With winter in full swing, most of us will be daydreaming about sunnier days to come, whilst the lucky ones will already have a beach gateaway booked. Escaping the gloom might seem like the preferable option but there can be drawbacks. Hidden, unclear, and avoidable credit card fees are one of them.
To help you navigate this matrix of tricky terminology and ambiguity, we've popped a little guide together. This covers everything from getting a credit card to how to avoid extra fees.
Are you eligible?
If you're considering using a credit card, make sure you're eligible. Credit card providers want to ensure customers can ultimately afford the card, therefore your eligibility will largely be based on your credit score. Many credit card providers and comparison websites allow applicants to perform a 'soft search', meaning you can check the likelihood of acceptance without affecting your credit score. If you're unlikely to be accepted then it might be worth not taking the risk of applying, as it will negatively impact your score. If you're thinking of getting the Journey Card, visit the app so you can check your eligibility first.
What type of card should I get?
There is plenty of choice out there and it can be hard to know what's right for you. Some consumers prefer cards that provide rewards or air miles. However, if you're going abroad, it may be worthwhile considering a card that doesn't charge you a foreign exchange (FX) fee for making withdrawals or purchases outside the country.
Why is FX important?
If you're making a purchase abroad and you're not using a no-FX card then many banks will charge you a percentage of the transaction. This is the exchange rate and there is no way of determining what rate the bank will be using when they come around to charging you. They may also charge you a separate foreign usage fee each time you use the service. If you take out cash abroad, you may also incur a cash withdrawal fee as well as interest from the moment you take out cash.
For example, if you use a credit card to take out £100 at the cash machine abroad, with the worst kind of card you might pay:
- £2 extra due to higher exchange rate.
- £3 extra for the foreign usage fee.
- £3 for the cash withdrawal fee.
- £2 interest before you pay off your bill.
That's £110 total. Doing this several times in one holiday will really add up.
Before you leave…
Only take cards you plan to use. In the event of theft or losing your wallet, you may need to make costly calls to several providers. It's also worth informing your card provider you're going on holiday so your card won't get flagged for fraud due to unusual activity. If you want to take some cash with you, make sure to get it in advance. Foreign exchange desks in airports do not offer the best rates and can leave some travellers worse off before they're even on the plane.
Once you're abroad…
As you would at home, make sure to protect your pin and keep your eyes on your card, especially at bars and restaurants. If you have a card that charges fees and you want to use cash, try to take out the total amount you'll need for the holiday at once. If not, you may come home and find lots of nasty charges that you weren't expecting from multiple withdrawals. Just make sure you store the money safely.
Whatever card you are using, when given the option of paying in the local currency or converting it into sterling, always stick to the local currency. Again, you will have no idea at what rate they'll charge you and those little extras will add up.
Once you're home…
Make sure to check your bill. If there are any transactions you don't recognise then speak to your provider straight away. Additionally, make sure you look to make your payment in full. The memories may last a lifetime, but you don't want the debts to.
We asked Ricky (our CEO) for some advice on the above, he said:
We work hard for most of the year and the daily grind makes our time off even more precious. I'd encourage anyone looking forward to their summer abroad to take a bit of time to see where they can get the best deal. It shouldn't come as a surprise that some cards can make your holiday more expensive, so it makes it all the more important to make sure you get the best deal for you.