Don't let exchange fees spoil your holiday

Overseas cash withdrawals can be expensive, but there are ways to avoid being stung by excessive charges. Chiara Cavaglieri reports

There has never been a spring getaway like it. The next few weeks see Easter holidays, two May bank holidays and the royal wedding. Savvy holidaymakers will already be hunting down the best deals – but all that hard work could come undone if you don't get the travel money right.

"There are plenty of options for your travel money, and it shouldn't be the last thing you think about before your trip. Otherwise you will be counting the cost," says Bob Atkinson, a travel expert at comparison site Moneysupermarket.com.

Don't be short exchanged

An airport bureau de change may be convenient, but the exchange rates are poor and don't be fooled by boasts of 0 per cent commission; the real cost is simply built into the rate.

If you're travelling to a place you visit regularly, check the local bureaux de change to see if they beat British rates. If not, it's usually best to pre-order your foreign cash from online currency exchange specialists.

"Buying currency online these days is in most cases commission free, but it's important to compare exchange rates and delivery charges," says Andew Hagger of Moneynet. "The most competitive providers include ICE, FairFX, Travelex and Post Office. However, in most cases, for orders of less than £500 you'll have to pay delivery charges of £4 to £5."

These often beat high street rates; however, check whether your bank applies fees for foreign currency transactions. All credit cards and some debit cards, including Barclays and Santander, charge a cash withdrawal fee so if possible use a different debit card or collect the money yourself and pay in cash. Also, stick with reputable companies because foreign exchange is not overseen by the Financial Services Authority (FSA).

The saving:

For €1,000, it would cost you £966.28 at Travelex Heathrow airport, but only £915.33 at Travelex Online, a saving of £50.95, according to figures from Moneysupermarket.

Credit cards

Spending on credit abroad can mean being stung by charges, with "loading" fees in the case of Barclaycard of up to 2.75 per cent. So £100 worth of spending will set you back £102.75. Cash withdrawal fees of about £3 per withdrawal are also common, plus immediate interest on top.

The Halifax Clarity Card has no foreign exchange loading or cash withdrawal fee, so you get the best possible exchange rate. However, you will be charged interest on withdrawals at an annual percentage rate (APR) of 12.9 per cent whether you repay your balance in full or not.

The Sainsbury's Gold credit card costs £5 per month but it comes with worldwide family travel insurance and is also fee free for overseas spending and cash withdrawals. Unlike the Halifax card, you won't be charged interest on withdrawals provided you pay them off in full each month.

The saving:

Five purchases totalling €1,000 would cost £912.97 on the Barclaycard Platinum, but only £887.67 with the Halifax Clarity Card.

Debit cards

Debit cards are some of the worst offenders. Halifax's debit card levies a spending penalty of £1.50 per payment, a loading fee of 2.75 per cent and a cash withdrawal fee of £1.50. NatWest's Current Plus Account debit cardholders also pay a point-of-sale fee of £1.25, a 2.75 per cent loading fee, and a 2 per cent ATM usage fee.

If you prefer to take a debit card there are a few good options, such as the Gold Classic card from Norwich & Peterborough (N&P) which offers fee-free spending and ATM withdrawals. There is a £5 monthly fee unless you pay £500 a month into your linked account.

Nationwide's FlexAccount Visa debit card no longer offers free overseas spending in Europe, but it is still competitive with a 2 per cent fee on spending in foreign countries and a £1 charge for overseas cash withdrawals.

The saving:

Five cash withdrawals totalling €1,000 would cost £887.67 with Norwich & Peterborough but £932.98 on the NatWest Current Plus debit card.

Prepaid cards

These don't have a credit facility but can be loaded with cash in the desired currency before you travel and then used as a debit card abroad.

"By preloading currency on to a card, holidaymakers know exactly what they have to spend rather than blindly 'agreeing' to an exchange rate at the point of sale with their bank card overseas," says Eleanor Drew, manager of PocketCurrency.

There are fees to watch out for including card application fees of up to £10, transaction fees, ATM withdrawal fees (typically up to £3), top-up charges and even monthly fees. But the best, such as the FairFX prepaid card, have no foreign loading fees and can be topped up for free by debit card or bank transfer.

"I think prepaid cards are a great way of taking your holiday cash overseas. It's certainly worth considering rather than risk getting a raw deal on the debit or credit card that you usually rely on in the UK," says Moneynet's Andrew Hagger.

Cash withdrawals cost €1.50 with the FairFX card, and although this is still less than most credit or debit cards, both the Travelex and the CaxtonFX cards are fee-free.

The saving:

Five ATM withdrawals totalling ¤1,000 would cost £913 on the FairFX card, but £907.77 with Travelex.

And finally...

Beware of dynamic currency conversion (DCC) when you're asked if you want to pay in sterling or the local currency. In nearly all cases, stick with the local currency because most retailers or ATMs apply their own, uncompetitive conversion rate.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Marketing Services Manager - (communications, testing, DM)

    £32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

    Guru Careers: Finance Account Manager

    £Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

    Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

    £40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

    Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

    £45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

    Day In a Page

    Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Could cannabis oil reverse the effects of cancer?

    Could cannabis oil reverse effects of cancer?

    As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
    The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

    The Interview movie review

    You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
    Serial mania has propelled podcasts into the cultural mainstream

    How podcasts became mainstream

    People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
    Jesus Christ has become an unlikely pin-up for hipster marketing companies

    Jesus Christ has become an unlikely pin-up

    Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
    Rosetta space mission voted most important scientific breakthrough of 2014

    A memorable year for science – if not for mice

    The most important scientific breakthroughs of 2014
    Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

    Christmas cocktails to make you merry

    Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
    5 best activity trackers

    Fitness technology: 5 best activity trackers

    Up the ante in your regimen and change the habits of a lifetime with this wearable tech
    Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

    Paul Scholes column

    It's a little-known fact, but I have played one of the seven dwarves
    Fifa's travelling circus once again steals limelight from real stars

    Fifa's travelling circus once again steals limelight from real stars

    Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
    Frank Warren column: 2014 – boxing is back and winning new fans

    Frank Warren: Boxing is back and winning new fans

    2014 proves it's now one of sport's biggest hitters again
    Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

    Jeb Bush vs Hillary Clinton

    Karen Tumulty explores the power dynamics of the two first families
    Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

    Stockholm is rivalling Silicon Valley

    The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
    Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

    Crucified Santa: Urban myth refuses to die

    The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
    Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

    The Boy in the Dress: On set with the stars

    Walliams' story about a boy who goes to school in a dress will be shown this Christmas