CREDIT and debit cards can charge you a fee of up to 5 per cent to use your card abroad.
And it can cost £5 extra to withdraw money from an ATM while on holiday.
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Andrew Hagger, personal finance expert at Moneycomms.co.uk, said: “Taking the right plastic with you on your travels can end up saving you a decent sum over the course of a week or two overseas, so it’s worth checking what your bank card charges you before you jet off.”
Adele Cooke explains how to get your summer wallet ready – and the ATM rule you need to follow.
Debit card
It can be easy to use your debit card while on holiday but doing so could land you with a surprise bill.
For example, Lloyds Bank charges customers who use their debit card abroad a 2.99 per cent foreign transaction fee.
This would cost you £2.99 for every £100 you spend.
But some cards do not charge fees when you use them abroad, so you can spend as you do at home.
Several big banks offer cards without overseas fees, so it’s worth shopping around to get the best deal.
First Direct does not charge fees to pay with its debit card while abroad and there is no penalty to withdraw cash from an ATM.
Santander customers with an Edge current account do not pay any fees when using the card to make purchases or withdraw cash while overseas.
But the account has a £3 fee and you must pay at least £500 into your account each month.
Meanwhile, Starling does not charge a fee to use its card or withdraw cash while on holiday.
Keep an eye out for cards that offer Visa, Interbank or Mastercard exchange rates as these will give you the best conversion.
Other cards charge a mark up on top of the exchange rate to cover some of their costs.
You can compare credit cards using websites including moneyfactscompare.co.uk or Compare the Market.
How to avoid roaming charges
Simrat Sharma, a mobiles expert at Uswitch, said switching to an eSIM – short for embedded SIM – can be cheaper than using international roaming.
“eSIMs make it easier to change networks,” she said.
“So for example, if you’re abroad you can quickly connect to the local network to pay local rates – without having to add or swap a physical local SIM card for your device.
“This means travel eSIMs are almost always cheaper than using international roaming, as users are effectively tapping into the same network plans as locals.
If you’re regularly switching numbers or travelling to different locations, you’ll be able to keep them all safely in digital format rather than carrying around a number of small cards.
“The software can easily be accessed via your device’s app store and uploaded to your phone in a few quick steps.”
Credit card
Many credit cards also charge foreign transaction fees of around 3%, which would add £1.50 to the cost of a £50 meal out.
But there are several credit cards that let you withdraw money from ATMs or spend in shops and restaurants fee-free.
The Barclaycard Rewards Card does not charge you transaction fees when you are abroad.
It uses Visa’s exchange rate, so you will get the best value on conversions.
Meanwhile, the NatWest Credit Card does not charge a transaction fee so you can spend abroad without paying a penalty.
A credit card can also give you extra protection if something goes wrong while you are away.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “A credit card will also protect spenders under Section 75 of the Consumer Credit Act on purchases between £100 and £30,000 if a service or goods are not provided or damaged.”
Pre-paid card
A pre-paid card can be a good option if you want to keep an eye on your holiday budget.
The cards are not linked to your bank account so you need to top them up before your trip.
This means that you cannot become overdrawn and can lock in an exchange rate before you travel.
But some places may not accept the cards, warns Reena Sewraz, Which? retail editor.
She said: “A fee-free credit card is useful if you’re planning to hire a car, as many operators don’t accept prepaid travel cards.”
Some prepaid cards may also have hidden fees.
The Post Office Travel Money Card lets you load up to 22 currencies onto the card and spend cash abroad fee-free.
But you will be charged 2 euros to withdraw cash at an ATM.
You can load 15 currencies onto the Asda Travel Money Card and spend and withdraw cash without fees.
Watch out for the inactivity fee, which is £2 a month.
Avoid one button
You could lose cash by making the wrong choice at foreign ATMs or tills.
Cash machines abroad usually give you the option to pay in pounds or the local currency.
But paying in pounds could cost you more.
This is because the overseas bank will do the conversion to pounds and the rates are usually unfavourable.
You will usually get a better rate by paying in the local currency.
Cash is king
You should carry some cash with you when travelling abroad.
Andy Coley, 49, from London wished he had exchanged cash before his business trip to Istanbul, Turkey, in March.
The leadership development trainer was hit with high fees to withdraw cash from an ATM.
Andy packed his Post Office Travel Card, which he often uses when abroad.
But he found most shops and restaurants in Istanbul would not accept the card.
Andy was forced to withdraw £500 in cash from an ATM, which cost him £37 in fees.
He said: “I would definitely travel with cash in the future and do a bit more local research.”
You can compare the rates on offer at different currency exchanges using Money Saving Expert’s online tool.
The cheapest place to buy currency may depend on which type you want, so check the rates before you head to a bureau du change.
Do not exchange cash at the airport as you may get a bad exchange rate.
Never withdraw currency using a credit card as you may be charged a high interest rate or fees.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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