Smart ways to use your credit card on holiday
Lots of us decide to use our credit card to make purchases on holiday. This can be a smart decision if your credit card has a free foreign usage but there can also be things to watch out for.
We've put this holiday guide together to help provide you with more information when using your credit card abroad.
Be smart - and follow our 3 main tips:
Tell your card provider before you go
Credit card companies can, on occasion, block a card payment if it’s suspicious. It’s a good idea to let your card provider know you’ll be going away so they know you’re using your card abroad.
Check any charges
It’s important to make sure whether there are any charges for making a transaction whilst on holiday. This is sometimes a percentage of the transaction amount but many card providers now don’t charge for foreign transactions.
Pay in local currency
If you can, always pay for goods on your credit card in the local currency. Typically, this will have a better exchange rate than paying for the same item in pounds sterling.
Is it better to use cash or credit cards on holiday?
It's best to have both. Taking both cash and a credit card gives you more flexibility. Let's say, you've just enjoyed a great dinner and ask for the bill. You search your wallet and find your cash has gone missing! Your credit card gives you another way to pay.
Again you may visit a local market where the vendors only accept cash. Prepare and check what currency is accepted before travelling. Having both a credit card and cash gives you extra piece of mind while you enjoy your holiday.
Mistakes to avoid while using a credit card on holiday
If you do decide to use your credit card on holiday, it can be easy to make some of these common mistakes:
- Beware of cash withdrawals
Depending on how your card works, you may be charged a fee for withdrawing cash on your credit card on holiday. If you need local currency, it’s usually best to take this with you.
- Check your protection
Before you make a large purchase using your credit card, you should make sure you have protection in place should you need to get your money back. The Consumer Credit Act 1974, covers purchases on items between £100 - £30,000, so you should be able to make a claim if something goes wrong.
- Have your providers contact details
It sounds obvious but when you’re on holiday you should always know how to contact your card provider in case of an emergency. There is usually a phone number on the back of your card so note this down in your phone just in case you lose your card or it gets stolen.
- Prepare for emergencies
On holiday you should be prepared for any emergencies affecting your ability to use your credit card. It’s a good idea to have cash in the local currency and potentially, an alternative credit card as well.
Create a spending budget using your holiday credit card
It can be easy for costs to quickly increase when you’re planning a holiday abroad. If you have a budget in mind, it’s a good idea to put a plan in place. This will help to make sure you don’t go over this and end up with a big payment left on your credit card.
Research where you’re going
If you have an idea of where you’d like to go, do some online research on the average cost of a holiday to this destination. Try to find out where the main resorts of a destination are and whether there is a price range so you can afford to go.
Timing is everything
When you know where you are going, decide on when. It can be more expensive to go during school holidays (although sometimes this is unavoidable) so check if you can save money by switching your dates around.
Look at accommodation options
The cost of accommodation can depend on the option you choose. Many resorts offer a variety of accommodation levels, from self-catering, where you pay for all your own meals all the way up to all-inclusive where all food and drink is included. Self-catering does give you more flexibility around how much you spend on meals (and meals out) but some all-inclusive deals can be cheaper over a whole holiday.
Track spending with your holiday credit card
You might find you can afford the flights and accommodation for a particular place – but what about spending money? Food and drink, trips and excursions and even smaller costs like tips and sunbeds can all add up. Go back to your original budget and try to split this into different categories to work out how much you’d need.
Even with a budget in place, we all know the unexpected can sometimes occur. So another important part of your holiday budget should be making sure you have insurance in place. It can help cover the cost of lost luggage and any accidents or illness abroad.