Winter’s almost over, spring is in the air and this year there’s a bumper bank holiday to take advantage of, so if you’re thinking of heading overseas we look at how credit cards could help you make the most of your time off.
Pay no interest on purchases
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What’s this about a bumper bank holiday?
This year the Easter, and May bank holidays line up in such a way that (if you have a regular 9-5) taking just nine days off could give you an extra long 18 day break.
This year Easter bank holiday is 14-17 April and the May bank holiday is on 1 May, meaning if you book off 18-21 April, and 24-29 April, you can get an 18 day holiday.
Spread the cost with a 0% purchase card
If you don’t want to pay for a flight, hotel booking or other big holiday purchase upfront, a 0% interest credit card could help spread the cost over a few months or even years.
Currently you can avoid interest for up to 30 months on new purchases with a 0% purchase card. So if you’re savvy with the repayments you could effectively borrow to cover the cost of your flights for free.
To do this, simply divide the cost of your flights by the number of months on the card’s 0% offer.
For example, if you buy a pair of £1000 return flights with a 0% purchase credit card that has a 30 month interest free period, you and made repayments of at least £33.33 (£1000 divided by 30) for 30 months, you could completely avoid interest.
Hidden advantages of credit cards – purchase protection for bookings
If you use a credit card to pay for purchases you will enjoy additional protections under section 75 of the consumer credit act, which ensures your credit card provider and the trader you make the purchase from are both liable for refunds if something goes wrong.
So if you’re worried about the reliability of your hotel, airline or holiday company, you could get your money back for your bookings from your card provider.
Get free flights, upgrades and more with a reward credit card
Airline reward cards can get you upgrades, flights and other perks. They work by rewarding you with avois points or other reward points you can redeem with certain airlines, hotels and partner retailers.
If you’re happy to cough up a large annual fee and there are some impressive rewards available with premium airline cards, but, really you need to fly frequently to get your money’s worth from one of these cards.
How to get “perfect” exchange rates
Perfect, or interbank, exchange rates are the rates you’ll see talked about in the headlines, or advertised if you search exchange rates. These are the rates that banks and currency brokers will buy and sell currency to each other for.
However, if you’re just after some money for your holidays you’re not very likely to get these rates.
This is where a credit card could help, if you get a card that charges no foreign transactions fees you’ll get either the Visa or MasterCard exchange rate for transactions (depending on who your payment provider is). These rates are typically very near to the interbank rate.
However, it’s also worth noting a few points of good practice when using your card overseas:
- You will often need to still pay overseas fees to withdraw cash with your credit card, as well as the additional cash advance fees and interest rates.
- Only ever make transactions in the local currency, you will often be charge a fee and receive a worse exchange rate if the payment terminal offers to let you pay in pounds sterling.
- Read more on how to use a credit card correctly overseas.
No foreign transaction fees and 0% interest
If you want to spread the cost of your holiday spending and get perfect rates, you can combine the benefits of 0% interest on purchases with a card that has no foreign transaction fees, with the platinum card from the Post Office.