6.4 Using your credit card abroad

Credit cards give added protection, because of the Consumer Credit Act 1974, which can be especially useful when you need a safe and convenient payment method while travelling abroad.

However, using your credit card abroad can also prove to be very expensive because the majority of card providers will charge you an overseas usage fee each time you use your card to make a purchase or make a withdrawal from a cash machine.

According to the Nationwide building society, Britons spend around £300m each year on these foreign usage fees.

When you use your credit card abroad there will ultimately be an exchange from Pounds to whatever currency is used in the country you are visiting. The exchange rates used are based on the Visa and MasterCard wholesale rates.

Once the exchange rates have been calculated, the card issuer will then add on a loading percentage of anything between 0% and 3% depending on the card. The rate charged may differ depending on how far away from home you are with some providers charging higher fees if your card is used outside of Europe.

Another fact to remember is that Chip and PIN is not yet compulsory in all other countries and so it is likely that you are going to have to sign to complete transactions in shops but still use your PIN to access cash from the ATM.

Without Chip and PIN you are potentially at a higher risk of credit card fraud because if your card is stolen all the fraudster will need to do is forge your signature to complete a purchase. This means it is vitally important that you remain extra vigilant as to the whereabouts of your card at all times.

You should also be even stricter about letting your card out of your sight and about shielding your PIN number at the cash machine.

Before you go off on your travels be sure to inform your credit card company that you are going abroad and that you are likely to be using your credit card. If your credit card company sees that your card has been used to make purchases in Australia, for example, it will find this behaviour very strange and will likely freeze the card until it has been in contact with you to see what’s going on. This is not something you want to happen while you are abroad as it could cut you off from your only means of funds and will mean you have to make phone calls to your card company to resolve the issue.

When you are deciding which credit card to use while you are abroad, it is worth bearing in mind what other facilities it offers for travellers such as the offer of a replacement card should yours be lost or stolen or insurance for flight delays.

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