Our guide to the best credit and debit cards for travelling

You put plenty of thought into what to pack in your suitcase, but what about what you carry in your wallet? Here’s our guide to the best credit and debit cards to use when travelling.

There are a number of charges you can face when paying with plastic abroad. Pick the right card and you can eradicate most of these, making foreign transactions much cheaper. First, consider the cost of converting your money into the local currency. Just like when you buy currency at a foreign exchange, the rate can vary between different card providers. Your provider will use an exchange rate set by Mastercard, Visa or American Express – these are all very close to the “spot” price so offer a better rate than you would get at a foreign exchange.

Of the three, Mastercard tends to offer a slightly better exchange rate than Visa or American Express but it is a small difference. For example, at the time of writing Mastercard was offering €1,157 for £1,000, compared with €1,150 from Visa.

On top of the exchange rate, many card providers – both debit and credit – charge a non-sterling transaction fee. You will pay this every time you use it, and it is typically up to 2.99 per cent of the transaction.

Then there is the non-sterling cash fee. This is a charge of about 3 per cent whenever you withdraw cash from an ATM. Also, if you take out money using a credit card you may be charged interest from the moment the notes are in your hands.

It is not uncommon to come across debit and credit cards that charge all of these fees when you use your card abroad, and that can quickly add up to an expensive transaction. Let’s say you spend £1,000 in a foreign transaction – the non-sterling transaction fee could add £29 to the cost. Withdraw £1,000 with a card that charges a non-sterling cash fee and it could mean a £30 charge. Take money out using a credit card and interest could add about 20-30 per cent to your costs.

WHICH CREDIT CARD?

The good news is that it is easy to avoid all those extra charges – all you need to do is pack the right plastic when you head overseas. If you are looking for a credit card then there are two great options to choose from. The Barclaycard Rewards card does not charge fees on transactions or withdrawals when you are abroad. Plus, there is no interest to pay, even on cash withdrawals, as long as you pay your bill in full. It also comes with a perk – 0.25 per cent cashback on your spending. The only drawback, and it really is a small niggle, is that the Barclaycard Rewards card uses the Visa exchange rate, which is often marginally worse than the Mastercard one.

To get the Mastercard exchange rate you could go for the Halifax Clarity card. This charges no fees on foreign spending or withdrawing money but you will pay interest at 19.9 per cent APR on cash withdrawals. Still, pay your bill in full and you won’t be charged interest.

The added bonus of putting your overseas spending on a credit card is that your purchases are protected in case things go wrong. Section 75 of the Consumer Credit Act states that your credit card provider is jointly liable alongside a retailer when you buy something that costs between £100 and £30,000. This means you can request a refund from your credit card provider, which is especially useful for overseas purchases as it can be tricky to resolve them when the retailer is in another country.

WHICH DEBIT CARD?

The drawback of a credit card is that you’ll have to pass a credit check to have your application approved and you may need a minimum income. You also can’t predict what credit limit you will be given. This is where a debit card may be a better option – some of these don’t require a credit check and may not have minimum income requirements.

Want a top-flight debit card to take on your travels? There are a couple of contenders. App-based Starling Bank’s current account comes with a debit card that doesn’t charge foreign exchange or cash withdrawal fees when you use it abroad. It also uses the Mastercard exchange rate and you’ll get instant notifications on your phone of what you’ve spent in the local currency and what it has cost you in British pounds.

As a small added bonus, you’ll earn 0.05 per cent interest on your balance with Starling Bank. Plus, if your card is lost or stolen you can lock it via the app on your phone. However, the bank will perform a credit check before you can open an account.

If you don’t want the hassle of getting a new current account then Currensea is worth a look. This is a debit card that uses open banking to link to your existing current account. This means no credit checks to get a card. You can then take advantage of its fee-free cash withdrawals of up to £500 a month; there is a 2 per cent fee after that.

Currensea uses the Mastercard exchange rate but places a 0.5 per cent fee on foreign exchange so the rate won’t be as good as with Starling Bank. You can remove the exchange rate fee by paying £25 a year for the Premium Currensea card. Premium members also pay only 1 per cent on cash withdrawals above £500 a month.

THE BEST CARDS AT A GLANCE

Ruth Jackson-Kirby