When traveling abroad, many consumers default to using their regular bank debit or credit cards for purchases and cash withdrawals. However, experts caution that these cards often carry foreign transaction fees and poor exchange rates, which can increase the cost of spending overseas by as much as 5%.

To reduce these costs, some travelers opt for travel credit cards, specialized credit products designed for use abroad. According to Olly Green, content editor at Travel SuperMarket, these cards generally eliminate foreign transaction fees and provide exchange rates that closely match the interbank rate. This means cardholders can safely choose to pay in the local currency without incurring additional charges. Helen Saxon, deputy editor at MoneySavingExpert, adds that travel credit cards allow consumers to pay the true cost of their purchases rather than being penalized for using a foreign currency.

One significant benefit of travel credit cards is purchase protection insurance, which typically covers transactions between £100 and £30,000. This protection can be valuable for larger purchases made abroad, as it may allow cardholders to seek reimbursement if issues arise with their purchases. Green highlights this feature as a key distinction between travel credit cards and travel debit cards. Saxon emphasizes its utility overseas where returning faulty goods can be difficult once travelers have returned home.

However, travel credit cards are not accessible to everyone. Saxon notes that applicants must pass a credit check to qualify. To improve the chances of approval, she recommends using eligibility calculators, such as the one provided by MoneySavingExpert’s Credit Club, to identify the most suitable card options before applying.

Cardholders should also be mindful of the potential costs if balances are not paid in full each month. Like standard credit cards, travel credit cards charge interest on unpaid balances, which can be substantial. Additionally, using these cards to withdraw cash abroad often incurs fees and immediate interest charges, making this an expensive option for accessing cash while traveling.

In summary, while travel credit cards offer advantages like fee-free foreign spending, near-market exchange rates, and purchase protections, travelers need to assess their eligibility and carefully manage repayments to avoid high interest costs. For many, these cards can be a cost-effective alternative to standard debit or credit cards when used responsibly during international travel.