Creditcard use abroad.

banjobob59

This query may have been answered already and if that is the case I apologise.

I have a new Barclaycard Rewards creditcard to use when I am abroad.
This card can be used for purchasing goods or withdrawing cash without being charged fees.

I have been told by a friend  that if I withdraw foreign currency with it then my credit rating, which is excellent may be affected.

Can anyone advise me if this is correct?

cymruchris

banjobob59 said:

This query may have been answered already and if that is the case I apologise.

I have a new Barclaycard Rewards creditcard to use when I am abroad.
This card can be used for purchasing goods or withdrawing cash without being charged fees.

I have been told by a friend  that if I withdraw foreign currency with it then my credit rating, which is excellent may be affected.

Can anyone advise me if this is correct?

It's affected in the sense that a warning will likely flash up on your various credit reference agency reports about withdrawing cash on a credit card, your magic score (that only you see) will drop slightly for a month, and then all will recover after 3 months.

The reality is though it'll not make much difference, if any to your credit history (Which is more important than any score).

I used my Barclaycard rewards in Germany last year, withdrew some Euros, settled the account to zero once the charge had been debited, and wasn't charged anything, and got a decent rate. So in terms of travel it worked nicely for me - then got all the 'WARNING - DON'T TAKE CASH OUT ON YOUR CREDIT CARD' notifications from the CRA's - and after 3 months everything was back where it was.

I don't think the CRA's are set up to record that you've taken cash abroad, and paid it off in full, and go into automatic meltdown mode - however it doesn't 'damage' anything long term.

If you're applying for a mortgage in 2 months time - maybe avoid it - if not - go ahead and use it.

Will_Riker

As above.  Occasional cash withdrawals abroad, to take advantage of favourable exchange rates and zero fees, are fine.  It's when you regularly withdraw cash at home that it becomes an issue - the obvious inference being that you're struggling to meet your everyday expenses from your income.

You will very likely see all sorts of dire warnings flash up on your CRA reports, none of which are seen by any lender.  All they will see is the raw data.  So yes, they will see that you made a cash withdrawal abroad - but their internal rating algorithms are somewhat more sophisticated than those used by the CRAs, so they will almost certainly not be in the slightest bit bothered.

DullGreyGuy

Will_Riker said:

So yes, they will see that you made a cash withdrawal abroad - but their internal rating algorithms are somewhat more sophisticated than those used by the CRAs, so they will almost certainly not be in the slightest bit bothered.

Will they? I dont think the data differentiates between UK and non-UK cash withdrawals? 

Ultimately each lender will be free to determine how it treats a cash withdrawal but one of the challenges is that for many it probably wont be a single withdrawl but a couple over the holiday. Personally, given Stirling is free and a debit card so no CRA report for making a cash withdrawal I use it for cash rather than a CC

Will_Riker

Just to clarify, there's no doubt that withdrawing GBP in the UK on credit card is generally a bad idea.  It's when you're withdrawing foreign currency abroad that the line is less clear.  Most debit cards will charge a fee for foreign withdrawals, whereas the advantage of a "travel" credit card is that they don't charge a fee, and you also benefit from near enough the best exchange rate you're likely to get.  And yes, you're correct that withdrawals on CC get reported to the CRA, but it's generally accepted that occasional instances are not a huge problem in an otherwise clean credit history.

DullGreyGuy

Will_Riker said:
Most debit cards will charge a fee for foreign withdrawals, whereas the advantage of a "travel" credit card is that they don't charge a fee, and you also benefit from near enough the best exchange rate you're likely to get.  

Exactly the same can be said about "travel debit cards"... no fee and the same Visa/MC FX rate... so why put 2-4 cash withdrawals onto your credit record by using a credit card?

banjobob59

Thank you all for your input. 
It is as I thought that using my CC to withdraw euros will temporarily affect my credit score but I believe that I can live with that as my score is very high.
Weighing all things up I believe using the CC is the best option.
Once again thank you all.

Will_Riker

banjobob59 said:

It is as I thought that using my CC to withdraw euros will temporarily affect my credit score but I believe that I can live with that as my score is very high.

To put your mind at rest, any impact of your score is entirely immaterial, since your score is not used - nor even seen - by any lender.  The effect on your credit history (which is what really matters) will be tiny and short-lived.

Marchitiello

Will_Riker said:

Just to clarify, there's no doubt that withdrawing GBP in the UK on credit card is generally a bad idea.  It's when you're withdrawing foreign currency abroad that the line is less clear.  Most debit cards will charge a fee for foreign withdrawals, whereas the advantage of a "travel" credit card is that they don't charge a fee, and you also benefit from near enough the best exchange rate you're likely to get.  And yes, you're correct that withdrawals on CC get reported to the CRA, but it's generally accepted that occasional instances are not a huge problem in an otherwise clean credit history.

There are so many free Forex debit cards nowadays that I cannot see the benefit of using a credit card for atm withdrawal abroad. Chase would be my favourite due to the USP of USA free ATM
usage (all other cards likely to be charged local operator fees) but also Starling and Monzo could be used. 

Also worth considering that the Barclaycard mentioned by the OP is a Visa card and will use Visa exchange rate which are generally slightly worst than MasterCard rates used by Chase, Starling and Monzo

DCFC79

Marchitiello said:

Will_Riker said:

Just to clarify, there's no doubt that withdrawing GBP in the UK on credit card is generally a bad idea.  It's when you're withdrawing foreign currency abroad that the line is less clear.  Most debit cards will charge a fee for foreign withdrawals, whereas the advantage of a "travel" credit card is that they don't charge a fee, and you also benefit from near enough the best exchange rate you're likely to get.  And yes, you're correct that withdrawals on CC get reported to the CRA, but it's generally accepted that occasional instances are not a huge problem in an otherwise clean credit history.

There are so many free Forex debit cards nowadays that I cannot see the benefit of using a credit card for atm withdrawal abroad. Chase would be my favourite due to the USP of USA free ATM
usage (all other cards likely to be charged local operator fees) but also Starling and Monzo could be used. 

Also worth considering that the Barclaycard mentioned by the OP is a Visa card and will use Visa exchange rate which are generally slightly worst than MasterCard rates used by Chase, Starling and Monzo

Exactly, OP get yourself a Monzo or Starling card for ATM withdrawls, not sure you woukd even need to use cash when abroad.

jbrassy

I have the BC Rewards card and have never withdrawn cash on it for this reason. Don't want to ruin my chances of getting a mortgage for the sake of withdrawing cash on holiday. I withdraw cash with Starling instead. Better to be safe than sorry.