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Should I take my credit card on holiday?
Holiday season is upon us, so whether you are looking forward to a hard-earned break, or planning to book a last-minute deal, it’s a good idea to consider how you will pay for stuff once you arrive.
You may have booked an all-inclusive break, a half-board holiday or be self-catering, but chances are you’ll still need to splash some cash while you’re away. It’s therefore important to budget for any added costs like food, day trips, entertainment and souvenirs. It’s also wise to have some money in case of an emergency.
Should you take a credit card or cash?
The main drawback of taking cash on holiday is the security risk – if you lose it or someone steals it, it’s gone, and there’s very little you can do about it. On the other hand, if you take a credit card with you and that’s stolen, you can contact your provider and ask them to cancel it so that the person who stole it is unable to spend any more money. Any cash that has been spent, you may also be able to get a refund for – which wouldn’t happen if it was cash that was stolen.
Tip: keep a separate record of your card providers’ emergency number, especially if you don’t have internet access where you’re staying.
Of course, there are some drawbacks to relying on a credit card on holiday rather than cash. The main one is that there may be a fee to use your credit card abroad. Check with your lender and be sure to factor this into your spending.
If you decide to take cash on holiday, either instead of or as well as a credit card, try not to carry large amounts with you at any one time. If you do have to leave money in your accommodation, ensure that it is secure.
When you booked your holiday, you’ll have weighed up whether or not to get travel insurance and what level of cover to get. Depending on your policy, this may protect you if you lose cash. However, you may be unable to claim this back until you return to the UK.
Remember, your cash is always your responsibility. If you lose all your money, make sure there is enough in your bank account to withdraw and cover your holiday expenses. Also be aware that withdrawing cash abroad with your debit card will incur a transaction fee (2%-3% average), as well as a cash withdrawal fee (£1.50–£5.00 average), and if you withdraw it with your credit card it could be higher still.
Card protection and Section 75
If you are still unsure whether to take your credit card abroad, there is another practical advantage. Section 75 offers you more protection while on holiday. If you purchase an item costing between £100 and £30,000 with your credit card, the card company is responsible along with the retailer if anything goes wrong with your purchase. This is important to remember on holiday, as it is not so easy to return items once you get back to the UK.
Credit cards for travelling abroad
As we mentioned earlier, if you are withdrawing cash abroad remember to check the charges added on by the provider. These are similar to those on debit cards, which include a transaction fee and cost for using the cash machine every time.
If you want to avoid or minimise such charges, you can shop around to find a credit card that’s designed to be used abroad. These cards carry much lower or even zero charges for their use. You can also take advantage of prepaid cards. These work like prepaid gift cards - you simply load money on to the card and can spend until the balance runs out. Again, you can top these up, but expect to pay application, withdrawal or top-up charges.
Whether you’re taking out a credit card only to use on holiday or you’re taking one you already own, be certain you can afford the repayments. It’s a good idea to set up a Direct Debit to cover your minimum repayment so you don’t have to worry about missing this.