The Best Credit Card to Use Abroad

I was muttering a while back about people disliking banks; that’s nothing compared to credit card companies.  The latter are an insidious bunch which deliberately targets those who can’t afford the cards with the aim of extracting exorbitant interest payments.  I take a great delight in using my single credit card as little as possible, hoping that I am actually costing them money to keep my account current – it’s probably not true though.

Where I do use it, is when I’m abroad or organising things like car hire where sometimes there’s simply no option.  Admittedly (and this is with grudging reluctance) there are some advantages to paying for goods or services with a credit card since you are usually protected under Section 75 of the Consumer Credit Act but there are pitfalls to be aware of if you shop abroad with your plastic.

Foreign Currency Loading Fees
This is the charge that your credit card company will add to your bill if you use your card abroad.  Usually it is 2.75% so a £200 purchase will actually cost you £205.50 instead.  Never fear – there are ways round this.

Dynamic Currency Conversion Rate
This little beauty refers to whether or not your payment is in sterling or local currency.  If, when presented with your bill, you choose to pay in sterling, then you could be charged a conversion rate by the restaurant or retailer (instead of the loading fee) which is significantly higher than that which your bank would offer. 

Unscrupulous outfits sometimes insist that you can only pay in sterling and you then sign the transaction slip confirming you have been given the choice so as to comply with terms and conditions laid out by the credit card companies.  If you choose to pay in the local currency however, then you’ll be charged the loading fees by the credit card company.

Cash Withdrawals
Avoid this one if possible. Credit card companies will charge you between 2.5% and 3% for this with a minimum withdrawal fee of £2.50 to £3. Then, to add insult to injury, cash is usually charged at a higher rate of interest than standard purchases and begins as soon as it comes out of the ATM. Lastly, their final pound of flesh is taken if the card company operates a payment hierarchy system meaning that some providers leave payment of cash withdrawals till last so you will be paying interest for longer.

The Best of the Bunch
As with the debit card, I think the best offer around is from those nice people at Nationwide who do not charge a foreign currency loading fee with their Classic and Gold cards.  This deal is one of the very few around and is my choice for a holiday credit card.

Airline Credit Card Booking Fees
Since we are on the subject of credit cards, a lady out there wrote to us about the charges which various airlines whack on when you pay with your card.  I did some investigating and she is absolutely right.  A sample list of fees that airlines will charge you just for using a credit card is below:

 

Airline	Mastercard (£)	Visa (£)	Maestro (£)	Breakdown of cost
Air Berlin	4.80	4.80	4.80	Per Booking
Air France-KLM	8.00	8.00	0.00	£4 per person per booking
BMI	8.00	8.00	0.00	£4 per person per booking
British Airways	8.00	8.00	0.00	£4 per person per booking
easyJet	2.5% or £4.95 min	2.5% or £4.95 min	1.75	N/A
Jet2	3.75% or £6.99 min	3.75% or £6.99 min	1.75 or £1.99 min	N/A
Monarch	8.00	8.00	1.50	£2 per person per flight
Ryanair	16.00	16.00	16.00	£4 per passenger per flight
SkyEurope	12.40	12.40	N/A	£3.10 per person per flight
Wizz	2.50	3.00	1.50	Per booking

note: costs are for two adults travelling

Is this even legal?
This seems to me to be an outrageous abuse of financial responsibility by the airlines, and it certainly pays to check how much you'll be charged for using a credit card, considering you could be paying up to £8 more per person on a return flight, for the privalige.

On that subject, a senior British legal figure I know, was talking about this debit card charging a few weeks ago. The practice was, in his opinion, “unlawful” and he saw no reason how it could be enforced.  It was, he suggested, a matter for the Office of Fair Trading to take up since he deemed it scandalous.  

Until any changes come into effect, I think passengers should pay careful attention to the extra fees that some airlines charge for credit card bookings, as this can be a nasty suprise for customers when they come to pay for their flights.

You may also like to read:
The Best Debit Cards to Use Abroad

© 2008 Skyscanner. All rights reserved. Any views and opinions expressed in Nick's Travel Bytes articles are those of the author and not Skyscanner.