Plastic charges clip the wings of tourists

Going abroad for Easter? Then take foreign currency or traveller's cheques instead of your credit card, advises Jasmine Birtles
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The Independent Online

If you are going overseas for the Easter break, you will probably have paid for the flight or ferry with your credit or debit card. It is likely, too, that all your expenses abroad will go on your plastic.

If you are going overseas for the Easter break, you will probably have paid for the flight or ferry with your credit or debit card. It is likely, too, that all your expenses abroad will go on your plastic.

Our use of cards abroad is soaring, particularly among younger travellers who have grown up preferring plastic to cash or traveller's cheques.

Figures from payment processor Switch show that we made 24.7 million purchases and cash withdrawals with our cards abroad last year. Five years ago the figure was just six million. The Association for Payment and Clearing Services (Apacs) says one in 14 of all our card trans- actions now take place abroad.

This is no surprise since it has become easier, thanks in particular to budget airlines, to take a short break. Despite fears of terrorism, travel figures from the Office of National Statistics reveal a 3 per cent rise in the number of trips taken abroad last year, accompanied by an 8 per cent rise in spending.

But using plastic abroad, either in cashpoint machines (ATMs) or across the counter in a direct purchase, carries its own cost. Most banks and building societies stick on extra charges when cards are used in other countries - often 2.75 per cent. And when combined with fees for cash withdrawals, these can tot up to as much as 4.75 per cent. This means that today's regular overseas travellers relying on their cards face a hefty bill for charges that can vary wildly between lenders.

Nationwide building society insists other lenders are making millions in profit each year through these hidden fees. "Virtually all providers add foreign currency loading when you make a transaction abroad," says spokeswoman Natalie Tate, "and it's typically 2.75 per cent.

"Within the EU there is no cost at all for these transactions, so banks are making at least 2.75 per cent profit every time you use them. Outside the EU the cost is about 0.8 per cent, so they're still making about 2 per cent profit."

Nationwide doesn't charge for debit card transactions anywhere in the world, nor does it do so for credit card purchases. Only on credit card cash withdrawals overseas will it levy a 1 per cent fee. By comparison, many lenders charge at least 1 per cent for "loading" - the cost of making the currency exchange transaction - on both credit and debit cards.

The cheapest solution is to draw up a rough budget for the time you will be away and take this sum out in cash at the Post Office or a Marks & Spencer instore bureau de change; neither charges commission for changing currency. Take your credit card with you in case of emergencies but pay for everything you can with cash.

Buying currency before you go also gives you greater control over the exchange rate. If you use cards overseas, you are hostage to daily rates set by Visa, for example, that may not be as favourable as those available before you left home.

The one big disadvantage to this, of course, is that you won't get any redress should your money be stolen. If this is a concern for you, the next cheapest option is traveller's cheques, available from banks or retail outlets such as the Post Office.

You need to keep a note of the numbers on the cheques so that, if you lose them, they can be replaced or, on production of a receipt, your British money refunded.

Hugh Stacey, spokesman for the Post Office's travel service, points out that in some countries it is better to have traveller's cheques in US dollars rather than sterling. "If you're almost anywhere outside the eurozone the dollar might be your best bet," he explains. "It's the number one hard currency in many parts of the world."

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