Don’t get caught out by exorbitant exchange fees this summer

14 August 2019

Whenever you go abroad it is always a good idea to take a credit or debit card with you, but using it can cost you dearly if you are not careful

Currency exchange

Poor exchange rates and high fees cost Brits holidaying in Europe £640 million last year, with £95 million lost through using debit cards abroad, and £100 million extra on fees and exchange rates, according to financial website Totally Money.

The fees and charges can stack up quickly when using cards overseas.

When you make purchases abroad your bank will need to convert the transaction from the local currency to pounds; called a non-sterling transaction fee. This is usually a fixed-percentage fee charged on the purchase, which can be up to 3% of your transaction.

Some banks may also charge you a non-sterling purchase fee of around £1.25 when you buy something with your debit card.

You can also be charged for withdrawing money from an ATM, with a fee of anything up to 5%.

If you make lots of purchases the fees can quickly add up, so be careful.

Credit cards

Before you go on holiday it is always best to check with your bank how much you will be charged for overseas transactions. If the fee is high it is worth looking for an alternative option.

There are several cards out there offering zero or reduced fees abroad.

The Tandem Cashback credit card has no fees on spending, but you will be charged interest on all cash withdrawals at 18.9%. It also comes with a cashback bonus of 0.5% on purchases above £1.

Another option is the Halifax Clarity, which also has no fees. If you pay off the balance each month you won’t have to pay any interest, although you will have to pay for withdrawing cash. Whatever you spend abroad will be converted to sterling at a rate set by Mastercard. The APR is 19.9%.

There is also the Santander Zero credit card, which has withdraw or purchase fees and comes with an APR of 18.9%.

Debit cards

If you don’t feel comfortable taking out a credit card or don’t think you will be able to pay it off in full each month you can always try a debit card.

You currently have the choice of four debit cards that don’t charge non-sterling transaction fees.

The Moneywise best buy is Starling Bank’s app-based current account debit card, which has zero fees for spending or cash withdrawals worldwide.

As a bonus you will also get 0.5% interest on balances up to £1,000. All you have to do is open a current account on the app and you will be sent a card.

Monzo is another good option, giving you fee-free spending worldwide. However, withdrawals are limited to £200 for every 30 days. Above this, the bank will charge you 3%.

Another benefit of the Starling and Monzo cards is that your money is protected by the Financial Services Compensation Scheme by up to £85,000.


Starling Bank Current Account

Starling Bank’s current account has no fees on withdrawals or card spending as well as a range of features on its app, including card blocking and spending trackers. You will also get 0.5% interest on current account balances up to £2,000 and 0.25% on balances between £2,000.01 up to £85,000. Your deposit is protected by the FSCS.

Saving money on exchange rates

This article seems useless and seems to be only there to sell the debit cards and bank accounts mentioned. I dont think when going on holiday you would want to open a new account just for that. It didnt tell you whether it was cheaper to opt for paying in the local currency with a card or sterling.

Not for savvys

I don't think the article is aimed at obvious savvys like Gaynor ... nor do I think Moneywise has anything to gain by it ...

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