With less cash to Spend Abroad, avoid unwanted Credit and Debit Card Fees

By: MoneyFacts

As holidaymakers prepare for their trip abroad, they may begin to realise that their travel cash will not be going as far as before. Thanks to fluctuating exchange rates, buying £200 worth of Euros today means €49 less spending money than a year ago, and a similar picture can be seen when buying £200 worth of dollars, with almost $48 less back compared with 2015. With this in mind it is vital for consumers to save cash where they can, and one way to do this is to be wary of using cards abroad.

The latest research by Moneyfacts.co.uk shows that some debit cards can charge £9.50 for a £200 cash withdrawal, while credit cards can charge £11.96 for the same transaction - an unnecessary expense when there are fee-free cards specifically designed for use abroad.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“In the run-up to the school holidays it’s clear to see why holidaymakers will be less than impressed, with exchange rates falling just as they’re preparing to get their holiday cash. With less cash in their pockets, those travelling abroad must make sure they don’t lose any more of their money when using debit or credit cards through unnecessary fees. Most cards will charge customers for use abroad, so planning ahead is vital.

“Cash isn’t always king due to the danger running out of money in emergencies, or losing it. Debit or credit cards and even prepaid cards can make it simpler for people to track their spending, and they can be more secure than carrying around bundles of cash. The only downside is using cards that charge for each use, and one of the most expensive transactions is withdrawing cash from an ATM.

“A typical debit card charges £9.50* when consumers withdraw £200 in cash abroad, and charges apply every time the debit card is used. There is typically a 2.75% to 2.99% conversion fee on the amount you spend on top of a set charge for ATM withdrawals, which can be between £1 and £5 for each transaction. The equivalent withdrawal on a credit cards can cost £11.96** before interest applies, but the reality is that all of these charges could be avoided if consumers used a card specifically designed for use abroad – which can be much more cost effective. MBNA, Creation Financial Services and Halifax all offer credit cards that charge absolutely no fees when used overseas. 

“At times, consumers are reluctant to take out a credit card specifically for overseas use because they’ll be charged interest on purchases and cash withdrawals, much in the same way as in the UK. Therefore a new current account may be a more attractive option. Norwich & Peterborough Building Society’s Gold Account offers a debit card with no fees for use overseas, which could make it perfect for those who frequently travel.

“Those holidaymakers hoping to stick to a tight budget may prefer to pack a prepaid card for overseas use, where they can load their spending allowance onto the card in advance. These are also a safe payment method as they can be replaced if lost. The best cards won’t charge for ATM cash withdrawals either, making them perfect for buying goods in shops that do not accept card payments.

“It’s never been more important for holidaymakers to try and make their money go that little bit further, and if they carefully plan ahead they can avoid those unnecessary fees when using a card abroad.”

*Typical debit card example is the NatWest Select Account, which charges a transaction fee of 2.00% and a conversion fee of 2.75% on cash withdrawals. **Typical credit card is the HSBC Credit Card Visa, which charges a 2.99% usage fee and a 2.99% cash withdrawal fee.

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