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All you need to know about using your credit card abroad
When you have a credit card, it is important to use it responsibly and keep a close eye on your finances. However, this is not always so easy, particularly when there are charges, penalties and restrictions on using your credit card that you might not know about.
One of the aspects of having a credit card that often trips people up is what happens when you use it abroad. Unless you take the time to inform yourself about how credit cards work in foreign countries, your next holiday could be a very expensive one indeed.
To help you understand what you can and can’t do with a credit card abroad, here is the vital information you need to know.
Keep your credit card provider in the loop
One of the biggest mistakes you can make before traveling is to not let your credit card provider know that you are going away. Unless you inform the bank or provider of your travel plans, any transactions you make during your trip could be marked as suspicious. If the provider suspects that your card has been stolen and is being used without your knowledge, your transactions could be declined.
Work out what you will be charged for overseas transactions
Before you travel, make an effort to work out what your credit card provider charges for overseas transactions. This may include currency conversion fees and transaction fees as well as interest rates, so don’t miss anything out when making your calculations. Write this information down somewhere and take it with you on your trip – this may help you curb your spending and avoid unnecessary charges.
Could a new credit card be the answer?
Some credit cards are designed specifically for use in foreign countries, offering holders the chance to spend and withdraw cash without being charged any fees. If you have time before you travel, compare credit cards of this type and get in your application. You may find that interest rates are higher, but if you pay your balance off in full when you get home, this shouldn’t be a problem.
When given the option, pay in the local currency
Whenever you are given the choice during your trip, you should choose to pay in the local currency. This is because the process of converting your transaction to GBP can work out very expensive.
Withdrawing cash can be expensive
Whenever possible, you should avoid taking out cash with your credit card during your trip. You are likely to incur a cash advance charge and you may even start accruing interest immediately. If you do have to withdraw cash, make it one large amount rather than lots of smaller amounts, as this will only result in one charge.