Five Reasons to Use your Credit Card on Holidays

If you’re taking a holiday abroad then it’s a no-brainer that you’ll want access to additional funds in case you’ve underestimated how much foreign currency you need.

While debit cards and travellers’ cheques offer a decent level of security and flexibility, there are a number of advantages to using a credit card on holidays.


1: Overseas speciality cards keep costs down

Holidays are often an expensive business, with purchases racking up left, right and centre for meals out, activities and those little treats that make a trip memorable.

Using a debit card abroad can add to that expense if the provider charges ‘load’ fees and the worst of them impose a hefty spending charge of £1 or £1.50 every time you use them.

However, there are a number of credit cards that present themselves as overseas specialists that avoid most of the hidden fees and charges, making things convenient while keeping costs down.

Top overseas speciality credit cards include:

  • Halifax Clarity: 0% loading fee, free cash withdrawals, 12.9% cash withdrawal interest (if fully repaid)
  • Santander Zero: 0% loading fee, free cash withdrawals, 27.9% cash withdrawal interest (if fully repaid)
  • Post office: 0% loading fee, £3 or 2.5% cash withdrawal fee, 27.9% cash withdrawal interest (if fully repaid)

2: Longer reporting time for fraudulent purchases

It’s very easy to let your guard down when you’re on a relaxing holiday in an unfamiliar place and unfortunately there are many unscrupulous people who are willing to take advantage of that laxity.

If somebody steals your card information to make fraudulent purchases, you often have better protection with a credit card than a debit card.

While most banks do offer adequate fraud protection for their debit card holders, the level of cover is usually higher with credit cards.

Firstly, with most credit cards you will have up to 60 days to report any fraudulent transactions, whereas with debit cards that window of reporting opportunity is significantly shorter, sometimes as little as 10 days. This can make all the difference when you’re on a long holiday and less likely to check your account history until you return home.


3: Secure funds against fraud

Another anti-fraud benefit to using credit cards abroad is that in the event that you are targeted by fraudsters, you’ll still have access to your funds.

With a debit card the money would be drained from the account and until the transactions were proven as fraudulent and subsequently refunded, you would be left without access to that money.

However, with a credit card, it is the bank’s money being used, so you can simply report the phoney transactions, have them removed from your credit statement and continue having access to your line of credit.

When you’re far from home in an unfamiliar place, having access to your money is of vital importance.


4: Extended Warranty

Just like with purchases made at home, credit cards offer extended warranties as part of their perks.

Shopping in other countries often gives you the opportunity to buy things at a much cheaper price than you can find at home and the extended warranty applies on top of the manufacturer’s warranty.

So if you’re after electronic goods or anything that might reasonably be expected to have a manufacturer’s warranty, consider the benefits of buying them cheap abroad while still enjoying the extended cover.


5: Price Protection

A small number of premium credit cards will offer price protection as part of the annual package which means that if you find the same item for a lower price elsewhere you can be refunded the difference.

This can help immeasurably if you come home after making a significant purchase on holiday to find the item much reduced at a local store.

Bear in mind that price protection usually comes with a strict time limit so the lower price has to appear in stores or online within 30, 60 or 90 days depending on your credit card provider.


A note on credit scores

While using a speciality credit card abroad can net you significant savings, it is important to remember that withdrawing cash from an ATM can negatively affect your credit score.

This is because when you withdraw cash with a credit card, some lenders will assume that you have to do it because you don’t have enough money left in your bank account, leading them to question your ability to manage your finances.

So, ideally use your credit card for purchases and only for ATM withdrawals as a last resort. If you’re unsure how your holiday transactions have affected your score, ask for a free credit report from advisory sites like mycreditmonitor to keep track of your score.

Follow these tips and you’ll quickly find that careful use of your credit card can help you make savings while on holiday rather than simply adding to the cost.


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Master of the budgets. Provider of the tips. Author and owner of Dumbfunded.co.uk.