Heading abroad this summer? You could cut the cost of your holiday simply by using the right bank card, with a growing number of fee-free debit and credit cards now rewarding customers for spending overseas.
New analysis from financial ratings firm Defaqto has found dozens of cards allow holidaymakers to spend abroad without paying foreign transaction fees, while some also offer cashback, switching bonuses or interest-free purchases that continue to benefit customers long after they return home.
With families spending hundreds or even thousands of pounds on flights, hotels, restaurants and attractions, choosing the right card could mean avoiding unnecessary charges and earning rewards to put towards future spending in the UK.
Spend abroad without paying extra
Many high street debit and credit cards charge around 2.75% to 3% every time they're used overseas, meaning a family spending £2,000 on holiday could pay around £60 in fees alone.
However, Defaqto found there are now 24 credit cards with no foreign transaction fees and no monthly fee, alongside 36 current accounts that also allow fee-free spending abroad.
That means holidaymakers can use their cards just as they would in the UK without being stung by extra charges every time they pay.
Earn rewards while you're on holiday
Some cards go a step further by rewarding overseas spending.
Defaqto found 10 fee-free credit cards also offer cashback or other rewards, allowing holiday spending to generate money that can be used once you're back home.
Among those highlighted are:
- Lloyds Ultra Credit Card – 1% cashback during the first year.
- Virgin Money Everyday Cashback Credit Card – 1% cashback for the first three months (subject to monthly limits).
- NatWest Travel Reward Credit Card – 1% cashback on eligible travel spending abroad.
Rather than simply avoiding fees, holidaymakers can effectively earn money back every time they pay for meals, drinks, hotels or excursions.
Katie Brain, Banking Expert at Defaqto, said: "Most people know to look for a card that doesn't charge overseas fees, but many don't realise they could also earn cashback on holiday spending.
"If you're already planning to spend hundreds of pounds on hotels, meals and excursions, using the right card means your holiday spending can work harder for you."
Cashback for when you're home
While the rewards won't make a holiday free, they can provide a useful boost after you return.
Cashback earned during a summer break could help pay for everyday essentials, reduce your credit card balance or simply soften the financial hit that often comes after returning from holiday.
For people expecting larger holiday bills, some fee-free travel credit cards also offer lengthy 0% purchase periods, allowing the cost to be spread over several months without paying interest, provided repayments are made on time.
Some current accounts pay you before you even travel
Holidaymakers willing to switch bank accounts could also receive a welcome cash boost before they fly.
There are also fee-free current accounts currently offer switching incentives, with bonuses worth up to £200.
Among those offering incentives are:
- First Direct – up to £200.
- The Co-operative Bank – up to £200.
- Santander Edge – up to £180, subject to eligibility.
These bonuses can provide extra spending money before departure while also giving customers access to fee-free overseas card spending.
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5 easy travel card tips
Defaqto recommends travellers:
- Check whether their card charges foreign transaction fees before travelling.
- Always choose to pay in the local currency rather than pounds when offered the choice.
- Read cashback terms carefully, as some providers exclude certain overseas purchases.
- Carry a second payment card in case their main one is lost or declined.
- Take a physical card as some hotels and car hire firms may not accept digital wallets alone.
Katie Brain also warned that credit card rewards only represent good value if balances are paid off responsibly.
"It's important to remember that credit cards should only be used where you can comfortably manage repayments. The rewards are valuable, but only if interest charges don't outweigh the benefits."
