April 4, 2006

By Peter Kenny

With the Easter break now arrived, many people are set to go on holiday and usually their credit card is just as important as their sun cream.

Just recently the High Court announced that credit card companies had to extend their credit card guarantee scheme to include purchases made while abroad. This move was a welcome victory for the Office of Fair Trading (OFT) who argued that a previous ruling made in 2004 was unfair to consumers.

Now anyone travelling abroad can be rest assured that any purchases made would be protected by their guarantee scheme. Now for the bad news, using you credit card while overseas will still incur massive loading charges and consumers should be aware of them.

If you withdraw cash from an ATM machine while abroad expect to pay a fee of up to 2%, no matter the amount. We advise that you take travellers cheques instead, however, if you do need to withdraw cash make sure you do not withdraw small amounts as the fee usually carries a minimum charge of £2. Also, as soon as you withdraw money from your credit card using an ATM you are charged interest immediately. The usual interest free period that is available in the UK does not extend to cash withdrawals from ATM machines. To make matters worse the interest rate you are charged for cash withdrawals is usually significantly higher than you standard purchase rate. Even if you have a 0% purchase promotional deal available you will still be charged a higher APR.

Most credit card companies charge a foreign transaction fee every time you make a purchase while abroad. This fee can range from 2.5% to 2.75%.  A couple of that do not charge a foreign transaction fee are Nationwide and Saga (over 50)

Most people are ware of these charges, however, there is one often hidden charge that can be costly. Anytime you make a purchase while abroad the retailer could use what we call “dynamic currency conversion” This means that the retailers will convert your transaction from local currency to sterling using their own conversion rate. When making a purchase please ask which method the retailer uses.

Here are links to the two listed above which do not charge foreign transaction fees:

The Nationwide Classic credit card has an offer of 0% on all purchases for 9 months and 4.9% on all balance transfers for 12 months, Typical APR 14.9%. For more details click here Nationwide credit card

The Saga credit card comes with an offer of 3.9% APR on all balance transfers for the first six months, the typical APR is 14.9%. There is no foreign commission charges for purchases made in the EU, however, there is a 1% for purchases made elsewhere. For more details on the Saga credit card click here Saga credit card