Escaping the rain? Plan your travel money first
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If you’re planning an overseas trip to escape the incessant rain in the UK, make sure you don’t get hit by steep charges for paying by plastic when you’re away.
Many high street debit and credit cards charge transaction and withdrawal fees when you use them abroad, which can really bump up your overall costs.
Alastair Douglas, spokesman for TotallyMoney, said: “Most people are likely to take their day-to-day current account card with them when travelling abroad, and it’s likely that they’re not aware of the fees their banks are charging.
“Some will charge 2.99% on top of every purchase made, while others will add a fixed fee of up to £5 for every cash withdrawal. So whether you’re buying a drink après-ski, or taking some cash out to cover dinner, double check how much your bank is charging you.”
Cards for overseas use
If you’re looking for a card which won’t charge you to make ATM withdrawals while you’re away, Chase UK’s Mastercard debit card doesn’t impose any fees on foreign spending or cash withdrawals, and you can take out up to £500 a day. You’ll also get % cashback on UK groceries, transport and fuel when spending on British shores. Starling’s current account also carries zero fees for spending abroad, and lets you withdraw up to £300 per day fee-free.
If you’d prefer to take a credit card on holiday with you, the Lloyds Ultra Visa credit card doesn’t charge any fees or interest on spending and you’ll also get 1% cashback on most UK and overseas spending for a year, falling to 0.25% thereafter. However, bear in mind that interest is charged daily on any withdrawals you make until you’ve fully paid off what you owe.
An alternative to taking a credit or debit card with you for your holiday spending is to use a pre-paid currency card, which you load with money in advance and use for purchases or cash withdrawals.
These can be useful if you’re on a tight budget as you can’t spend more than you’ve loaded on the card. However, although these cards often advertise themselves as fee-free, bear in mind that a margin may be charged on the exchange rate.
DON’T pay in pounds
If when withdrawing cash or paying for goods and services when abroad you’re asked whether you want to pay in pounds, you should always opt to pay in the local currency instead.
Although you may think it's useful to know exactly how much you’ll be debited by selecting pounds, the downside is that it gives the retailer the opportunity to use a local bank exchange rate which could see you paying well over the odds.
Andrew Hagger, Personal Finance Expert, Moneycomms.co.uk explained: “Some retailers or ATMs will offer you the choice of paying in sterling (which may seem appealing to brits abroad), converting the price of the purchase from the domestic currency, for example the Euro.
“The problem is that this allows the retailer or ATM to apply their own poor value local exchange rate which costs the card user far more in charges and is much less favourable than the standard MasterCard or Visa exchange rate.
“To avoid being stung with unnecessary fees you should always elect to pay in the local currency. “
This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.
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