Hidden costs of plastic
Sunday 07 June 1998
But there are already more than 1 billion automatic teller machines (ATMs) around the world that accept credit and debit cards. So should you just take your plastic on holiday?
It is tempting to leave financial arrangements until you arrive at your destination, but you can run into problems. ATMs break down and run out of money. You may also have to travel to an ATM once you reach your destination.
Even if you avoid technical problems, plastic withdrawals can be dear. Credit-card withdrawals are subject to a withdrawal fee or handling charge, plus "foreign loading" - the charge made for allowing you to obtain money abroad.
Foreign loading on Visa credit cards ranges from 1.25 per cent to 2.75 per cent. MasterCard doesn't charge foreign loading but most MasterCard issuers do, and again this ranges from 1.5 per cent to 2.75 per cent.
On top of that, both MasterCard and Visa charge withdrawal fees and handling charges from 1.5 per cent to 2.75 per cent. If you withdraw pounds 200 on a Lloyds Bank MasterCard, for example, it will cost you 1.5 per cent withdrawal fee plus 2.5 per cent foreign loading. That's a total of pounds 8 for the transaction before you start paying interest on the advance, and the interest charged for cash advances is higher than for purchases made on your card.
Debit cards represent slightly better value because you're taking money directly from your bank account, so there's no interest to pay. But there is still a withdrawal fee and foreign loading. This could work out quite costly if you make several withdrawals.
The cheapest credit cards for money advances are Northern Bank MasterCard or Classic Visa, which don't charge handling fees, and Clydesdale MasterCard and Woolwich Visa or Mastercard, which don't charge foreign loading. The best value debit cards are NatWest Cirrus, Abbey National Visa and Bank of Scotland Visa.
But if you're not already a holder of one of these cards you're unlikely to apply for one just to use on your holiday. It makes more sense to hunt down the cheapest providers of foreign currency and traveller's cheques (see table). One of the best deals is British Airways' joint venture with Travelex bureaux de change.
What if the worst happens? If your Visa credit or debit card is lost or stolen, you need to contact your card issuer to put a stop on your card. There is a list of card issuers' numbers in the Visa Holiday Money guide, free on 0171-231 5432. For MasterCard, Maestro and Cirrus you also have to notify your card issuer, so remember to make a note of its number before you leave on holiday.
q Kathleen Hennessy is assistant editor of 'Moneywise' magazine.
Cheapest currency providers
Provider Commission Handling Charge Total cost
for pounds 500
American Express pounds 3 None pounds 3
Bank of Ireland 0.2% min pounds 3 None pounds 3
British Airways* 0.75% min pounds 1.25 None pounds 3.75
*only for BA customers
Cheapest traveller's cheques
Provider Buying commission Total cost of Selling back
sterling cheques pounds 500 worth of commission cheques
British Airways* None pounds 1.25 None
American Express 1% pounds 5 None
Thomas Cook Direct None pounds 5 None
*only for BA customers
- 1 Apple has installed security backdoors on 600m iPhones and iPads, claims security researcher
- 2 Malaysia Airlines MH17 crash: Pro-Russian rebel 'admits to shooting down plane'
- 3 Louis van Gaal gets tough with Manchester United players, with Darren Fletcher and Luke Shaw berated in public and Phil Jones left looking bemused
- 4 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 5 Peaches Geldof inquest: Tragic final moments of socialite's life reveal she "lied" to husband about failed drugs tests
Malaysia Airlines MH17 crash: Pro-Russian rebel 'admits to shooting down plane'
Israel-Gaza conflict: Deadly flechette shells 'used by Israeli military in Gaza Strip’
Malaysia Airlines MH17 crash: Blogger captures footage ‘showing BUK missile launcher that shot down jet’ now back in Russia
Peaches Geldof inquest: Tragic final moments of socialite's life reveal she "lied" to husband about failed drugs tests
Israel-Gaza conflict: The myth of Hamas’s human shields
Malaysia Airlines flight MH17 crash: 'Nine Britons, 23 Americans and 80 children' feared dead after Boeing passenger jet is 'shot down' near Ukraine-Russia border
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...
£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...
£380 - £480 per day: Orgtel: Business Analyst - Banking - Edinburgh - £380 - ...
£70000 - £80000 per annum: Harrington Starr: My client is a leading financial ...