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Three quarters of UK credit cards come with a foreign transaction fee of 2.75%-2.99%. On just \u00a3500-worth of holiday spending, that equates to \u00a313.75-\u00a314.95 in foreign transaction fees.<\/p>
The good news is that some credit cards come with 0% foreign transaction fees \u2013 a perk that card issuers can offer in order to win over new customers.<\/p>
So does that make it worth getting one? Well, it will primarily depend on how much you anticipate spending overseas. But it will also depend on the other costs and benefits of the card, and how you use it.<\/p>
If a credit card comes with a monthly or annual account fee, then it might cost you more than it saves. Santander\u2019s World Elite Mastercard (representative 49.8% APR variable), for example, charges no foreign transaction fee, BUT has an account fee of \u00a315 per month. If you\u2019re after a credit card specifically to avoid fees on spending overseas, then opt for one with no monthly or annual account fee.<\/p>
Similarly, if you don\u2019t clear your full balance each time your card bill comes through, then you\u2019ll be charged interest \u2013 which will quickly outweigh the savings on foreign transaction fees.<\/p>
It\u2019s not all about the charges (and avoiding them). Some cards offer tangible benefits that can add to the value you\u2019re getting. The cleanest example of this is cashback<\/a>. Lloyds\u2019 Ultra Credit Card<\/a> (representative 16.9% APR variable) charges no foreign transaction fee and has no monthly\/annual fee, but earns you cashback as you spend (1% in year one, and 0.25% after that). On \u00a3500-worth of holiday spending, not only would the Ultra help you avoid up to \u00a314.95 of foreign transaction fees, it would actually earn you \u00a35 in cashback, leaving you \u00a319.95 better off compared to a more standard card.<\/p> If your credit card came with, say, travel accident insurance (which is the case with some American Express cards), then you might assign a value to that as well \u2013 though it can be harder to pin down! Cards with lots of perks usually have an annual fee, so you have to weigh up the value of the benefits vs the fees. But as a rule of thumb, Amex cards aren\u2019t suitable for spending overseas, because there\u2019s currently no Amex that charges 0% foreign transaction fees.<\/p> The calculator below helps quantify the benefit of a credit card with vs without a foreign transaction fee. It can also factor in the benefit of cashback at the same time.<\/p> Bear in mind that foreign transaction fees apply whenever you spend in a currency that\u2019s not pounds Sterling, regardless of where in the world you are. So if you\u2019re at home in the UK and spend money with a company that\u2019s based overseas (perhaps booking a hotel that charges in Euros) you may incur a foreign transaction fee.<\/p>Calculating fee savings and cashback from a travel credit card<\/h3>
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