you if you apply for a loan in the future.

Is it bad to pay your credit card twice a month?

It is not bad to make multiple credit card payments every month. The most important thing is that you do not exceed your credit limit and you make your payments on time to avoid interest and fees. 

How many is too many credit cards?

You can have as many credit cards as you feel you will use. However, try not to apply for more than one credit card every six months as this could harm your credit score. 

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Categories: Credit Cards
Tags: UK