Paying the bill

Using credit cards on holiday


Taking your credit card with you on holiday can save you from having to carry around wads of cash. But you need to watch out as many will charge you for using them abroad. The good news though is that some are designed specifically for overseas use and as a result, can make a great addition to your wallet.

Taking a credit card abroad

The average credit card can be useful for spreading the cost of a purchase over several months without paying interest, or collecting loyalty points and earning cashback – but it might not be the right card to take with you on holiday.

Many of these cards will charge you when you use them overseas in three different ways:

  • Foreign exchange fee – Just as you would find with most debit cards, if you use your credit card to pay for goods overseas, you could be hit with a foreign exchange fee/loading charge of around 2.75%.
  • Cash withdrawal fees – If you use your credit card to withdraw cash, you may also have to pay a fee of around 2%-3% of the amount you withdraw (as you would with many debit cards).
  • Interest charges – If you don't pay off your credit card balance in full, you'll be charged interest on it unless it offers a 0% window. But even if it does offer 0% on purchases, this won't apply to cash withdrawals and you'll be charged interest from the day of the withdrawal

It’s therefore best to avoid ATM cash withdrawals on a credit card altogether when you’re away. If you’re going to need cash for smaller ticket items, refreshments and public transport, it’s best to take some foreign currency abroad with you, as well as your credit card.

Get the right card

However, you shouldn't be put off using a credit card abroad as, providing you pick the right one, they can be a great travel companion. Many offer competitive exchange rates and a number of them allow you to avoid some, if not all, of the above charges, making them ideal for your holiday spending. You can compare these on our comparison tables.

Watch out for dynamic currency conversion

When paying with a credit card abroad, the retailer may (or may not) give you the option to pay your bill in your own currency, rather than the local one, using dynamic currency conversion.

While this is convenient, as you can get an idea of the value of your purchase, it comes at a price. You’ll be charged a higher exchange rate for dynamic currency conversion, which isn't worth paying.

The retailer might automatically use dynamic currency conversion unless you say not to, so it’s best to check your bill carefully before signing anything or entering your PIN. If they have used dynamic currency conversion, ask to be billed in the local currency instead.


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