Money Insider: Play your cards right and have a cheaper holiday

 

With the summer holiday season fast approaching, it's a good time to look at the charges you can incur when using your plastic abroad. Debit and credit cards may be a secure and convenient way to pay when you're away from the UK on holiday, but the associated fees and charges can vary considerably, so it's worth getting to grips with these before you head off for your summer break.

If you use a credit card overseas you'll need to bear in mind that the majority of providers will add on a foreign-usage fee to all cash and purchase transactions. In most cases these charges are around 2.75 per cent to 2.99 per cent, however there are a few cards offering a better deal.

Credit cards from Halifax (Clarity), Metro Bank, Saga and Post Office don't charge any usage fee, thus saving you up to £3 per £100 of purchases.

However, that's only half the story, as on top of the usage fee, most credit card cash withdrawals will cost you around an extra 3 per cent on top, so an ATM withdrawal of £100 currency equivalent can easily set you back a combined charge of around £6, thus best avoided if possible.

We are using our debit cards more and more and tend to take them for granted, especially that they don't cost anything to use while in the UK. Unfortunately it's a different story when you use them abroad and something that holidaymakers often overlook, until the charges are debited from their account and then it's too late.

As with credit cards there is a usage fee for cash withdrawals (2.75 per cent to 2.99 per cent) as well as an ATM withdrawal charge typically between £1.50 and £5.

The charges which tend to catch most people out are those levied for debit card purchases which are subject to the usage fee above, plus up to an additional £1.50 per transaction, regardless of the amount.

The worst offenders are Halifax (£1.50 per purchase transaction), NatWest (£1.25), Lloyds TSB (£1), RBS (£1.25) and Santander (£1.25). If you're looking for a fee-free debit card for using overseas, then take a look at those from Norwich & Peterborough Building Society or Metro Bank.

With sterling looking much stronger against the euro, your summer holiday may work out to be a little less expensive this year, so don't go and spoil it by shelling out on unnecessary credit and debit card fees.

It's worth spending a couple of minutes to check with your bank what the charges are for your particular plastic before you jet off, rather than getting a nasty shock when you check your account on your return.

At least if you understand the overseas charges you can adapt your spending pattern accordingly – for example, you don't want to be making cash withdrawals or purchases of £10 or £20 if you're going to be hit with charges of £1.50 plus each time.

While these costs don't sound much in isolation, if you look at a scenario where a family is on holiday for a fortnight and they make five debit card cash withdrawals of £100 currency equivalent and eight debit card purchases of £50 currency equivalent, they could easily be faced with up to £50 extra in charges with some cards.

Another option is to consider a prepaid currency card from the likes of Fair FX or Travelex. Both these providers offer you the choice of a euro, US dollar or multi-currency card.

The cards are chip and PIN secure, accepted wherever you see the MasterCard symbol and offer a cheaper way to pay than many high street debit and credit cards.

The sterling currency cards can be loaded from your debit card and as such the exchange rate is locked in at the time the cash is transferred to the card, so you'll know exactly what you'll be paying for all your holiday transactions.

A final warning: whatever type of plastic you use overseas beware of an increasingly common custom (particularly in Europe) where the overseas retailer or ATM machine gives you the option to pay in pounds sterling, which is known as dynamic currency conversion (DCC).

While it may seem a good idea that you know exactly how much you'll be debited, the problem is that it gives the retailer the opportunity to use an uncompetitive exchange rate, and this could see you paying well over the odds, in some instances by as much as 3 or 4 per cent.

Even though most card issuers charge a 2.75 per cent-2.99 per cent loading fee, opting to pay for your purchases in the local currency is often still a better option than being stung by the poor rate used in a DCC transaction.

Andrew Hagger – Moneynet.co.uk

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

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones