Spending overseas can work out to be quite costly. The trick is to choose the right card.
Should you use your existing card abroad?
If you’re planning on using your everyday plastic while on holiday, you’ll be shocked by the hidden charges that could come with it.
Using the wrong card abroad is definitely not something you’d want to do as lenders can charge commissions up to 3% every time you use your card abroad.
Rather than taking your existing card with you, you might want to do a bit of research and find a card specifically tailored for using abroad.
Using a credit card abroad
Consider a specialist travel credit card instead of a bog-standard card as they usually offer no foreign transaction fees.
Some cards even come with special deals such as no fees for overseas cash and reduced charges when buying foreign currency – here are some of the best credit cards to use abroad.
Keep an eye out for withdrawal fees, which are usually between 2.5% and 3% every time you withdraw cash from an ATM.
Most card lenders charge a fee, take commission and start charging you interest on this money - allowing no interest-free period.
The interest rate also tends to soar when you withdraw cash abroad – sometimes as high as 30%.
Using a debit card abroad
Debit cards generally have the worst fees when it comes to spending abroad. Not only do they add an ATM fee but they also charge up to £1.50 every time you spend on it overseas.
It’s possible to get a debit card that has decent offers which won’t charge fees or interest for cash withdrawals, but these are few and far between.
Though, it could work out to be a lot more hassle than it’s worth as you might have to change your entire bank just so you can get a card that’s cheaper to use abroad.
Charges and fees when using your card abroad
Watch out for the following charges to make sure you’re not slapped with a hefty bill after you return from your holiday.
Consider a prepaid card
You could also choose a prepaid travel card which allows you to pre-load the card with money before you travel and use it like a debit card.
Some cards also let someone from back home add money to the card online, so you’re not in a bind if you suddenly run out of cash.
The rate you get on the day you load the card will be the same when you spend, so it may mean you get a worse or better deal, depending on how the exchange rate looks that day.
It comes with a bunch of benefits and is often cheaper than other ways of spending money abroad.
Top tips for spending abroad
Before going away, make sure you tell your card provider that you’re planning to use your card abroad.
If you don’t, your card might be blocked because of ‘unusual transactions’ when you use it outside the UK.
It’s best to research your destination before travelling as you don’t want to be stuck for money if the country you’re going to doesn’t accept debit or credit cards, or doesn’t have ATMs.
The most important thing to remember, though, is that if you’re asked to pay in sterling or the local currency, always choose the local currency.