If you’re going away for Easter, then I’m sure you’ve got a great deal on your flight, car hire and accommodation. And no doubt you’ve sorted out your travel insurance. But what about your spending money?
While in the UK, most of us probably rely on our debit cards for day to day spending. But according to research by Defaqto, using your debit card to pay for small items in Europe can be ruinously expensive. Swiping your contactless card once a day to pay for €5 breakfast of coffee and a croissant every day for a fortnight’s holiday could cost you an extra €21 in charges on top of the €70 you pay for the items. This is because when you use a debit card overseas –spending or withdrawing cash from a machine – you’ll be charged a fee for converting from Euros to pounds and often also another usage fee. Defaqto says that only four current account debit cards don’t charge fees for overseas purchases or ATM withdrawals: Metro, Monzo, Starling Bank and Cumberland Building Society. Monzo and Starling are app-only. Nationwide Flexplus doesn’t charge for ATM withdrawals abroad but the account has a £13 a month charge.
It can be better to use your credit card for spending overseas. The research shows that spending €25 on a meal would cost between 43-64p when using a credit card but on a debit card the cost would be between 37p and £1.84. These charges include currency exchange fees and debit/credit card fees. One in six credit cards doesn’t charge a fee for spending abroad. However don’t draw cash on a credit card while away. Not only will there usually be a fee for taking money out from an ATM (as well as currency conversion costs) but you’ll rack up interest as soon as you take the money out – even if you clear your balance in full when your statement comes.
Another option is taking a pre-paid card, where you load the card with your chosen currency. Jane has written in the past about the Revolut card which is pretty well free to use while away. But the report warns that most pre-paid cards have high fees or may charge for loading money onto the card or when renewing it. Some – the report names Asda – have high exchange fees which make them unattractive. Remember too that pre-paid cards are no use for hiring a car and also may not be accepted at petrol stations. Taking at least some cash with you is a good idea – but watch out on exchange rates. While you might not pay commission for exchanging your sterling into foreign currency over here, the report says that typically exchange rates are 2-3% less than those used for credit and debit card transactions.
I guess the real conclusion of the report is that you should take a mix of ways of funding your holiday spending and don’t assume that the cheapest method at home is the best abroad too. Check out our guides to holiday money and credit cards before you go: and if you still haven’t arranged your holiday, look at www.travelsupermarket.com* for deals – or use a cashback site such as TopCashback* or Quidco*.