Overseas Spending On Your UK Credit Card Just Got Cheaper

There’ll likely be many of us sitting around the office moaning and complaining about how the Bank of England’s surprise move to increase the base lending rate is going to cost us a fortune. But, look closely enough, and one group sitting around the office canteen table who’ll have a rather smug look on their face will be those of us who just used our UK credit cards to do some extra shopping while on our overseas summer holiday last week.

As many of us already know, one of the major problems with using our UK credit cards overseas is the fact that the exchange rate between the currency we spend in and the currency we get billed in (pounds sterling) is set by our UK credit card issuer. In most cases, this rate of exchange is not particularly favorable. However, if you used your credit card to purchase an item overseas in the last few days, then for once the rate of exchange between the purchase currency and the billing currency could actually be working out in your favour!

The reason why you could well have directly benefit from using your UK credit card overseas in the last few days is because with the increase in the Bank of England’s base interest rate has come a strengthening of the pound, which in turn should make the purchase you just made overseas on your UK credit card in the last few days even cheaper than it would have been the week before! Indeed, if you exchanged money before you went on your summer holiday, to spend while you were on your summer holiday, it is even unlikely that the exchange rate you got for changing your money before you went will be as good as the exchange rate you’ll now be charged on your overseas UK credit card transaction, as those extra few days will have made all the difference.

So, if you did happen to use your UK credit overseas in the last few days, have some sympathy for all your family and friends sitting around moaning about the increase in interest rates and try not to look to smug when you’re thinking about how much cheaper that purchase on your UK credit card just got.

In fact, what you need to be thinking about is taking the time to make sure that your UK credit card issuer applies the more favorable rate of exchange to your recent credit card purchase in your next credit card statement.

Richard Smith
8th August 2006

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