Many people prefer to take plastic rather than cash abroad. It is accepted in most places these days and, unlike stolen cash, a credit card can be cancelled. But watch out for the extra charges that might catch you out when you use your cards abroad.
The first charge unsuspecting card users face is the ‘exchange loading fee’. This is a fancy name for the charge made for getting your money exchanged into another currency. Then there’s the cash-machine charge – some cards charge a minimum £5 per withdrawal. You may also be charged for spending on your card while you are abroad. However, with a little planning, you can avoid almost all of these hidden costs.
The best credit card to take abroad is issued by the Post Office. There’s no exchange loading fee, but don’t use it to withdraw money from a cash machine as you’ll have to pay a fixed 2.5% of the amount withdrawn at every visit.
For a cheap debit card, Nationwide offers the best deal, even after new charges take effect. Its Flexaccount Visa debit card doesn’t charge an exchange loading fee, or anything for cash withdrawals. But from 1 June any purchases made on the card outside Europe will be subject to a 0.84% fee, rising to 1% from 1 July.
For small, daily purchases it is well worth having some local currency to hand. It makes shopping quicker and avoids card fees. The best way to organise this is to withdraw cash using your Nationwide card once you get to your destination. If you must carry some cash before you arrive, be careful where you buy it.
Never leave getting your foreign currency until you are at the airport or you will get stung. “Airport travel money bureaux have long taken advantage of travellers who leave buying their holiday cash until they reach the airport by offering far worse rates than outside the terminal,” says Stephen Heath, chief executive of Fairfx.com in The Observer.
However, go to currency exchange Travelex’s website (www.travelex.co.uk) in advance and it’s a whole different story. On Wednesday, for example, the website offered me €200 for a competitive £186.31. Travelex offers a price promise – it will beat any rate you can find online. Just order your currency up to midnight the day before you fly and then collect it from the airport exchange bureau. You can even have it delivered to your home for free if you order over £500.
If I had taken €200 from a European cash machine using my Nationwide Flexaccount debit card on Wednesday it would have cost me just £180.40. That’s £5.91 saved for the first holiday drinks.