The best travel cards UK (2023): Credit card vs Debit card vs Smart vs Prepaid to use overseas
TLDRIn the video, the presenter discusses the advantages and disadvantages of various financial cards for use while traveling abroad. He highlights the issue of fees incurred when using big-name cards like American Express, Halifax, and Lloyd's for transactions and ATM withdrawals overseas. He offers alternatives, including fee-free cards that provide better exchange rates, such as the Barclaycard Rewards credit card and debit cards from digital banks like Starling and Chase. The presenter also shares tips on using local currency and being aware of potential ATM charges. He briefly mentions smart cards like Curve and prepaid cards from Revolut and Wise as additional options for managing money abroad.
Takeaways
- 💳 Using big name cards like American Express, Halifax, Lloyd's, or First Direct abroad can incur fees for spending, ATM withdrawals, or currency conversion.
- 🌐 To avoid fees, consider getting a fee-free card that offers the Mastercard or Visa rate close to the true inter-bank rate for proper exchange rates without added costs.
- 💰 When traveling, pay in local currency to take advantage of fee-free spending and avoid conversion rates that may be unfavorable.
- 🏧 ATM withdrawals can still have local charges even if the card itself is fee-free, so plan accordingly and consider withdrawing larger amounts less frequently to minimize potential fees.
- 📈 Before applying for a new card, conduct an eligibility search to understand your chances of acceptance without a hard credit check.
- 💳 Credit cards like the Barclaycard Rewards offer fee-free cash withdrawals and spending, with the added benefit of earning a small cashback.
- 💳 Halifax Clarity credit card is another option for fee-free spending but charges interest on cash withdrawals, so pay off balances promptly.
- 🏦 Digital banks like Starling and Chase offer fee-free spending overseas and are generally better options than traditional high street banks.
- 💳 Starling Bank and Chase debit cards are top picks for overseas spending, with Chase offering 1% cashback (capped at £15 per month after the first year).
- 🔒 Always keep track of your spending and withdrawals to ensure you are within the limits of your chosen card to avoid any unexpected fees.
- 🎉 Consider a mix of credit, debit, and backup cards (like Curve) for the best financial management while traveling.
Q & A
What is the main drawback of using big-name cards like American Express, Halifax, or Lloyd's when traveling abroad?
-The main drawback is that these cards charge fees for spending abroad, whether in a restaurant, shop, or ATM. These fees can add up significantly, especially for longer trips or in expensive locations.
What are the benefits of using a fee-free card when traveling abroad?
-Fee-free cards offer the Mastercard or Visa rate, which is very close to the true interchange or inter-bank rate, allowing you to get the proper exchange rate without additional fees. They also often allow for ATM withdrawals without charges, helping you save on foreign transaction costs.
What is the importance of paying in the local currency when using a fee-free card abroad?
-Paying in the local currency ensures that you take advantage of the fee-free spending. If you pay in your home currency, the conversion happens at the merchant's rate, which may not be favorable and could result in additional costs.
What should be considered when using an ATM with a fee-free card?
-While the bank that issues the fee-free card won't charge you for ATM withdrawals, the local bank or ATM itself might have a charge. It's important to be aware of potential local charges and possibly plan to withdraw larger amounts to minimize the frequency of fees.
Why is having a credit card useful when traveling?
-A credit card is useful because it allows for situations where a company may freeze a certain amount of funds, which can be problematic if it's your only spending money. Credit cards also offer Section 75 protection, which provides additional consumer rights and protection for purchases over a certain amount.
What are the key features of the Barclays Rewards Credit Card?
-The Barclays Rewards Credit Card offers fee-free cash withdrawals and spending abroad. It also provides a small cashback reward of 0.25% on purchases, making it a top pick for international spending.
What are the advantages of the Halifax Clarity Credit Card for traveling?
-The Halifax Clarity Credit Card offers long-standing fee-free spending abroad but charges interest on cash withdrawals. It's a good alternative for those who can't get the Barclays card and should be used responsibly by paying off the balance as soon as possible to avoid interest charges.
Why are digital banks like Starling and Chase preferred for fee-free overseas spending?
-Digital banks like Starling and Chase are preferred because they offer fee-free spending and cash withdrawals abroad. Additionally, Chase offers 1% cashback on spending, making them particularly attractive for travelers.
How can Curve and Currency smart cards be beneficial for travelers?
-Curve and Currency smart cards can be beneficial as they allow you to link multiple Visa or Mastercard debit or credit cards to a single account and spend abroad with lower fees than traditional banks. They can serve as a backup option or for budgeting purposes by locking in exchange rates.
What are the advantages of using a prepaid card like Revolut or Wise for traveling?
-Prepaid cards like Revolut and Wise allow you to lock in exchange rates in advance, which can be beneficial for budgeting. They offer fee-free or lower fee spending up to certain limits and can be used with digital wallets like Apple Pay or Google Pay for added convenience.
What are Andy Webb's top picks for credit, debit, and smart cards for fee-free overseas spending?
-His top picks are the Barclays Rewards Credit Card for credit cards, Starling Bank and Chase debit cards for fee-free spending, and Curve as a smart card backup. For those wanting to lock in exchange rates, Revolut and Wise prepaid cards are recommended options.
Outlines
💳 Fee-Free Spending Abroad with Credit Cards
The paragraph discusses the drawbacks of using big-name credit cards like American Express, Halifax, and Lloyd's abroad due to the fees incurred for spending, ATM withdrawals, and currency conversion. It then introduces the concept of fee-free cards, such as the Mastercard or Visa, which offer closer exchange rates to the inter-bank rate. The speaker shares their top picks for credit cards, emphasizing the importance of paying in local currency to avoid extra charges and being aware of potential local ATM fees. The section concludes with a brief mention of the advantages of using a credit card for large purchases and the protection provided by Section 75.
💰 Top Picks for Fee-Free Credit and Debit Cards
This paragraph presents the speaker's top choices for fee-free credit cards, highlighting the benefits of the Barclaycard Rewards credit card, which offers cashback and no fees on cash withdrawals and spending. The speaker also mentions the Halifax Clarity credit card as a fee-free alternative, although it charges interest on cash withdrawals. The discussion then shifts to digital banks, which are generally fee-free, and the speaker lists several options, including Virgin Money, Starling Bank, and Chase. The advantages of these banks, such as no fees for spending overseas and cash withdrawals, are emphasized, making them ideal for travel purposes.
📱 Smart Card and Prepaid Card Options
The speaker explores smart card options like Curve and Currency, which consolidate multiple cards into one for fee-free or lower fee spending. Curve is praised for its weekday fee-free spending up to £1,000, while Currency offers lower fees for select banks. The paragraph also delves into prepaid cards, recommending Revolut and Wise as modern alternatives that allow users to lock in exchange rates and avoid fluctuations. The speaker advises using these cards in conjunction with the previously mentioned fee-free cards for optimal financial management during travel.
🏦 Final Recommendations and Conclusion
In the final paragraph, the speaker summarizes the top recommendations for fee-free spending abroad, which include the Barclaycard Rewards, Halifax Clarity, Starling Bank, and Chase debit cards. The convenience of soft credit checks for these accounts is highlighted, allowing users to apply without affecting their credit score. The speaker also touches on the benefits of having a backup card like Curve and mentions the option of using prepaid cards for budgeting purposes. The video concludes with the speaker's name and a prompt for viewers to explore more content on maximizing their finances.
Mindmap
Keywords
💡extra credit cards
💡cashback
💡foreign transaction fees
💡true interchange rate
💡ATM fees
💡local currency
💡credit card
💡section 75 protection
💡digital banks
💡smart cards
💡prepaid cards
Highlights
The speaker discusses the benefits of using extra credit cards and current accounts with debit cards for cashback and monthly rewards.
Some big names like American Express, Halifax, Lloyd's, or First Direct charge fees for using their cards abroad, which can add up significantly.
The speaker suggests that it's easy to find alternative cards that offer fee-free transactions abroad, typically providing the true Mastercard or VISA exchange rate.
When abroad, it's advised to pay in the local currency to avoid additional conversion fees charged by merchants.
While some banks offer fee-free ATM withdrawals with their cards, local banks or ATMs may still charge a fee.
The speaker emphasizes the importance of having a credit card for situations where a company freezes a certain amount of money on the card, such as car hire or hotel incidentals.
Section 75 protection is highlighted as a benefit of using a credit card for purchases over 100 pounds, providing additional consumer protection.
The Barclays Rewards Credit Card is recommended as a top fee-free credit card for overseas spending, with a cashback reward of 0.25%.
The Halifax Clarity Credit Card is mentioned as another option for fee-free spending abroad, although it charges interest on cash withdrawals.
Digital banks like Starling and Chase offer fee-free spending overseas and are highlighted as top picks for debit cards.
Chase offers 1% cashback on spending, making it a more attractive option than Starling for users looking for rewards.
Curve and Currency are smart card options that allow linking of other bank accounts and cards for fee-free or lower fee transactions.
Prepaid cards like Revolut and Wise can be used to lock in exchange rates, providing budgeting benefits for those planning their spending abroad.