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Credit Card News
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Never look a gift card in the mouth… -
6th April, 2012
Want an Easter break? Where can you get the best value for money?
Overseas Credit Cards
Our favourite for May
No foreign exchange surcharge, no ATM fee
Caxton FX Prepaid Credit Card
- Free loading from your own account
- No overseas surcharges
- No fee for overseas ATM withdrawals
- No monthly maintenance fee
- Available in € Euro, US$ or £ Sterling
- Competitive exchange rates
Also consider
Unique scheme to reduce overseas charges
Nationwide Credit Card
- 0% on balance transfers for 17 months
- 2.95% balance transfer handling fee
- 0% on new purchases for 3 months
- Earn the right to free overseas transactions
Representative APR 15.9%
Steadily increasing charges for using credit cards overseas have prompted us to scour the market for credit cards that give you a better deal you use them abroad, we call these Overseas Credit Cards.
Paying by credit card used to be considered the most cost effective way of paying for goods and services when you travel overseas. The exchange rates the card issuers applied to transactions used to offer better exchange rates than you could get for changing cash into local currency.
However, the introduction of a foreign exchange (FX) surcharge, which applies to all transactions on the card when you’re outside the country or currency the card is issued in have changed the picture. This surcharge is typically 2.75%, but ranges from 0% as the lowest currently to 3% for some cards. This is on top of any charges for drawing cash from cash points or ATM’s, typically a further 1.5% to 3%.
If you’re new to overseas credit cards, take a look at our Guide below. We’ve assembled here our overseas credit cards comparison, with the lowest fees for purchases abroad at the top.
 |
CaxtonFX Currency Credit Card | No overseas surcharges, no ATM fees, ideal for business travellers | Prepaid | Prepaid |
Virtually free to run For overseas spending only No overseas spending surcharges No overseas ATM cash charges
No purchase protection Min load £100, $200 or €150 |
Kalixa Prepaid MasterCard Credit Card | No fees or commission on foreign exchange | Prepaid | Prepaid |
No overseas transactions charges Free loading No monthly fee or transaction charges Online account access No purchase protection |
Virgin Money Prepaid Travel Card | Great opportunity to save on card charges on your holiday spending this summer | Prepaid | Prepaid |
Free to own and run No overseas purchase surcharges Free emergency card Discounts with Virgin Companies No purchase protection ATM fees Electronic use only |
Nationwide Credit Card | 0% on balance transfers for 17 months, 0% on purchases for 3 months | 2.95% | 15.9% APR |
Low representative APR Complete all round package Low overseas surcharges Competitive Balance Transfer deal No transfers from other Nationwide cards |
CashPlus Gold Prepaid MasterCard Credit Card | Top prepaid card, cash-back & comes with Euro card | Prepaid | Prepaid |
CashBuilder feature to build credit rating Purchase Protection Cash back and rewards Shop onlineOverseas Credit Card Guide
Although using your credit card abroad does give you a range of useful benefits like payment protection and protection against fraud, the credit card issuers charges have increased substantially in recent years. The charging structures of the mainstream credit cards have also become so complex it’s become nigh impossible to work out in advance of your trip what your exposure to charges will be and to budget accordingly.
Credit card companies are already making money from the merchant every time you use your card to make a payment, and making money on the exchange rate they charge you to convert the ‘local’ foreign currency you’ve made the payment in, back into £ sterling. To charge you an extra fee just for the privilege of using the card is unwarranted.
So… how to avoid overseas surcharges using your credit card overseas!
Like many other types of credit card deal, getting the best value for money out of overseas credit cards often means looking at promotional deals. Many new credit card products offer reduced overseas charges for a limited time only. But as always there’s nothing for nothing, and the reason these overseas cards have low or zero charges for overseas transactions is because often their charges for using them at home are less than competitive!
As always when considering a new financial product, analyse your personal circumstances, budget and likely spending pattern. Although its convenient to have the line of credit that a traditional credit card offers you, are you comfortable paying those surcharges? Although some of the deals around at the moment on mainstream cards offer reduced or zero foreign exchange surcharges, all these cards still charge you significant fees for drawing cash from an ATM or at the counter.
Many of the cards that offer the best deals on overseas spending work on the prepaid card model. This means you don’t have to go through the palaver of a credit check, and setting up a line of credit, you just fill in the online application and the card arrives in the post a few days later.
Overseas Credit Card ‘GOTCHERS’!
- The only overseas credit cards that offer complete freedom from foreign exchange surcharges (that is no FX fee on purchases, and no fee for drawing cash from an ATM) are currently prepaid cards. The lowest charge card currently available is the Caxton FX card.
- If you select a (prepaid) overseas credit card that’s issued in a foreign currency, this will enable you to ‘fix’ the foreign exchange rate you get at that time for the entire duration of you trip. Unfortunately these cards are currently only available in the UK in € Euros and US$ dollars. The Caxton FX card is available also in an Global Traveller version which you load in UK £, and then just pay a fair exchange rate, with no foreign exchange surcharge or ATM cash withdrawal fees.
- Whilst prepaid cards allow you to avoid the key overseas fees, depending on how you ’load’ the money onto the card there can be a charge for this, and the ultimate maximum balance on some of the cards can appear restrictive to some consumers. Cash withdrawal per day limits can also seem inadequate for some.
- If you’re using a mainstream card for overseas cash withdrawals, be careful. Even if you always pay off your balance in full, some card issuers will still charge you interest between the time when you made the cash withdrawal and when you settled the balance.
- Mainstream cards that offer you a break on the foreign exchange charges often recoup this money by offering less than competitive charging structures on home originated transactions. Make sure you understand the overheads of the card you chose, it maybe that the overseas card you select isn’t good value if used in the UK.
