Watch Out For Fees When Using Your Credit Card Abroad

By: MoneyFacts

Holidaymakers who are preparing to take a trip abroad may be busily sorting out their travel money and packing their last-minute essential items, which probably includes their debit or credit card.

Despite being a convenient payment method when at home, the latest research by Moneyfacts.co.uk reveals that debit cards and most credit cards charge for use abroad, which is why holiday-goers should consider taking out a more cost-effective card if they expect to use their plastic during a trip.

Our research shows that some debit cards can charge £9.50 for a £200 cash withdrawal, while credit cards can charge £11.96 for the same transaction - an unnecessary expense when there are fee-free cards specifically designed for use abroad.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

 “Planning what to take on holiday can be tricky, but in case of emergency, it may be a good idea to take some form of card with you as well as money. Cash isn’t always king because there is a danger of not taking enough to cover expenses, or even worse, losing it.

“Using a debit or credit card when abroad means you can benefit from extra protection from theft, but the sometimes excessive charges incurred when using these payment methods abroad can lead to a costly headache. A typical debit card charges £9.50* when consumers withdraw £200 in cash abroad and charges apply every time the debit card is used. There is typically a 2.75% to 2.99% conversion fee on the amount you spend on top of a set charge for ATM withdrawals, which can be between £1 and £5 for each transaction.

“Credit cards are a little different but some can charge £11.96** when withdrawing £200 in cash, before interest applies. However, if holidaymakers plan ahead, they could get a more cost-effective card to cover additional expenses. For instance, MBNA, Creation Financial Services and Halifax all offer credit cards that charge absolutely no fees when used overseas. 

“Those who would prefer to use a debit card can still dodge fees by taking out, or switching to, a new current account that offers fee-free debit cards for foreign use. For example, Norwich & Peterborough Building Society’s Gold Account offers a debit card with no fees for use overseas, which is perfect for those who regularly travel.

“Pre-paid cards are another viable option for people who want to budget their spending on holiday or avoid taking cash. Consumers can load their spending allowance onto the card and feel safe in the knowledge that if they lose their card, it can be replaced without any loss of money. There are even pre-paid cards that do not charge for ATM cash withdrawals, which is perfect for paying for goods in stores that do not accept card payments. Bearing this all in mind, it may be useful to add a pre-paid card to the packing list.”

*Typical debit card example is the NatWest Select Account, which charges a transaction fee of 2.00% and a conversion fee of 2.75% on cash withdrawals. **Typical credit card is the HSBC Credit Card Visa, which charges a 2.99% usage fee and a 2.99% cash withdrawal fee.

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