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Credit, debit and pre-paid cards and your holiday spending


Spending money on holiday can often be a minefield of hidden charges and excessive transfer rates.

If you feel uncomfortable carrying large amounts of money around with you, there are still many different options available to you, so we have looked at the best ways to use cards abroad.

When buying your holiday

Before you pay for your holiday, maybe think about using your credit card instead of paying via cash or your debit card. If the holiday costs between £100 and £30,000 you will be covered by Section 7 of the Consumer Credit Act. This means that your credit card company will have equal responsibility with the seller if there is a problem with the holiday or if the holiday company goes bust.

Simply paying the deposit for your holiday is enough to get you the protection. You would still be entitled to claim the whole amount of the holiday back if something went wrong, even if you pay the rest via a different method.

Be aware, not all situations are covered. For example, if you buy a flight from a third party, like a travel agent, and they go bust, you might not be able to make a claim as the third party was contracted to provide you a plane ticket, not the actual flights. You will also be unable to claim for any additional costs that you didn’t have to incur- for example if you decided to extend your holiday and your airline goes bust while you are still abroad.

While on holiday

Credit cards

There are some really great credit card deals designed specifically for overseas spending. When applying for a credit card to go abroad with always ensure that “foreign spending fees” are not applied to it. The Post Office, Saga and Nationwide offer credit cards without foreign spending fees, but try to do some of your own research first.

We must stress- don’t use a credit card to supplement your holiday spending. When using a credit card, make sure you have the cash to pay back everything you have spent once you bill comes around, to avoid excessive interest costs. Also, try not to use your credit card in cash machines abroad. Instead, pay via chip and pin and bring some cash with you.

Pre-paid cards

If you are not keen on the idea of a credit card, you could try a specialist overseas pre-paid card. This is where you load a card with cash before you travel, and then you use it like you would a debit card. You can choose exactly how much goes on it, so it can work well for people on a budget. Also, if you happen to lose the card, the money will remain protected.

The exchange rate on the card will be the same as the day you buy the card. This could be a good or bad thing, depending on the time you buy it. If rates seem to drop a few weeks before your holiday, it might be worth topping it up early!

It’s worth noting that a few places won’t accept pre-paid cards, especially car hire firms and pay at the pump petrol stations, so make sure you take precautions to avoid coming up short.

Debit cards

Debit cards can be a really risky way to pay for things when on holiday. Many of the high street banks add a charge of £1.50 every time you make a purchase, which over the course of the holiday, can really add up. As well as this, there may also be cash machine fees. Credit cards or pre-paid cards, when designed for use abroad, usually work out at much cheaper.


If you decide to go for cash, try not to buy at the airport as exchange rates are rubbish compared to other high street places. is a travel money comparison tool that compares rates at about 40 online bureaux and orders them by how much currency you'll actually get after all fees and charges.

So, that’s our advice on how to spend on your holiday. Do you have any helpful hints or tips you feel we may have missed? Let us know via Twitter @financialuk

If you have any questions about the topics discussed today or would like any further information please don’t hesitate to give us a call on 0800 092 1245. Happy holidaying!

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