Using your credit card abroad?

Planning a big shopping trip abroad? In order to bag as many bargains as possible you might decide to take your credit card. But as BBC Watchdog recently highlighted, it may not be a good idea to solely depend on it.

The good thing about using credit cards abroad is that they are widely accepted. In today’s world, a credit card can be the most useful thing of all for getting you out of a scrape. Also the exchange rate offered on credit cards is about the best you can get (but don’t forget that many charge a “loading rate”, typically around 2-3%, and there are charges for using them in cash machines so they are best used for larger purchases and withdrawals).*

But in order to combat card fraud, credit card companies now look for unusual activity on cards, and spending abroad can be considered unusual. If the company decides something is suspicious, they may put a block on the card to prevent any further spending. This may be more likely to happen in countries that don’t have Chip and Pin such as the USA*.

Sometimes they will endeavour to inform you of this, but if you are on holiday you might not receive the message if it goes to your home number. Others might not phone you at all – which means costly international phone calls to the credit card company to sort it out, when you should be enjoying your trip!

If your credit card is your only source of money on holiday you could be left in a perilous position if your card is blocked as the call centres are not always easy to reach, and of course you need the money to make the phone calls. Some holidaymakers have been left unable to buy meals and onward transport due to having no other access to funds.

When BBC Watchdog contacted some banks to establish the best course of action, all of them recommended phoning your bank to inform them of your holiday plans. However as the blocks are applied by computer, there is still no guarantee that your card won’t be stopped. They also recommend giving the card company your mobile number so if they do try to phone you at least you can be contacted. But really the only way around the problem is to take some back-up money with you.

Don’t forget to take travel insurance when you go abroad as well as your credit card. In some cases it may be easier to settle some out-of-pocket expenses upfront with the card and claim them back from your insurer on your return home. Check your policy wording carefully to establish whether your claim will be valid and for any procedures you need to follow. 24/7 travel insurance offers insurance for a weekend break from under £10** including cover for personal money and travel documents of up to £500.

** Premium £9.75 includes Insurance Premium Tax, based on a couple aged 18-54 taking out a “standard” Single Trip policy for 3 days for European travel and purchased within 14 days of departure date. Cover details and prices are correct at time of going to press and are subject to change.