Don’t get stung by steep charges on holiday spending
If you’re heading abroad on holiday in the next few weeks, make sure you’ve thought about the best ways to spend while you’re away.
Airport bureaux de change often provide some of the worst exchange rates, so you can usually make your holiday budget stretch much further if you buy your travel money in advance elsewhere.
Alternatively, make sure you take a debit or credit card that won’t hit you with steep charges for overseas use. Here’s our rundown of some of the best options for your travel money.
Taking cash
It can give peace of mind to have a bit of local currency to hand when you first arrive at your destination, and you’ll usually find the best rates online. There’s a useful travel money comparison tool available at Money Saving Expert. All you do is enter how much you want to exchange and whether you want to arrange delivery or collection, and it will tell you which providers are offering the best rates.
Bear in mind that if you’re planning on taking cash overseas, it’s worth checking that your travel insurance policy covers the money you’re taking. Most annual and single trip policies include cash cover as standard, according to Defaqto, although cover limits often aren’t very high. For example, 35% of single trip travel insurance policies only cover between £200 and £299, with one in four policies (24%) offering cover between £300 and £399.
Paying by plastic
Many holidaymakers prefer to pay by debit or credit card when they’re abroad, but fees charged for spending and withdrawals can vary widely, so it’s worth checking you aren’t paying over the odds.
Katie Brain, Banking Expert at Defaqto. said: “Using a card abroad can be just as cost-effective as taking cash, if not more so. Many current accounts and credit cards now offer zero foreign usage fees, and some even offer cashback on spending.”
Best debit cards for overseas use
Several current accounts enable customers to spend and make cash withdrawals overseas without racking up fees. These include First Direct’s current account, which also gives you access o a linked 7% regular savings account and a £250 0% overdraft.
If you’re looking for a current account that also gives you cashback as well as fee-free spending and cash withdrawals worldwide, Chase is worth a look. You’ll receive 1% cashback on spending at UK supermarkets, fuel and transport, and the maximum you can earn each month is £15.
Another option is to take a pre-paid currency with you, which you can load with money before you go and then use it as you would a debit card. Revolut and Wise are among providers offering this type of card, but check charges carefully before you get one. For example, there are no exchange fees for most currencies between Monday and Friday when you use the Revolut card abroad, but you'll pay a 1% fee to exchange at weekends.
Best credit cards for overseas use
One of the best credit cards for overseas use is Barclaycard’s Rewards Visa card, as not only does this not have any fees on spending or ATM withdrawals overseas, but you also won’t be charged any interest on cash withdrawals provided you pay them off in full.
Another big benefit of this card is that you can earn 0.5% cashback on almost all UK and overseas spending until 30 November this year. The cashback rate falls to 0.25% from 1 December.
Alternatively, MBNA's Cashback Visa credit card offers 0.25% cashback with no fees on overseas spending for three years. However, you will be charged fees and interest on overseas cash machine withdrawals so you should ideally only use this card to make purchases.