You could be hit with some unexpected extra fees.
Martin Lewis has issued an urgent alert to Brits about the use of credit cards while on holiday. The finance expert has drawn attention to the potential hazards of withdrawing cash with this type of card.
Figuring out the most cost-effective way to spend money while on holiday can be a challenge. Some countries still largely rely on cash, whereas others are more open to card and mobile payments.
And in certain destinations, such as Morocco, it’s not possible to get local currency before leaving the UK. Regardless of where you’re headed, Martin strongly discourages using your credit card for cash withdrawals.
On his website Money Saving Expert, he expanded on his guidance. Martin said: “Withdrawing cash on a credit card abroad?”.
As reported by GlasgowLive, he highlighted that this habit could have a detrimental effect on your credit score. “It could impact your credit rating,” he further explained.
“We get this question a lot, as we warn against credit card ATM withdrawals in the UK, as it risks high interest and many lenders see it as a debt-problem indicator.”
However, infrequent use of this method is generally not an issue. He stated: “Yet if you only do it occasionally abroad on a specialist card, it’s not a biggie, just don’t overdo it and pay it off in full” He also mentioned that in some countries, using a UK card can be a “bit trickier”.
This includes:
- In Japan, you may need special ATMs to use international cards
- In China, hotels take cards, but elsewhere Alipay is easier
- In India, some shops and restaurants won’t take international cards
As well as using credit cards for cash withdrawals he also advised against using them to top up prepayment cards. He clarified: “You’ll likely pay fees and interest.
“Most credit-card providers count these as a cash transaction – so charge withdrawal fees and interest. It’s always better to use a debit card if you can.”
For those planning a holiday and seeking to exchange currency beforehand, MSE’s online travel money comparison tool here can be a handy resource.