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The top credit cards to use abroad

Should you swap your credit cards for the new deal from Halifax?

If you’re jetting off on holiday soon, you might be considering how to pay for any purchases you make while you’re abroad.

The problem is that many debit and credit cards charge you for the privilege of withdrawing cash or paying for items when you’re overseas. So how can you get around this?

Fortunately, there are a handful of cards that allow you to use them abroad without charging you rip-off fees. Bear in mind that the exchange rate that each one offers will be different and you might want to take that into consideration when you're comparing.

The big benefit of using a credit card is any purchases you make over £100 are covered if they turn out to be faulty or damaged by Section 75 of the Consumer Credit Act. This means you can claim compensationn either from the merchant or your credit card provider.

You'll also be better protected in the unfortunate event that your card is fraudulently used.

Let’s take a closer look at the cards that don't charge you for using them abroad.

1. Aqua Advance MasterCard

The aqua Advance MasterCard is actually designed for people with a less than perfect credit rating but is also a very good piece of plastic for taking abroad. There are no foreign currency exchange or transaction fees. However, as it a card aimed at people looking to rebuild their credit score, it comes with a very hefty representative APR (the annual cost of interest and charges) of 34.9% – so make sure you pay off your balance in full each month.

2. Post Office Platinum credit card

The Post Office Platinum credit card won’t charge you a commission fee for any purchases you make overseas. This is also the case if you make any online transactions from home in a foreign currency.

What’s more, for the first three months, any purchases you make will also be interest-free! However, be warned that after that period you will be charged an interest rate of at least 16.9%. So make sure you have paid off your balance in full by the time the three months is up and that any purchases you make after that are also paid off in full each month.

If you use your credit card to order currency or travellers cheques with the Post Office, you’ll also avoid paying a cash advance or handling fee. However, while this is highlighted as a benefit, you’ll be charged interest at 24.10% from the date the money is taken from your account.

3. Saga Platinum credit card

If you're aged 50 or over, the Saga Platinum credit card will also let you sidestep foreign currency fees when you use your card for spending overseas. There’s also nine months of interest-free spending with this card. Just bear in mind that after this point, you’ll be charged interest of at least 11.9%.

Unlike the majority of credit cards, with the Saga Platinum Credit Card you'll also benefit from 55 days interest-free on cash withdrawals – meaning that if you do take out money from an ATM abroad, you won’t be charged interest providing you clear your balance within 55 days.

If you don’t clear your balance within this period, the interest rate jumps to a whopping 23.9% and this will be charged from the date you withdraw your money – so don’t get caught out! You should also bear in mind there is a 2% fee (minimum £2) for withdrawing cash on your credit card.

4. Nationwide Credit Card and Select credit card

If you're a new customer, the Nationwide Credit Card allows you to build up an allowance for spending overseas every time you make a purchase in sterling. So for every £5 you spend in sterling, you’ll be rewarded with £1 to spend overseas.

The allowance you’ve earned will appear on your statement each month and there’s no limit to how much you can build up. What’s more, if you don’t use your overseas spending allowance in the first year, you can carry it over.

Take a look at the nifty calculator on the Nationwide website to see how your allowance can build up.

If you spend more than your allowance when you’re on holiday, you’ll be charged a 2% commission fee.

You can also enjoy up to six months interest-free spending. Just make sure you pay off your balance in full before the six months come to an end. The representative APR is 15.9%.

If you're a Nationwide FlexDirect current account customer and you've paid in at least £750 a month for the past three months or you're going to switch to it or have switched to it in the past four months, you are eligible for the Nationwide Select credit card.

This card offers commission-free purchases abroad plus 0.5% cashback on all sterling purchases. It also offers 12 months interest free on purchases. The representative APR is 12.9%.

5. Capital One Aspire World

There's also the Capital One Aspire World credit card.

This card does not charge you at all for transactions overseas, though you will still be charged for withdrawals from ATMs.

What's good about this card is you get paid cashback for your spending. There is a tiered rate of cashback depending on how much you spend over the year. Up to £6,000 earns 0.5% cashback, up to £10,000 earns 1% and spending above £10,000 gets a rate of 1.25%.

There's also no annual fee, while the card has an APR of 19.9%.

6. Halifax Clarity credit card

Our final selection is the Halifax Clarity card. It won't charge you for purchases anywhere in the world and the representative APR is only 12.9%.

If you make any cash withdrawals, you won't be charged a fee but you will be charged interest from the date the withdrawal is made – so you should still avoiding using this card at an ATM if at all possible.

Withdrawn credit cards

The Sainsbury’s Gold credit card has now been withdrawn to new customers but existing customers can continue to pay £5 a month for fee-free cash withdrawals and foreign purchases and free family worldwide travel insurance.

To make the most of this, make sure you clear your balance in full each month – otherwise you will be charged interest (9.94% for purchases and 24.93% for cash advances).

The Santander Zero credit card has also been withdrawn but if you still have one, it charges no fees for foreign transactions or cash withdrawals. You’ll also be able to enjoy six months interest-free spending (however, the rate jumps to 18.9% after that). Be warned that this credit card will charge you interest at a rate of 27.9% from the minute you withdraw cash.

[Don't forget your travel insurance – pick a policy here]

How they compare to debit cards

Both Norwich & Peterborough Building Society and Metro Bank offer accounts with debit cards that don't charge any fees if you use them abroad. However, the Norwich & Peterborough accounts require you to either fund them or use them each month, even when you're not travelling.

Prepaid currency cards

Another option is prepaid currency cards. The great thing about these cards is that they allow you to load up your card with funds before you jet off abroad – as well as when you’re out there, making it easier (in theory) to stick to a budget.

Certain cards don’t charge you for making purchases overseas or making cash withdrawals. And because these cards are prepaid, there’s no need to worry about interest rates. What’s more, you’ll generally get a competitive exchange rate. But they do come with some fees, so read the small print carefully.

There is a wide range of prepaid currency cards on the market, from the likes of the AA, the Post Office, FairFX, Caxton FX, Travelex and My Travel Cash.

[Compare the top credit cards that don't charge overseas fees]