Going abroad on holiday? Withdrawing cash from an ATM using a credit card can be expensive - though some specialist travel credit cards offer better terms on foreign cash withdrawals, so it's worth checking the specifics of your own card before relying on it. We'll explain how using a credit card for travel cash can add to your holiday expenses through fees and interest charges.

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Withdrawal Fees

Withdrawing foreign currency abroad on a credit card can mean paying two separate fees on the same transaction. A cash withdrawal fee, where one applies, is typically around 3% of the amount withdrawn, with a minimum charge of around £3. On top of this, a foreign transaction fee (also charged on credit card purchases made in another currency, such as at a restaurant or hotel) is usually around 3% of the transaction, where a card charges it. Together, these two fees can add up to around 6% or more of the amount withdrawn.

Higher Interest Rates

With few exceptions, credit cards charge a higher APR for cash transactions than purchases. Cash APRs are typically higher than purchase APRs. As a result, it would cost more to borrow cash from the credit card company vs the purchase rate, in most cases. This is especially painful on credit building cards, where representative cash interest rates range from 29.9% to 49.9% APR or more.

No Grace Period

In general, there's no grace period for cash transactions on a credit card - which means you start paying interest immediately. For the purposes of interest calculations, cash is treated differently from purchases. If you pay off your purchases in full each month, you won't pay interest on those purchases. Cash transactions, on the other hand, will be charged interest from the date of withdrawal even if you pay off the full balance. This holds true for the majority of credit cards in the UK.

That said, a small number of cards offer a grace period specifically on non-sterling (foreign currency) cash withdrawals, even though the same card may not offer one on UK cash withdrawals — most cards in the market don't offer a grace period on cash withdrawals of any kind. Because this varies by card and can be easy to miss, it's worth checking a card's summary box directly to see whether this applies.

May Damage Your Credit Rating

A cash withdrawal may affect borrowing costs and, if it contributes to higher reported balances or missed payments, may indirectly affect a credit profile. This is most likely to affect those with an already weak credit score, or those planning to borrow elsewhere soon.

Alternatives for Cash Abroad

There are usually cheaper alternatives to using a credit card for foreign cash withdrawals.

Travel-friendly debit cards like Chase, Monzo, and Starling offer fee-free ATM withdrawals abroad (often with a monthly limit) and don't charge foreign transaction fees on purchases either. Prepaid travel cards can be loaded with currency before you leave and offer competitive exchange rates, though watch out for inactivity fees and top-up charges.

If you need larger amounts of cash, ordering foreign currency online before you travel and collecting it at the airport or having it delivered can work out cheaper than ATM withdrawals, especially if you shop around for the best exchange rates.

For day-to-day spending abroad, using a debit card or credit card with no foreign transaction fees is typically the most cost-effective option, reserving cash withdrawals for situations where card payments aren't accepted. Whichever method you choose, it's probably best to avoid airport and hotel bureau de change counters, which typically offer the worst exchange rates and highest fees.

Parting Thoughts

The extra costs associated with withdrawing cash on most credit cards can add up, so it's worth weighing alternatives such as buying travel money in advance through one of the many comparison websites available in the UK. For a longer trip requiring a larger amount of cash, it's worth checking that any amount carried or pre-purchased would be covered under travel insurance.