Fantastic Plastic For Holidaymakers

With Easter just around the corner, millions of Brits will be heading abroad. We continue our 'The Good, The Bad and The Ugly' email series with a look at the best and worst cards to take overseas.

This article was originally sent to Fools as part of our 'The Good, The Bad and The Ugly' email series.

When it comes to overseas trips we take great care when it comes to choosing the right resort, accommodation, car hire and so on. Then again, we put hardly any effort into choosing which credit cards to take with us, which can be a costly mistake!

Of course, not all credit cards are created equal, and this is particularly the case when they are used overseas. Just as we have become accustomed to flashing our plastic here in the UK, so we do the same abroad. Indeed, we chalked up five foreign transactions for every second of 2007, with total overseas spending exceeding £12 billion.

To demonstrate how expensive spending overseas on credit cards can be, I analysed more than a hundred different cards. Here are my results:

Additional cost of foreign purchases

*Card issuer*	*Foreign currency* *loading fee (%)*	*Extra cost of £1,000* *of purchases (£)*
Nationwide BS	0.00	0.00
Post Office	0.00	0.00
i24 (charges an annual fee of £275)	0.00	0.00
Saga	1.00 (0.00% in the EU)	10.00 (0.00)
Leeds BS	2.00	20.00
Hoare & Co.	2.50	25.00
Egg Money	2.65	26.50
American Express, BMW Amex British Airways Amex Nectar Amex	2.73	27.30
Abbey Alliance & Leicester aqua ASDA Bank of Cyprus Bank of Ireland (UK) Barclaycard bmibaby Capital One Cheshire BS Citi Clydesdale Bank Co-operative Bank Coutts & Co. Debenhams Dunfermline BS easyJet Egg Visa First Direct First Trust Bank (NI) GE Money Hilton HHonors House of Fraser HSBC Bank John Lewis and Waitrose Lloyds TSB Marks & Spencer MBNA Melton Mowbray BS MINT Morrisons Mothercare NatWest Northern Bank (NI) Norwich & Peterborough BS Royal Bank of Scotland Sainsbury's Bank Shell SkyCard Smile SonyCard Tesco Personal Finance The GM Card Ulster Bank (NI) Vanquis Virgin Money Yorkshire Bank Yorkshire BS	2.75	27.50
AA Amazon Bank of Scotland Britannia BS Halifax Intelligent Finance Marriott Rewards	2.95	29.50
Goldfish	3.00	30.00

Source: Fool.co.uk's independent, unbiased search engine

As you can see, all but three of the above card issuers charge an additional `currency commission' when you use your credit card abroad. Typically, this fee will add 2.75% to the cost of each purchase, or £27.50 for every £1,000 spent overseas. Goldfish wins the wooden spoon in our survey for charging a ridiculous 3% for every foreign transaction.

Thus, if you play your cards badly, then you could pay an additional charge of up to 3% of the value of each purchase. Hence, if our entire foreign spending of £12 billion was made using on the most expensive plastic, then we'd forfeit around £360 million each year. Ouch!

A warning: don't use your credit card to withdraw cash overseas

By the way, if you use a credit card to withdraw cash overseas, then the fees really start to mount up. As well as the above currency-conversion fee, you pay a cash-withdrawal fee of up to 3% on top. Also, you pay interest at sky-high rates of interest (even 30% a year) from the moment you withdraw cash. So, my advice is never to do this, except in dire emergency.

On the other hand, I always take a credit card abroad, in order to enjoy the added protection afforded by Section 75 of the Consumer Credit Act. If you buy goods worth between £100 and £30,000 which later prove faulty, then you can claim against your credit-card issuer, as well as the retailer. This legal right applies to purchases in the UK and abroad, but does not cover debit cards.

In summary, if you don't want a holiday headache, then be sure to carry the right credit cards. Only those issued by Nationwide BS and the Post Office don't charge extra for overseas purchases, making them the Best Buys for foreign use. So, off you go -- and enjoy your Easter!

You can find cracking credit cards at The Motley Fool's credit card centre.