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There’s a lot to do in the final days before you go on holiday: double-check your tickets and travel documents, pack your bags and check in online, dig out last year’s flip-flops and alert neighbours that you’re going away.
Amid all this, you also have to work out the best way to take currency on holiday. Leave it too late and it could cost you dear.
Beware foreign charges
If you’re heading overseas, the simplest thing to do is to pack your existing debit and credit cards, and unpack them when you arrive. If they’re stamped with the Visa or Mastercard logo – and they almost certainly will be – you can use them in millions of shops, bars, restaurants, hotels and ATMs worldwide, as you would at home.
There is a catch, though.
At home, there are no charges to pay. It’s a different matter abroad. Once you step outside Blighty, most standard cards will impose foreign usage charges (also called non-sterling transaction fees) every time you use them.
Those foreign usage charges add up
Typically, cards charge a foreign usage fee of between 2.75% and 2.99%, adding around £3 to the bill for every £100 you spend abroad.
Worse, many add a flat-rate fee on purchases, which will add on between 50p and £1.
If you withdraw cash, then watch out. You can pay fees of around 2% of the amount you withdraw, often with a minimum charge of £1.50.
All these fees add up. Say you bought four family meals out costing £50 each, and made four cash withdrawals for £50 a pop. That could cost you £5.98 in non-sterling transaction fees for the food, plus £4 in flat-rate fees, and £6 in cash withdrawal charges. Total charges: £15.98.
It quickly adds up over the course of your holiday.
Order your card now
Personally, I think the best way of spending money abroad is to take out a credit card with zero foreign usage charges. I took out a card with Nationwide more than a decade ago, which is now free to use in Europe, although not the USA, and feel smug every time I use it. We’ve reviewed many of the top travel credit cards on our site, to help you choose from the many out there.
The important thing to remember is that it can take a week or two for a new card to arrive in the post. So book yours well in advance, before it’s too late.
There’s a new way to get fee-free foreign money, and that’s to take out a debit card with one of the new breed of app-based fintech challenger banks. Three stand out for holiday money: Monzo, Revolut and Starling Bank.
With the Monzo card, you can spend anywhere in the world, for free. It passes on the Mastercard exchange rate directly to you, with no fees or additional charges. You can withdraw up to £200 every 30 days at overseas ATMs, although there’s a 3% charge after that.
Revolut’s multi-currency card waives foreign transaction fees and exchange rate commission, and offers free ATM withdrawals. Its exchange rates are as tight as can be.
Similarly, Starling won’t charge you to use your debit card abroad and won’t add ATM fees either.
Be warned: local ATMs may add on their own charges for cash withdrawals, which can be punitive. So keep your eyes peeled.
The perfect combination
Whenever I go away, I pack my Nationwide 0% overseas usage credit card and my Revolut debit card. You might find that another combo suits you better.
I use my credit card for spending, because that gives me extra consumer protection on purchases between £1 and £30,000. However, I use Revolut for ATM withdrawals, to avoid the stinging APRs credit cards impose the moment you withdraw cash, both at home or overseas.
Holidays are coming. If it’s too late to order your cards for this trip, order your cards so they’re ready for the next one.
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