MARTIN Lewis has issued an urgent holiday warning to anyone using a debit card abroad.
The MoneySavingExpert (MSE) founder issued the warning in a special holiday episode of his ITV Money Show.
1
It included advice on the best debit, credit and pre-paid cards to use abroad this summer.
When you use your credit and debit cards abroad, banks can hit you with several charges.
For purchases from a shop, your bank will probably impose a “non-sterling transaction fee”, usually around three per cent.
Some will also charge you for using them outside of Europe.
Martin if you have a Bank of Scotland, Halifax or Lloyds debit card, you should avoid using these abroad.
The Bank of Scotland and Halifax charge you 50p each time you use them, while Lloyds charge £1.
“So imagine you’re buying something for a fiver,” Martin said.
“The exchange rate fee means you’re going to pay £5.15 for it and then you’ve got that, that makes it £6.15.”
Most read in Money
Martin said most travellers would be better off spending on a credit card, paid off in full, rather than using these debit cards.
He said: “If you’ve got one of those cards, beware if you’re going outside Europe, you will pay a little bit more for using it so you probably definitely want a specialist card in that case.”
There are credit cards that offer fee-free spending abroad. These are best used for making purchases in shops and restaurants.
It’s generally not a good idea to use credit cards to withdraw cash at home or abroad as it can damage your credit score if done too often.
The best travel debit cards have no spending or ATM fees overseas, so you can use them as if you’re shopping at home.
It may mean opening a new bank account, but you can do this alongside your main one and transfer money across.
While prepaid cards can be loaded with a set amount of currency, a bit like a gift card for holiday money.
You can use them for spending or withdrawing cash.
You can either load them with a foreign currency at home or with Pounds and the exchange rates are calculated when you spend on the cards abroad.
But be aware that providers may add between one per cent and 2.5 per cent to the exchange rate.
The best cards for spending abroad
Debit cards
Chase Bank is fee-free for spending and cash withdrawals abroad and gives you one per cent cashback on all your spending, paying up to £15 a month for the first year.
Starling also charges no fees for spending or ATM withdrawals.
You can withdraw up to £300 a day using this card.
Monzo has no exchange rate markup but you can only withdraw £250 free at ATM over a period of days.
After this, you’ll get charged 3% on any withdrawals you make over that.
Credit cards
The Barclaycard Rewards card doesn’t charge fees on spending or ATM withdrawals abroad.
There’s also no interest on any cash withdrawn, as long as you pay it back when your next bill is due — but ATM providers could still slap on a fee.
The Halifax Clarity has no charges on overseas spending or withdrawing cash, but you will get charged interest of about 5p for every £100 withdrawn per day from the moment you take money out, so pay it off straight away.
Prepaid cards
A card from Revolut via its Standard plan has no fees for purchases abroad and offers free ATM withdrawals of up to £200 per month.
Currensea offers a card that links up with your existing current account — but it’s not prepaid, so you don’t need to load it with currency before you set off.
The FX fees are 0.5 per cent on purchases and withdrawals, and no additional charges for the first £500 withdrawn each month.
Anything above is subject to a two per cent fee.
Fair FX’s multi-currency card is a decent option with no exchange rate mark-up — but there is a fixed £1 fee on all ATM withdrawals.
Cash
If you prefer cash to cards, exchange at home before you go. Kiosks in tourist hotspots tend to offer terrible rates.
Moneysavingexpert.com’s TravelMoneyMax tool helps find the cheapest place to buy it.
Never buy at the airport unless you’ve ordered it in advance.
And don’t buy currency with a credit card as it counts as a cash withdrawal, meaning you might be charged fees and a higher rate of interest.
The Sun recently reviewed the best and worst cards for spending abroad in 2023 – and you could save £80.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
This post first appeared on thesun.co.uk
