Using Credit Cards Abroad
When you are planning a holiday, there is a huge amount to arrange
, and one of the most pressing things for most people is planning a budget and arranging spending money.
The array of different options available to you for making payments abroad can seem overwhelming. You will also be wary of the added fees attributed to making certain kinds of payments in other countries, although knowing exactly what they are and how to avoid them is another matter.
When you are on holiday, you can make use of credit cards, debit cards, Prepay cards or foreign currency from cash machines or foreign exchange bureaus, and in different situations, different methods of payment will be appropriate.
Using credit cards abroad
There are a number of benefits to using credit cards abroad, but also some drawbacks which you should be able to avoid if you are aware of them. Also, there are many credit card offers on the market which can help you to spend without racking up additional costs.
Purchases
While making purchases on your credit card abroad will not usually be free, There is a major advantage to using your credit card, as opposed to a debit card, to make larger-scale purchases abroad.
Any purchases abroad from 100 to 30,000 pounds will be subject to protection under Section 75 of the 1974 Consumer Credit Act, meaning that if there is a problem with the purchase, you can claim the money back from your credit card company and you won't have to chase the foreign retailer.
Cash machine withdrawals
Using your credit card in a cash machine can lead to a range of added costs. Firstly, your provider may charge about 2.5% for making the cash withdrawal, meaning that every 100 pounds you take out will cost you an additional 2.50 pounds. However, this cost does not apply to all credit cards.
Secondly, interest paid on cash withdrawals will be higher than the interest you would pay on purchases made with your credit card. There will be no interest-free period as there may be on purchases so you will start paying interest on the balance straight away. The interest rate on cash withdrawals will often be higher than the APR, and is often the last thing to be paid off, so you will be paying this higher rate of interest for the life of the balance.
Thirdly, the cash machine itself may have a separate charge which you will need to take into account. This will depend on the cash machine itself, though, and is not dependent on the credit card you choose.
Taking your cards
If all of the potential fees and costs are making you consider leaving your cards at home when you go on holiday, don't. Bringing debit and credit cards abroad will give you a safe and secure way to pay for things in an emergency, a better idea than carrying around large amounts of cash wherever you go.
Always inform your bank before you go on holiday, or they may stop your card because of 'unusual' (foreign) spending.
by: David P Walker
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