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

Arts and Entertainment
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
News
Katie Hopkins makes a living out of courting controversy
people
News
General Election
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
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Pricing Analyst

    £30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

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

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

    Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

    £21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

    Ashdown Group: Head of Client Services - City of London, Old Street

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

    Why Mohammed Emwazi chose Isis

    His friends were betrayed and killed by al-Shabaab
    'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

    Open letter to David Cameron

    Building the walls of fortress Europe has had deadly results
    Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

    You don't say!

    Tory candidates' election tweets not as 'spontaneous' as they appear
    Mubi: Netflix for people who want to stop just watching trash

    So what is Mubi?

    Netflix for people who want to stop just watching trash all the time
    The impossible job: how to follow Kevin Spacey?

    The hardest job in theatre?

    How to follow Kevin Spacey
    Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

    Armenian genocide and the 'good Turks'

    To continue to deny the truth of this mass human cruelty is close to a criminal lie
    Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

    'Lou needed care, but what he got was ECT'

    The truth about the singer's upbringing beyond
    Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

    This human tragedy has been brewing for years

    EU states can't say they were not warned
    Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

    Women's sportswear

    From tackling a marathon to a jog in the park, the right kit can help
    Hillary Clinton's outfits will be as important as her policies in her presidential bid

    Clinton's clothes

    Like it or not, her outfits will be as important as her policies
    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders