Here’s a New Year’s resolution. If you plan to go abroad, don’t pay more than is necessary. Too many people overspend on foreign shores, so I’m going to explain how you can save with perfect exchange rates.
HOLSTER UNBEATABLE EXCHANGE RATES
Spending abroad on plastic is often costly, as banks get perfect rates but add a hidden 3 per cent load onto the charge — so spending £100 worth of dollars costs us £103.
Yet a few cards are marketed as “super-cheap” abroad in the hope you’ll also use them here, where they are not so cheap. These specialist, no annual fee, credit cards are load-free worldwide, smashing bureaux de change, giving permanently unbeatable rates everywhere you use them. In other words, spend £100 worth of dollars and it costs £100.
So I suggest you grab one for use abroad. But do ensure that you repay in full, preferably by direct debit to minimise any interest.
My top pick is Halifax’s Clarity card, which has the lowest ATM fees (even so, spending on the card beats cash withdrawals). If you fail to fully repay it’s 12.9 per cent representative APR (but remember this is charged on ATM withdrawals, even if you do fully repay).
Yet if you have a Saga (over-50s) (11.9 per cent rep APR), Post Office (17.8 per cent rep APR), Nationwide Select (15.9 per cent rep APR) or Santander Zero credit card, then as these are load-free worldwide, it’s not worth a new application.
CAN YOU GET THESE CARDS?
As always, it depends on your creditworthiness. The best way to find out, is to apply. But that marks your file, whether you are accepted or rejected, and each mark has a minor impact.
Poorer credit scorers still have options. The Capital One Classic Extra card is load-free overseas and pays 0.5 per cent cashback on all spending — a useful double purpose.
Watch out for its 34.9 per cent rep APR if you fail to repay in full. It is worth noting you will also be charged this and a fee on cash withdrawals even if you fully repay, so err towards spending on it, not ATM withdrawals.
TOP PRE-PAID CARDS
You load one up before you travel, then use it like a debit card. If you lose it, your cash is protected.
However, unlike top credit cards, you get the rate on the day you load, not when you spend, so currency fluctuations can hit you.
My top pick cards, based on low fees and best rates, are FairFX Euro and FairFX Dollar. They are usually £10, provided you load at least €60 or $75.
These charge an ATM fee, so if you need to withdraw cash regularly, consider the ATM fee-free Caxton FX card. You can choose a euro, dollar or “global currency” card.
NEVER GET AIRPORT CASH
Airport and ferryport bureaux know that you are a captive customer, so they often offer terrible rates. If you have left it too late, at least order online for airport pick-up, as you can usually get a better rate.
BEWARE BUYING FOREIGN CASH WITH CREDIT CARDS
If you buy currency from a bureau de change on a credit card, it counts as an overseas cash withdrawal.
That means you usually pay £3 per £100 fee, plus interest, even if you clear the card in full. Some bureaux make it a triple whammy, adding 2-3 per cent fees too. Thankfully debit card charges for this were stopped last year.
DO YOU HAVE AN OVERSEAS DEBIT CARD FROM HELL?
Bizarrely, ordinary bank debit cards are often the worst way to spend abroad.
Not only do they load exchange rates and add ATM fees — the debit cards from hell below effectively fine you £1-£1.50 each time you spend abroad.
Name and shame: Santander, NatWest/RBS (avoid for smaller purchases), Halifax, Lloyds and TSB.
Buy something costing £5-worth of euros with one of these cards, and with load and spending fine, it costs you £6.65.
WANT TO PAY IN EUROS OR POUNDS?
If you’re using a card abroad, sometimes you’ll be asked if you want the transaction to be in pounds or the local currency.
In a nutshell, pay in the local currency (eg, euros) not pounds.