Hike in the cost of using credit cards abroad

As the summer holiday season begins in earnest, many banks are increasing the cost of using credit cards abroad.

Providing you have the right credit card, plastic is often the safest and cheapest way to use your money abroad. However, the consequence of having the wrong card could mean an extra £100 being added to the cost of your holiday.

Industry experts estimate banks generate around £500 million a year in extra revenue from customers using cards with expensive charges overseas.

When you use your card to make a purchase or withdraw cash overseas, one or sometimes two transaction charges are added.

Most card companies charge around 2.75% for converting foreign currency to sterling, known as 'foreign usage loading'.

Withdrawing money from a foreign cashpoint is even more expensive, with a cash handling fee of up to 2.5%, in addition to a currency conversion fee.

Several of the UK's banks have announced increases in the cost of using plastic cards overseas, while others are expected to follow suit.

Halifax is increasing the commission charged on overseas credit card purchases from 2.75% to 2.95%. This means that for every £100 spent, the bank will charge £2.95 for converting foreign currency. The increased charge will come into force for most of its customers in August. Halifax is also increasing the cash withdrawal charge with this type of card from 2.5% to 3% of the value.

From July 30th, Lloyds TSB is raising its foreign transaction charge from 2.75% to 2.99% on its debit cards.

Suggested credit card for using when on holiday

Don't return home from holiday, dreading the arrival of your credit card bill. Instead take a card on holiday which doesn't charge a currency commission (foreign loading fee) such as the Post Office credit card.

Use the search form above to find details of the Post Office card. Select lowest standard rates and click compare, then scroll down until you see the card.