3. Credit cards
These are the most widely accepted cards around the world, so can be a convenient way to manage your spending money.
There are other advantages to spending with a credit card, too.
They offer you the same level of protection abroad as when you use them in the UK. So if your card is stolen, you should be covered for any money that's spent on it.
They also give you Section 75 protection – even overseas.
This means that if you use your card to buy goods or services which are not fully supplied or are unsatisfactory, and the cost of an individual item is more than £100 but not more than £30,000, you may have a claim against the retailer and the card firm.
More information on Section 75 is available on the Government's Legislation website Link opens in a new window
Another advantage of credit cards is that they generally offer competitive exchange rates, thanks to a wholesale rate determined by card providers Visa and MasterCard.
However, there are some potential disadvantages associated with spending overseas on your credit card.
You could have to pay a non-sterling transaction fee, both on purchases and cash withdrawals. Usually this is around 2.75%.
If you use your credit card to withdraw cash, you may also have to pay a withdrawal fee. This is usually around 2-3%.
You will also be charged interest on cash withdrawals from the day of the withdrawal. This is the case even if your card offers 0% interest on purchases and you pay the balance in full at the end of the month, as the interest-free period does not apply to cash withdrawals.
Finally, as with spending in the UK, unless your card offers 0% interest on purchases, if you don't pay off your card in full at the end of the month you'll pay interest on your holiday purchases.
Our credit card tips
As in the UK, some retailers may have a minimum card payment amount, so it may also be a good idea to take some cash in the local currency for smaller purchases such as public transport and refreshments.
Ask for all overseas transactions to be made in the local currency rather than sterling. While a sterling transaction shows you the exact cost of your purchase, your bank is likely to give you a better exchange rate than the retailer – meaning you'll save money by paying in the local currency.
Remember to tell your credit card provider if you're planning a trip abroad. Otherwise, they may think your card is being used fraudulently and block it. It's a good idea to take a copy of your credit card company's 24-hour number with you so you can get in touch if something goes wrong. You may also want to give them a contact number for you, in case they need to contact you while you're away.
- Widely accepted
- May offer competitive rates
- Offer protection against theft
- Offer Section 75 protection if there are issues with the items you purchase
- Can make budgeting more difficult
- Some retailers may require a minimum payment
- Likely to incur withdrawal fees at ATMs
- May incur additional fees and charges
- Interest will be charged on cash withdrawals from the date of withdrawal