Overseas Spending - Perfect Credit Cards

ecdub

I have been reading about the best cards to have for travelling abroad, and I just wanted clarification on one thing. These cards that do not charge 2-3% etc, do they offer this by giving a less than favourable exchange rate? Or is there a fixed rate, and so the charges by some cards are all just additional costs?

It used to happen with travel money exchange rate, certain places would scream about the fact they charge no commission - and then offer you a pretty poor rate to compensate.

Thanks for your help!

reclusive46

ecdub wrote: »

I have been reading about the best cards to have for travelling abroad, and I just wanted clarification on one thing. These cards that do not charge 2-3% etc, do they offer this by giving a less than favourable exchange rate? Or is there a fixed rate, and so the charges by some cards are all just additional costs?

It used to happen with travel money exchange rate, certain places would scream about the fact they charge no commission - and then offer you a pretty poor rate to compensate.

Thanks for your help!

The MasterCard, Visa and American Express rates are some of the best. You literally do get the wholesale best rate with no commission on fee free cards.

http://www.visaeurope.com/en/cardholders/exchange_rates.aspx

Check that link for the interest exchange rate.

grumbler

ecdub wrote: »

I have been reading about the best cards to have for travelling abroad, and I just wanted clarification on one thing. These cards that do not charge 2-3% etc, do they offer this by giving a less than favourable exchange rate?

No, it's always Visa/Mastercard rate.

Or is there a fixed rate, and so the charges by some cards are all just additional costs?

Yes.

Where have you been reading? I think MSE article is pretty clear about this. In the past banks used to hide the charge in the exchange rate, but now they show the charges as separate items in the statement.

ecdub

Thanks very much for your quick responses.

Is the ideal thing to do, have both a perfect rate debit card for cash withdrawls and credit card for purchases?

If I am not worried about having the spending on credit, would the bank account / debit card be the best way to go to cover cash withdrawls and spending?

chattychappy

I often post on this topic, perhaps do an advanced search for my posts with "foreign" in or something.

For cash, Halifax Clarity and Santander Zero (if you already have it) are great CCs for cash. No fee or loading - just interest from the date of withdrawal. I prefer to stick CCs into ATMs rather than my precious debit card which gives access to my current account. (Interest is minimal if you pay off promptly.)

Barclaycard isn't too bad either for foreign cash. They do load (about 3% as far as I recall), but no fee and they treat it like a purchase. So up to 56 days interest free if paid off in full.

Cards often get blocked when used overseas. So take at least a couple - even one that loads the forex rate is better than being stuck with nothing.

ecdub

Hi Chattychappy,

That is interesting, I am moderately surprised you are advocating using a CC for cash withdrawls when there will be a charge associated with it, when a debit card could be used fee free. Have i read that right? What is the issue with using a debit card?

grumbler

To stop being surprised read MSE article: Cheap Travel Credit Cards
The above CCs don't charge for cash withdrawals (bizarrely, Barclaycard charge ATM fee on ££ transactions only, but they do charge for the conversion).
The issue with debit cards is that very few of them don't charge for conversion and some people (not I) consider it to be more risky to use them abroad.

ecdub

Thanks Grumbler - this sentence stood out for me in the article.

On these cards, it's far cheaper to spend on them than withdraw cash and spend it.

I now think I have deceiphered from the article and replies above, that by withdrawing cash, and paying around 13% APR, you are essentially paying a small fee of interest on cash withdrawls if repaid in full each month, which is less than most cards would charge as an admin fee per transaction..?

If you paid the card off before the month end bill date would that save a little extra interest?

grumbler

ecdub wrote: »

On these cards, it's far cheaper to spend on them than withdraw cash and spend it.

No, it is not 'far'. Halifax Clarity standard monthly interest rate is just about 1%,

I now think I have deceiphered from the article and replies above, that by withdrawing cash, and paying around 13% APR, you are essentially paying a small fee of interest on cash withdrawls if repaid in full each month, which is less than most cards would charge as an admin fee per transaction..?

Correct, and you can pay it off earlier to cut the interest.

If you paid the card off before the month end bill date would that save a little extra interest?

Absolutely. You don't even have to wait until the bill is produced.

unimaginative_user_name

To give a recent example. My OH recently withdrew €160 from an ATM in Portugal using his Halifax Clarity. On our return to the UK we checked online to find out how much this was in £, added a bit to cover interest and paid it off before the bill came. We were charged 31p in interest and no other fees.

chattychappy

grumbler wrote: »

The issue with debit cards is that very few of them don't charge for conversion and some people (not I) consider it to be more risky to use them abroad.

The difference in financial risk is, perhaps, small from a regulatory point of view. It's more of a hassle issue from my point of view. I spend a lot of time abroad and rely on my current account for paying bills. If my debit card was comprised, I could be left with insufficient funds to pay CCs, mobile phone etc etc. Sorting problems out remotely can be tricky and reversing the damage time consuming. With a CC there is less of a knock-on effect.

Another problem is that I need my debit card in a card reader to use my account online. If an ATM were to swallow the card, then I could be stuck until I return to the UK.

grumbler wrote: »

Absolutely. You don't even have to wait until the bill is produced.

Yep. Should there be an outstanding balance from the previous statement then it is best to pay this off at the same time - else depending on the T+Cs the payment might not be applied to the ATM withdrawal.