Using a Credit Card Abroad: Fees, Exchange Rates and How to Save
A credit card can be one of the easiest and safest ways to pay on holiday. It can also quietly add a few per cent to everything you buy. The difference comes down to the card you take and a couple of simple choices at the till.
Key takeaways
- Many UK cards add a foreign transaction (non-sterling) fee to spending in other currencies. MoneyHelper says bank currency fees are often around 3%.
- Some cards charge no foreign transaction fee. These are often called travel cards.
- When asked, pay in the local currency, not pounds, to avoid poor exchange rates.
- Avoid cash withdrawals on a credit card where you can. Fees and interest usually apply from day one.
- Credit card purchases abroad still get Section 75 protection on eligible purchases.
This is general information, not financial advice.
What fees can you pay when using a card abroad?
Foreign transaction fee (non-sterling transaction fee)
Many card providers add a percentage on top of every purchase made in a foreign currency. That includes spending in a shop abroad and online purchases from overseas sellers priced in another currency. MoneyHelper says these currency fees are often around 3% of the transaction, though some cards charge nothing.
Cash withdrawal fee
Taking cash out on a credit card usually triggers a cash fee, often with a minimum charge, as well as any foreign transaction fee.
Cash interest
Unlike purchases, cash withdrawals are usually charged interest from the day you take the money out, often at a higher rate, even if you pay your bill in full.
ATM operator fees
Some overseas cash machines charge their own fee on top of anything your card provider charges. The machine should tell you before you confirm.
Check your card's summary box or terms for the exact fees that apply. Santander and other providers publish calculators that show the cost for specific currencies.
Pay in pounds or local currency?
Card machines and ATMs abroad often ask whether you'd like to pay in pounds or in the local currency. Offering pounds is called dynamic currency conversion (DCC).
It sounds convenient, but with DCC the exchange rate is set by the retailer or ATM operator, not by Visa or Mastercard. As HSBC and others point out, it usually costs you more.
The simple rule: choose the local currency. Pay in euros in Spain, dollars in the US, and so on. Your card network converts the amount, and your provider adds its own fee if it charges one.
You should always be given the choice. If a waiter or shop assistant selects pounds for you, you can ask them to redo it in the local currency.
Credit card vs debit card abroad
| Credit card | Debit card | |
|---|---|---|
| Foreign fees | Varies, and some charge none | Varies, and many charge a percentage plus a per-use fee |
| Protection | Section 75 on eligible purchases (over £100, up to £30,000), plus chargeback | Chargeback only |
| Cash withdrawals | Usually expensive, with fees and interest from day one | Usually cheaper, but fees may apply |
| Hotel and car hire deposits | Usually accepted | Sometimes refused, and funds may be held from your account |
| Risk if lost | Your own money isn't directly taken | Fraudsters could access your current account |
Many travellers take both: a fee-free credit card for spending and a fee-free debit card for any cash.
Is a travel credit card worth it?
A travel credit card usually means one with no foreign transaction fee, and sometimes no fee on cash withdrawals abroad either. If you travel even once or twice a year, the savings can add up, especially on big costs like hotels and car hire.
Before choosing one, check:
- whether it charges no fee on purchases only, or on cash too
- whether cash withdrawals still attract interest from day one
- the standard purchase rate, in case you can't pay in full
- any annual fee, and whether any perks justify it.
Compare cards in the same format on Rewards & travel credit cards.
Your protection when you pay by card abroad
Section 75 of the Consumer Credit Act applies whether you buy in the UK or overseas. MoneyHelper confirms you're covered in the same way. If you pay by credit card for something costing more than £100 and up to £30,000, your card provider shares responsibility with the seller if something goes wrong, for example a tour that never happens.
For smaller purchases, or debit card payments, you can ask your provider to try a chargeback.
Some cards also include travel extras such as travel insurance. Check exactly what's covered rather than assuming.
Tips before you travel
- Check your card's fees for spending and cash in foreign currencies.
- Tell your provider if they ask you to. Many no longer need travel notifications, but check your app.
- Take a backup card in case one is lost, blocked or not accepted.
- Know your limit. Hotel and car hire deposits can temporarily use up part of your credit limit.
- Save your provider's overseas contact number in case your card is lost or stolen.
- Set up a direct debit so you don't miss a payment while you're away.
- Check the latest GOV.UK foreign travel advice for your destination, including any card-acceptance or cash notes.
Online shopping in foreign currencies
Foreign transaction fees can also apply when you buy online from a seller charging in another currency, even if you're at home. Some sellers also offer to convert to pounds at checkout. That's DCC again, so it's worth comparing.
Frequently asked questions
Do all UK credit cards charge fees abroad?
No. Many do charge a foreign transaction fee, but some cards charge no fee on overseas spending. Check the summary box.
Should I pay in pounds or the local currency abroad?
Usually the local currency. Paying in pounds (dynamic currency conversion) lets the retailer or ATM set the rate, which is typically less favourable.
Is it bad to withdraw cash on a credit card abroad?
It's usually expensive. Most cards charge a cash fee and interest from the day of the withdrawal, even if you pay in full. A fee-free debit card is often cheaper for cash.
Does Section 75 cover purchases abroad?
Yes. Eligible credit card purchases over £100 and up to £30,000 are covered whether you buy in the UK or overseas.
Can I use my credit card in Europe without fees?
It depends on your card. Euros are still a foreign currency for a UK card, so cards that charge a foreign transaction fee usually charge it on euro spending too. A card with no foreign transaction fee avoids this. Check your card's terms.
Will using my card abroad affect my credit score?
Not directly. What matters is how you manage the balance: paying on time and staying within your limit.
This is general information, not financial advice. Fees vary between cards and can change, so check your provider's current terms before you travel.
