When you head off on holiday, the aim is to leave all the stresses behind you, right? Well a common cause for concern when abroad is bank charges. What are you getting charged for, and how much is it going to be? Most of the worry is the degree of uncertainty around bank charges. Have a read of Economy Car Hire’s best advice when it comes to clearing up those hidden costs.
Credit Cards
A good credit card is the best way to spend when you go abroad. Be careful here though, some cards are much better than others. It is important to check out the different charges for each card. Make sure you check the worldwide loading fees for the card you choose to use. This is the charge on any transactions outside of the UK. There are a number of cards that offer a 0% fee here so look out for these.
You should also be aware that some cards offer different loading fees depending on whether you are spending inside or outside of the EU. This is something to consider if your travels are taking you further afield. It is also important to realise that all car hire companies require a credit card to rent a vehicle, for the security deposit, and pre-paid or debit cards are not accepted.
At the time of writing our recommendation would be the Halifax Clarity credit card. This card has no foreign exchange fee and its exchange rates are set by Mastercard so you will get a fair price. Make sure you check the current best deals before you travel as these can change dramatically.
Pre-paid cards
Maybe you don’t own a credit card, what do you do then? Well the next best option is a pre-paid card, the modern equivalent of Travellers Cheques. These can be easy to set up and offer the flexibility of being used as a credit card and to withdraw cash. If you are travelling to somewhere that accepts Euros or Dollars then a pre-paid card could save you some hassle. It allows you to purchase currency at a time when the exchange rate is favourable and it stores it at that rate.
It is worth knowing that it’s not advisable to keep large amounts of currency on a pre-paid card either before or after a trip abroad. We recommend either the FairFX or CaxtonFX both of which have different strengths. The FairFX does charge a small amount for cash withdrawals abroad but you will get a slightly better exchange rate. However, the CaxtonFX gives you a slightly worse exchange rate but there is no charge for cash withdrawals abroad.
Debit Cards
Although credit cards and pre-paid cards are commonly considered to be the best ways to pay for things abroad it may not be possible. You can use a debit card abroad but they come with a different set of fees. Most of the major debit card providers have some charges on withdrawals or transactions abroad, but not all. This list of charges, by Which? of major debit card providers is very useful.
Exchange rates
Another thing to bear in mind is exchange rates. The best thing to do here is just be prepared. First things first, never purchase currency at the airport. You will usually get a terrible rate and you can save a lot of money by pre-ordering currency and getting it delivered to your home or picking it up at the airport. There are a variety of ways of doing this, such as www.travelex.co.uk and www.moneycorp.com/.
Try not to exchange cash at a bureau. Although this may not be possible all the time, the rates you get are better if you just use your credit card to pay in the local currency. Finally, do your research. If you have the time to compare a couple of different rates then you will ensure that you are not getting ripped off.
Hopefully this has given you enough information to avoid those crippling bank charges and make sure you have a stress-free holiday. On top of bank charges there are many other tricks to be aware of when you are abroad. Make sure you are vigilant and watch out for these by reading our Common travel scams to be aware of.
Nationwide Select card doesn’t impose fees on foreign transactions. Norwich and Peterborough don’t charge fees on their debit card cash withdrawals abroad on their Gold Classic
I rarely buy foreign currency advance but make a bee line for the nearest ATM when we get to the foreign country. And it’s a good idea to keep any unused Euros for next time rather than changing them
Great advice. Thanks for the tips John!
I use SAGA who do not charge for using the card abroad. I started using it due the excessive cost of the 500 to 800€ deposits required when you do not take out the hire company insurance (I have yearly much easier). At 3% when they take the 5-800€ and 3% when they give it back is OTT.
Thanks for taking the time to leave comments Pam and George, I’m sure our other readers will be grateful for the extra advice and recommendations!
My best advice is, when paying by credit or debit card and you are asked if you want to pay in GBP or the local currency, always, always choose the local currency option. However it isn’t always that obvious, make sure you read through all the options before entering the pin and pressing that OK button.