Which credit card to use abroad

General information for travellers, not financial advice. Card terms differ by country and by issuer, and they change. Always read the terms of the specific product before relying on it.

Paying abroad is one of the few areas of travel where a small amount of preparation reliably saves a measurable amount of money. Not through a clever trick, but by avoiding three specific charges that most travellers pay without noticing.

The three charges you are trying to avoid

1. The foreign transaction fee

Most standard cards add a percentage - commonly around 2% to 3% - to every purchase made in another currency. On a two-week trip that is a meaningful sum for something you receive nothing in return for.

Plenty of cards charge nothing. Travel-oriented credit cards, and the current accounts and cards offered by app-based banks, routinely have zero foreign transaction fees as their headline feature. If you travel more than once a year, holding one is the single highest-value change you can make.

2. Dynamic currency conversion - the one that catches everybody

You are in a shop or at a cash machine abroad and the terminal offers you a choice: pay in the local currency, or pay in your home currency. Your home currency looks helpful. It is a fee.

This is dynamic currency conversion. The merchant's payment processor converts at a rate they choose, typically several percent worse than the network rate, and keeps the difference. Choosing your home currency also means your own bank cannot apply its rate.

Always choose the local currency. Every time, at every terminal, at every cash machine, without exception. It is the single most reliable saving in this article and it costs nothing but the discipline to read the screen.

3. Cash machine charges

Two separate charges can apply: your own bank's withdrawal fee, and the machine operator's fee. The second is disclosed on screen before you confirm and can be surprisingly large in tourist areas.

Practical rules: withdraw larger amounts less often, use machines attached to real banks rather than the standalone ones in shops and airports, and decline the conversion offer.

What actually matters when choosing a card

1. No foreign transaction fee. Non-negotiable if you travel regularly.
2. A fair exchange rate. Look for a card that uses the Visa or Mastercard network rate with no mark-up. Beware cards that advertise "no fees" but apply a weekend or out-of-hours spread instead.
3. Free or cheap cash withdrawals, at least up to a monthly limit.
4. Purchase protection and chargeback. This is the underrated one. A credit card gives you the right to reverse a payment when a service is not delivered - the airline that folds, the tour that never happened, the rental company that charges for damage that was already there. Debit cards have weaker protection in most countries.
5. Included insurance, if any. Some cards include travel medical cover or car rental excess cover. Read the exclusions before relying on them: they often require the whole trip or rental to be paid on that card, and frequently exclude certain countries, long trips or older travellers.
6. Instant notifications and an app that lets you freeze the card the moment you cannot find it.

Credit or debit?

Use both, for different things.

Credit for anything expensive or delivered in the future: flights, hotels, tours, car rental. You get chargeback rights, and a fraudulent charge is the bank's money until it is resolved rather than yours.

Debit for cash withdrawals and small day-to-day spending, ideally on an account holding only what you need for the trip, so a compromise is contained.

One important detail: car rental companies almost always require a credit card in the main driver's name for the deposit. Turning up with only a debit card strands people at the counter more often than any other single issue.

Carry two cards on different networks, stored separately

This is the rule that saves trips. Cards get lost, blocked by fraud systems, swallowed by machines, and demagnetised. Some countries and merchants accept one network and not the other - American Express in particular has patchy acceptance outside major cities and chains.

Carry one Visa and one Mastercard, from two different issuers, and never keep them in the same pocket or the same bag. Leave one in the room safe and take the other out.

Cash still matters

Card acceptance varies enormously. Northern Europe is close to cashless; large parts of Asia, Africa and Latin America are not, and small islands may have one cash machine that can be empty on a Sunday.

• Carry a modest amount of local currency for arrival - taxis, buses, the first meal.
• Do not change money at the airport unless you have to; the rate is the worst you will see.
• Do not buy currency at home for exotic destinations. The rate is usually poor and a local cash machine will beat it.
• Keep a small emergency reserve of a widely accepted currency somewhere separate from everything else.
• Break large notes early. Nobody at a market has change for the biggest note in circulation.

Before you leave

• Check the expiry dates. A card expiring mid-trip is a common and entirely avoidable disaster.
• Tell your bank where you are going if they still require it - many now use location data instead, but a blocked card on day one ruins a day.
• Make sure you can receive verification codes. If your home SIM is out of the phone, bank SMS codes will not arrive. Move to an authenticator app before you travel.
• Know your PINs. Some countries still require chip and PIN where you normally tap, and some machines have no contactless at all.
• Write down the international phone number for reporting a lost card and keep it somewhere that is not your phone.
• Check whether your card works as a physical card at all - a few app-only accounts are virtual by default.

Paying by phone

Phone payment works essentially everywhere contactless cards do, and it has two genuine advantages abroad: the card number is never exposed to the merchant, and you can carry the physical cards separately. It is not a replacement for them, because a flat battery is a real thing and some terminals and cash machines still need the plastic.

The short version

1. Get one card with no foreign transaction fee before your next trip.
2. Always pay in the local currency. Always.
3. Carry two cards on different networks, kept in different places.
4. Use credit for big and future purchases, debit for cash.
5. Withdraw larger amounts, less often, from bank machines.
6. Carry some cash, and never change money at the airport.