Using a credit card abroad can involve more than the price on the receipt. Currency conversion, foreign transaction fees, cash withdrawal charges and interest can all affect the final cost. Understanding these separately will help you compare your options before you go.
In this guide
How exchange rates work
When you pay in a currency other than your card account’s currency, the amount needs to be converted. The card network or provider’s exchange rate and any applicable fees determine what you pay. Check the rules for your particular card; a competitive exchange rate does not necessarily mean the transaction is fee-free.
Your provider may use a Visa or Mastercard exchange rate for non-sterling transactions. A network’s currency calculator can help you estimate the conversion, but check whether the estimate includes your provider’s fees. Exchange rates change, so an estimate is not a guaranteed final charge.
Foreign transaction fees
Some cards charge a percentage fee on purchases in a foreign currency. Others offer fee-free overseas purchases, subject to their terms. Do not assume that all cards from the same bank charge the same amount, or that a card described as suitable for travel has no other costs.
Illustration, not a current market rate: if your card charged a 3% foreign transaction fee and a purchase converted to £500 before that fee, the fee would be £15. Your own card’s rate may be different, including zero. Check its current summary box and terms.
Comparing cards for travel
A card designed for overseas spending may reduce purchase fees. Compare the foreign purchase fee, exchange-rate rules, any monthly or annual account charge, purchase interest rate, and the separate costs of taking out cash. Eligibility and the terms offered depend on the provider and your circumstances.
Plan how you will repay what you spend. Paying the full statement balance by its payment due date normally avoids purchase interest, subject to your card’s terms. Do not wait until you return from holiday if a payment is due while you are away. Cash withdrawals can be treated differently even when you repay the statement in full.
Do not borrow more than you can afford just to obtain a travel benefit. MoneyHelper’s guide to credit cards explains the costs and repayment risks.
Paying in local currency
A shop or ATM may offer to convert the payment into pounds for you. This is called dynamic currency conversion, or DCC. The offer uses the conversion provider’s exchange rate and may include an extra fee or markup.
Choosing the local currency instead of the offered sterling conversion avoids that particular conversion offer, leaving conversion to your card’s usual arrangements. It does not remove your own card’s foreign transaction fees. Compare the displayed costs with your card’s terms rather than assuming that a sterling amount is better value.
Visa’s DCC guidance says you should be shown the amounts, exchange rate and additional fees or markup, and given a choice. If the details are missing or you feel pressured, Visa recommends declining the conversion and reporting the incident to your card issuer.
Cash withdrawals and interest
Taking out cash can involve several separate costs: your card provider’s cash transaction fee, any currency conversion or foreign transaction charge, an ATM operator’s charge and, on a credit card, cash interest. Read the ATM’s displayed charges before accepting a withdrawal.
Credit card cash withdrawals may start accruing interest from the transaction date. Paying your monthly statement in full does not necessarily make them interest-free. Even a card with no cash withdrawal fee can still charge cash interest.
Check the exact cash terms before using a credit card at an ATM, and compare them with the terms of any debit card you already hold. Do not assume that either type of card is always cheaper. Buying foreign cash or topping up some payment accounts with a credit card can also count as a cash transaction under the issuer’s rules.
For an example of how an issuer distinguishes these costs, see Halifax’s explanation of credit card fees. This is a source of guidance, not a product recommendation; your own card’s terms control what you pay.
Planning your holiday money
Set a spending budget and compare the total sterling cost of the options you are considering, including conversion, account and withdrawal fees. Do not rely on predicting exchange-rate movements to make a holiday affordable.
If you need cash, compare the amount you would actually receive after fees. Balance the cost of repeated withdrawals against the risk of carrying more cash than you can safely keep. A larger withdrawal is not automatically the right choice just because there is a fixed fee.
Foreign-currency and local bank accounts
Do not assume that opening an account abroad will remove every currency cost. Before considering one, check eligibility, account fees, the cost of converting and transferring money into it, and withdrawal charges. You may still need to exchange pounds to fund the account.
For a short holiday, compare the costs and practical requirements with the payment options you already have rather than treating a local bank account as the default solution. This guide does not offer an account-opening service or a personalised recommendation.
Before-you-go checklist
Check the current purchase, foreign transaction and cash withdrawal terms for each card you intend to use.
Read any account charges, limits and eligibility conditions, not just an advertised overseas spending benefit.
Plan to meet statement payment deadlines while away, and ensure any Direct Debit has sufficient funds.
Understand the difference between paying in local currency and accepting a merchant or ATM’s sterling conversion offer.
Budget for the trip without relying on further borrowing or a favourable future exchange rate.
Sources and review scope
The sources linked above were checked on 19 October 2026. Fees and terms can change. This revision removes the old Brexit and visa predictions, historic fee-spend statistic, blanket bank-account savings claims and unverified offer of specialist help. It does not provide travel-entry advice, a live product comparison or personalised financial advice.