Saturday, 20th December 2014

Credit Cards: The fees you might pay on holiday

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In the mad rush of planning a holiday, it’s easy to hastily stuff credit cards into your suitcase without thought. Despite cards from well-known providers such as Visa and MasterCard being accepted in shops and ATMs around the world, the problems sometimes appear with surcharges and fees that are added because of overseas transactions. But what are the most common charges? Are there specialist credit cards for those who frequently travel abroad? In this article, we will tell you everything you need to know when arranging money for your holiday.

Most credit card providers will charge you in some way for using your plastic on holiday, but there are a number of different ways it can be done. For example, transaction fees could see a percentage of a purchase’s value being added to the total amount paid. If such a charge was set at three per cent, this would result in a £100 restaurant bill being billed to your account at £103.00. When you think about it, paying another three per cent on top of an already expensive holiday can be an unwanted development, and so using a different service if this is the case may be worthwhile.

However, a separate charge could be added instead. For example, other credit card services simply add a flat rate of £1.50 for every transaction made. Even though this will cap the amount of money you pay on high-value items, it does mean trivial spends like a bottle of water suddenly become rather expensive.

So, once you have been confronted with these options, what choices do you have? Well, one way in which you can save money on charges could be by withdrawing cash from your account as and when you need it. Despite this, you should still bear in mind that withdrawal fees can apply and the interest rate that this service is set at can be higher. Because of this, you should always check with your bank if you are using a debit card. Consulting your credit company is also important because of how your account could be suspected of fraudulent activity if you don’t let your creditor know you’re on holiday. This may limit access to your funds until you notify them otherwise.

It may seem like a minefield that’s difficult to contend with, but there are 0% credit cards that help. Typically, such credit providers will make your purchases free within the EU, meaning that buying gifts for your family abroad will be no costlier than using your card at home. Some cards do levy a one per cent charge for purchases made in a non-EU country, but you shouldn’t let this put you off; this rate is still far lower than the market average.

Usually, cards that boast such a unique selling point will also have other features that could also protect you abroad. For example, purchase protection means that you are covered against the theft of your card abroad and any money that is withdrawn thereafter. There are even some services that throw in travel insurance for every time you do go on holiday!

Taking your credit card, or applying for a new one, isn’t the only option at your disposal. Originally optimised towards those with bad credit, prepaid credit cards are now becoming a viable option for travellers. Currency exchange companies now offer services that allow you to top up cards with a currency of your choice. You could also be protected against fluctuations in the value of your money as the holiday progresses. Keeping a track of your spending and making your money last is also easier, partially because of the text message alerts that are sent to your phone when the balance is low. Additionally, if your hotel has Internet access, logging on and checking your balance in a card’s online system will allow you to keep updated on your finances. Once again, because of how you may be relying on this credit exclusively for the duration of your holiday, the support you are given if your card is lost or stolen will be reassuring if needed.

There is a clear message to take from this article; always check the surcharges you will pay on purchases abroad. The last thing you want is to find your bank statement is lower than expected because of unexpected transaction fees. If it is too late to apply for a new credit card with preferential rates, prepaid alternatives will ensure that you don’t have any money worries when you’re away.