Don't get stung by high fees when you're splashing out abroad

As Nationwide starts charging customers who use its cards outside Britain, Alessia Horwich looks for lower-cost alternatives

It's all change in the world of foreign spending and recession rules now apply. Charging commission for currency exchange is no longer de rigueur just on the high street; credit and debit card providers are keeping the profits on foreign exchange rolling in by slapping a foreign transaction fee on to purchases abroad.

As of 6 May, Nationwide is jumping on the bandwagon charging credit card customers who spend outside the eurozone 0.81 per cent of the transaction value in order to cover costs they incur from Visa. However, other cards charge as much as 2.99 per cent, enough to cover the Visa fee and more besides. So is there any way to reduce the cost of spending overseas?

One way to dodge the foreign fee bullet is with a travel money card. A new tool designed specifically for spending abroad, these are MasterCard or Visa prepaid cards that do not charge commission fees for spending abroad. They work like pay-as-you-go mobile phones: you load foreign currency on to the card online, by phone or by SMS using a credit card, debit card or bank transfer, and then use it to spend. Some cards are specifically for use in the eurozone and will be free to use within it, but will charge for use elsewhere. Similarly you can get cards that are solely for use in the US. One of the cheapest cards on the market is the Caxton FX Global Card which has no transaction fees, regardless of where you are in the world, and does not charge you to load the card with cash or use an ATM outside the UK.

Unfortunately, other standard deals on the market, such as the Post Office Travel Money Card, are not so straightforward. Many have baffling lists of charges, including fees for loading money on to the card, ATM charges and the cost of buying the card in the first place, which can cancel the benefit of free foreign transactions. Samantha Owens from financial information service says, "If you get a travel money card with free overseas transactions, check you're not getting charged in other ways. It's important to assess the small print to make sure you're not paying over the mark."

However, a major benefit of a travel money card is security. The loss you can suffer if your card gets stolen is finite as thieves can spend only as much as there is on the card. Cards can also be managed remotely, perfect for parents who want to control how much their travelling teenagers spend, and the exchange rates used are often competitive compared with those offered by bureaux de change. The most retro way to spend abroad is the traveller's cheque, still widely available and, if you're clever about it, fee free. Traveller's cheques are essentially a way of sidestepping ATM withdrawal fees and carrying cash with a built-in insurance policy. If they are lost or stolen you can phone in your unique reference number and the cheques will be replaced anywhere in the world within 24 hours. They are available in five currencies (euro, US dollar, Canadian collar, Australian dollar and sterling) and are commission free to purchase from certain outlets, although not all. The Post Office, for example, charges 1.5 per cent for buying sterling cheques, but any other currency offered is commission free. To cash them in without incurring charges you have to go to one of the American Express fee-free exchange partners. There are thousands in major cities worldwide and you can find the nearest one to your holiday destination online at

If you are using your cheques abroad to buy another currency (eg using your US dollars traveller's cheques to buy Guatemalan quetzals), it is always important to look out for the exchange rate. This can vary massively, especially if you are exchanging your cheques in a non-financial business such as a hotel. Patrick O'Neill, a spokesman for the Post Office, says, "It becomes something that is almost forgotten about by people, but to get the most currency for your pound you need to look out for the exchange rate even when the transaction is commission free."

If you want to carry cash, you can get cheaper foreign currency by buying online in advance, rather than getting the poor exchange rates offered last minute at UK airports. Lower overheads mean you get more for your sterling and you can get round the delivery costs by picking the money up from a high-street branch or at the airport itself. This is an option available when you order currency from, which also offers to refund you the difference if you can get your currency cheaper elsewhere.

Despite Nationwide's decision, there are still credit cards on the market that don't charge any foreign transaction fees (except for cash withdrawals). The Post Office credit card has 0 per cent commission on purchases overseas and the Saga credit card doesn't charge on transactions within Europe. Abbey is also planning to relaunch its Zero credit card, which has free overseas purchases, at the beginning of May, and even current Nationwide customers shouldn't be completely disheartened, as spending with a Nationwide card is still significantly cheaper than with most other cards.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
Life and Style
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

    Day In a Page

    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
    Public relations as 'art'? Surely not

    Confessions of a former PR man

    The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
    Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

    Bill Granger's luxurious sweet treats

    Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
    London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

    The mother of all goodbyes

    Paula Radcliffe's farewell to the London Marathon will be a family affair
    Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

    Steven Naismith: 'We know we must do better'

    The Everton forward explains the reasons behind club's decline this season
    Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

    Michael Calvin's Last Word

    Praise to Wenger for having the courage of his convictions