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Credit cards are commonly used for holiday expenses, from hotels to flights to meals. The tips below explain how to use a credit card to avoid unnecessary fees and interest charges that can add to the cost of a holiday.

1. Paying at Least the Minimum Amount Due On Time

Credit card charges for a holiday can be significant, with big-ticket items like flights and credit cards costing hundreds if not thousands of pounds. No matter how much has been charged to the card, paying at least the minimum amount due on time avoids late fees and additional interest costs. Banks charge high interest and fees on late payments, which can add up to a significant financial cost over time.

Paying the entire balance each month, not just the minimum, avoids interest charges altogether. Those paying less than the full balance will incur interest charges on unpaid balances. Paying only the minimum amount due can result in you paying down the balances for years. For example, the graph below shows how "slowly" balances go down over 24 months depending on how much you pay each month.

2. Keeping Room on Your Credit Limit

Just like leaving room in a suitcase for unexpected purchases, keeping some room on a credit card's limit before travelling can help absorb unplanned costs. Going abroad with a credit card near its limit doesn't leave room for surprise events - whether that's an unplanned activity, or a mishap such as lost luggage.

Exceeding the credit limit even a little can cost you. Most credit cards charge around £12 for exceeding the credit limit (although they may waive this if you call and ask them to... if you have a good payment record). But perhaps even more importantly, exceeding the credit limit will leave a mark on your credit score which can have long-term implications on your ability to get credit in the future.

3. Checking if Your Card Charges Fees When You Spend Abroad

While a handful of credit cards don't FX charge fees, most credit cards charge a non-sterling transaction fee on each transaction - typically 2.99% (checked as of February 2026). This remains the standard fee for major issuers like Virgin Money, American Express, and standard Barclaycards. On a £1,300 holiday spend, this 'hidden' fee alone would cost you nearly £40, making fee-free travel cards an increasingly popular choice.

If you have more than one credit card in your wallet, check these fees to find out which one is cheapest to use to pay for meals, activities and other purchases when you're abroad.

4. The Cost of Getting Cash on a Credit Card Abroad

In most cases, using your credit card to get cash from an ATM when you're abroad is expensive. You may be charged a non-sterling transaction fee (typically around 2.5% - 3%) and a cash transaction fee (typically 3% with a minimum charge of £3 for each withdrawal), plus interest is usually charged IMMEDIATELY for cash withdrawals - and at a higher interest rate than you pay for purchases.

As of July 2026, the average credit card interest rate (APR) in the UK reached 24.66%, but cash withdrawal rates typically run higher than purchase APRs, with rates often into the 30s or 40s percent. These figures reflect a general impression from reviewing a range of major UK credit card providers, rather than a formal survey of the whole market — check the specific card's summary box for the exact terms.

When combined with immediate interest accrual and a standard cash advance fee (often 3% with a £3 minimum), withdrawing cash on a standard credit card has become one of the most expensive ways to fund holiday spending.

Even paying the full amount before the next due date won't avoid interest charges for the time between the cash withdrawal and repayment, since there's no grace period on cash. Some travel credit cards can be useful for withdrawing cash abroad, so long as you can pay back the withdrawal quickly.

For example, the Halifax Clarity credit card doesn't charge fees for withdrawing cash from an ATM (although beware that ATMs sometimes still charge you to use them), but as the card starts accruing interest charges immediately paying back the withdrawal as soon as possible online helps limit the interest cost.