Play your cards right on holiday to beat charges

23rd June 2014

Holidaymakers planning on using their plastic abroad can see the extra charges mount up if they are not careful, banking expert David Black of Consumer Intelligence warns.

Customers using credit or debit cards abroad typically get charged between 2.75% and 2.99% on overseas spending with their plastic and between 2% and 5% for withdrawing cash at overseas ATM with a minimum charge for the latter of £3 or £5.

In addition there are possible losses from exchange rates to contend with – paying in stores with sterling overseas is generally a bad idea – as well as the possibility of having to pay interest on any cash withdrawn, even if you pay off the bill in full when you get the monthly statement.

However, there are credit cards and debit cards which will not charge – or at least minimise bills – and you should plan ahead to get one of them before your holiday starts.

According to Black, best credit cards include the Capital One Classic Extra, Aqua Reward, Post Office Credit Card and Saga Platinum Credit Card, which do not levy a foreign exchange fee on overseas spending. The Halifax Clarity also doesn’t charge a foreign exchange fee or levy an overseas ATM withdrawal charge. Note that local ATM providers may charge a fee.

Best debit cards for overseas use include Cumberland Building Society’s Plus Current Account and Norwich & Peterborough’s Gold Classic Current Account which don’t charge for overseas spending or an ATM withdrawal fee plus Metro Bank’s Current Account which doesn’t charge for purchases or ATM withdrawals in Europe. The Cumberland’s account can only be opened by people who live in its branch area.

Black said: “Holidays can be very expensive so anything which helps keep the costs down is worth looking at and getting the best credit or debit card is a good start.

“It is generally a bad idea to use a credit card for cash withdrawals and particularly so overseas. Most credit cards will have pay an ATM fee and a forex fee, as well as charging interest on the amount withdrawn – even if you pay off the entire outstanding amount when you get your next credit card statement.”

People who don’t want to use credit or debit cards overseas could also look at prepaid cards which only allow you to spend the money you have already loaded on to them.

Three to consider are foreign currency denominated prepaid cards if you are going to mainland Europe or the US: Caxtonfx and UKcash which don’t charge fees for purchases or ATM withdrawals and FairFX which does not charge for spending but does charge 1.5 Euros or $2 for ATM withdrawals.

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