Many of us are finally starting to head abroad again for holidays and travel, and that means sorting out currency exchanges. While many of us these days have bank cards that work totally fine across the world, did you know that you might actually be overpaying?
If you’re not sure what the foreign exchange (FX) charges are for international transactions, using your card as normal while away on holiday could be costing you more than you think. In this article, we’ll cover what you need to know to help save money: what banks are charging you, and some ways that you could get around it.
What are the charges you might pay for using your card abroad?
Most credit and debit cards let you spend abroad but will charge you for the privilege. Although your card provider gets near-perfect rates, it usually adds a ‘non-sterling transaction fee’ of around 3% – so £100 worth of foreign currency costs you £103.
On top of this, many debit cards charge a flat fee (typically 50p-£1.50) each and every time you use your card overseas, regardless of the amount. All these transactions will add up!
Your first port of call should be checking on your bank’s website for outside of the UK fees and charges to find out which apply to you.
Withdrawing money from an overseas cash machine will incur a fee, usually around 2.5% of the amount withdrawn with a minimum of around £3. Many people are aware of this charge for credit cards, but it’s important to note it applies to most debit cards too.
Using specialist travel cards and debit cards
There are specialist travel cards that don’t charge these fees, so you get the same near-perfect rate the bank does when it processes your transaction. This is usually a couple of days after using the card, so you won’t know the exact rate you’re getting at the time. It is definitely worth looking into which companies offer debit and credit travel cards.
A specialist travel card can save you over £50 per holiday!
Pre-paid travel cards
If you’re worried about the currency swings of specialist travel cards, consider a prepaid travel card where you can lock in a rate. Think of it like a gift card, but for holiday money – you decide how much currency you want to add and then you can use it for spending or withdrawing cash abroad. As it works like a debit card, you know how much you have to spend and can’t go over. You’ll either be able to load it in the currency of your choice before you go (locking in a set exchange rate) or load it with pounds, so it uses the current exchange rate when you spend.
Our travel card quick tips
- If you are using a credit card always pay it off in full.
- If asked if you’d like to pay in pounds or the local currency, always pick the local currency.
- Not all cards are equal- Visa’s exchange rates tend to be better than Mastercard’s
So, there you have it – the lowdown on how to save money when using your card abroad. For more money saving tips, why not follow the Face to Face Finance blog?