What are travel credit cards?

 

LFisherman on beach abroad

Travel credit cards come in many different formats, and so researching them thoroughly before applying is essential. Some travel credit cards are airmile credit cards, which offer customers the ability to earn reward points (airmiles) when they shop using their credit card. These points can then be exchanged for travel-related rewards like flights and hotels (the exact details of what your travel credit card points can be exchanged for will vary by product and issuer). Some UK credit card issuers offer travel related benefits on standard credit card products, like "no handling fees" on foreign transactions, and the treatment of foreign exchange cash bought on a credit card as a purchase (avoiding the prohibitive interest rates typically charged on cash withdrawals).

A fairly new type of travel credit card is the travel prepaid card. These products are growing in popularity as foreign exchange companies and travel agents offer them to consumers wanting foreign currency for their trip abroad. They operate in much the same way as debit cards, in that you can only spend what you have preloaded onto them, and many people prefer them to travellers’ cheques (which can be lost and still cashed) or taking their own bank card abroad, where the level of risk of exposure to their wider personal finance arrangements is uncomfortable.

Getting the right travel credit card

Understanding what credit cards are available when travelling, or looking for travel related rewards, is the first step to getting the right travel credit card for you. Next you need to assess what specifically you want the credit card for. Do you spend on a credit card regularly enough to accrue a good level of reward points? Do you travel often enough to justify getting a credit card purely on the basis of the benefits you receive whilst abroad (perhaps forfeiting other potential great perks like 0% balance transfers or 0% interest on new purchases)? Obviously if it's travel prepaid credit cards you are looking for, it makes perfect sense to shop around, rather than relying on the products offered by travel agents, airlines or foreign exchange companies, who tend to be dealing with an almost captive market, and therefore have no real incentive to ensure their products are market leading. Once you know what you're looking for, you should compare products. A great way to compare credit card products is by using credit card comparison tables (sometimes called credit card best buy tables) like the ones above, which rank products based on key attributes.