Everything you need to know about holiday money including the cards to avoid


DON’T put a dampener on a sunny holiday by paying a fee every time you use your card.

Credit and debit cards routinely add fees of almost three per cent when used abroad, and ATM charges can be as much as 7.95 per cent, which would add £8 to a £100 withdrawal.

Credit and debit cards routinely add fees of almost three per cent when used abroadCredit: Getty

Andrew Hagger, personal finance expert at Moneycomms.co.uk, said: “Being smart with your plastic when travelling means more of your spending money goes on the things you enjoy rather than expensive overseas card fees.”

Here, Harriet Cooke looks at the options.

ASK YOUR BANK

MANY debit cards charge a fee of around 2.75 per cent for spending outside the UK, which would mean paying an extra £1.40 for every £50 meal out.

But the best cards for overseas travel have no fees, so you can use them as if shopping at home.

READ MORE ON CREDIT CARDS

Big-name banks are increasingly offering customers these perks to deter them from taking out specialist accounts elsewhere.

You might not get the best rates but it’s better than paying standard card fees and it’s super-easy to set up.

NatWest’s new free travel account allows you to hold euros on your existing debit card and spend them without paying the usual 2.75 per cent fee, as well as withdrawing up to €200 cash from an ATM abroad.

You’ll need a NatWest current account, but it’s not available for joint account-holders.

Some premium NatWest accounts, such as Reward Silver, already do not charge for foreign transactions.

HSBC customers with a Global Money Account receive a separate debit card for use abroad, which they can use to withdraw cash or make card purchases without fees.

How do prepaid cards work?

Paulomi Debnath, 44, from Romford, East London, recently took out an HSBC Global Money debit card to use abroad.

The jewellery designer, who founded handmadebytinni.com, said: “It was handy on a business trip to Singapore earlier this year when I forgot to take Singaporean dollars.

I went to a bureau at Heathrow airport to exchange and the transfer rate was shockingly bad.

But my husband Avik said, ‘Don’t worry, just use your card, and put some dollars into our Global account’.

“The exchange rate wasn’t quite as good as Google’s (which uses Interbank data) but it was a lot better than what the travel desk was offering.

“It is very convenient to be able to convert currency instantly within your main banking app — and the card worked perfectly during the trip.”

Paulomi Debnath took out an HSBC Global Money debit card to use abroadCredit: Supplied

Santander customers with Edge or Edge Up accounts are not charged fees for making purchases abroad or withdrawing cash, but there is a fee of £3 or £5 respectively for holding the accounts.

Watch out for the exchange rate — not just fees. If a bank is offering Interbank, Mastercard or Visa rates, you are getting a pretty good deal.

Banks that offer different rates, such as HSBC and NatWest’s travel accounts, charge a mark-up to cover their costs, but not a significant one.

For example, NatWest advertised €1.1384 for £1 on Wednesday this week, against the Interbank rate of €1.1739.

JOIN A NEW BANK

IF your bank does not offer decent travel perks, it might be worth applying for a specialist debit card.

You can do this alongside your main account and transfer money across.

Chase Bank’s card is fee-free and gives one per cent cashback on all your spending, paying up to £15 a month for the first year.

Starling’s current account also offers free spending, and like Chase, offers the Mastercard exchange rate.

The Sun’s Travel Editor, Lisa Minot recommends Currensea, a travel debit card which uses open banking technology to allow people to spend directly from their existing current accounts if abroad.

Currensea’s free cards charge 0.5 per cent above the Interbank rates for transactions, and nothing for withdrawals under £500 a month.

Remember to always opt to pay in local currency, as paying in sterling usually means getting a dismal rate from the merchant you are buying from.

CREDIT CARDS

SOME credit cards also charge foreign currency fees of up to 2.95 per cent and up to 7.95 per cent for ATM withdrawals.

But travel-free versions are great for shops and restaurants, and they offer special protections if your purchases are not up to standard.

The Barclaycard Rewards card does not charge any fees on spending or ATM withdrawals.

There is also no interest on any cash withdrawn as long as you pay it back in full when your next bill is due.

The Halifax Clarity is also a good pick as it has no charges on overseas spending.

Try to avoid withdrawing cash on a credit card as it can damage your credit score.

Remember that overseas cash machines may charge their own fees, even if your card is fee-free, so it is a good idea to buy currency at home.

Niki Woods says her Halifax Clarity card has saved hundreds in feesCredit: Supplied

Niki Woods, 47, from Leeds, frequently travels for work and reckons she has saved hundreds in fees with her Halifax Clarity card.

The author, who trains women and businesses about midlife and the menopause, said: “I use it to pay for everything while abroad as it doesn’t charge foreign transaction fees and I pay the balance off every month to avoid interest.

“The only disadvantage is it means I tend to go to supermarkets more, rather than markets, where they don’t take cards.”

BEST PREPAID CARD

PREPAID cards are not directly linked to a bank account. You add money to them, which you then spend while on holiday.

The big advantage is you can choose to exchange cash in advance, locking in a rate, and cannot go overdrawn.

The downside is there are often hidden fees, and some places do not accept them.

Sainsbury’s and Asda’s Travel Money cards are decent options. You can load up to 15 currencies on them and spend and withdraw cash abroad without fees.

Be aware that if you do not use your card for 18 months (for Sainsbury’s) or 12 months (Asda), an inactivity fee of around £2 a month will be taken off your balance.

FOREIGN CASH

FIND the cheapest place for cash currency using moneysaving expert. com’s Travel Money Max tool.

Do not buy currency using a credit card as it counts as a cash withdrawal, so you might be charged fees and a higher rate of interest.

Airport drop-off fees are up by 20%

AIRPORT drop-off charges are up to 20 per cent pricier than last year, we can reveal.

Gatwick now charges £6, up from £5, for a ten-minute stop.

Stansted is the most expensive airport – although it did not increase prices this year

We checked prices at 28 UK airports and seven had upped their prices – Aberdeen, Birmingham, Bristol, Gatwick, Glasgow, Glasgow Prestwick and Leeds Bradford.

The most expensive was Stansted, which now levies £7 for a 15-minute pick-up although it has not increased its charge this year.

Four UK airports – London City, Cardiff, Inverness and Newquay – do not charge.

But London City does not allow drivers to wait at all, whereas at Newquay and Inverness you get ten minutes’ stopping time and at Cardiff it is five minutes.

Drivers could be hit by a penalty charge notice of up to £80 if they break wait-time rules.

Holidaymakers are being warned to check for alternative drop-off areas in the mid or long-stay car parks.

For example, drop-offs at any of Heathrow’s various long-stay zones is free for 30 minutes.

From here, travellers can get on a transit bus taking them to the terminal free of charge.

Passengers travelling from London Luton can be dropped off for free at its mid-stay car park, which is only a ten-minute walk from the terminal.

Rod Dennis, RAC road safety spokesman, said: “It’s hard to see these sky-high drop-off fees as anything other than a money-making opportunity for the car-park operators.

“If public transport to an airport is poor or non-existent, travellers will inevitably have to drive, and it’s not right they can be stung by such costs even if they’re stopping for no more than a matter of minutes to drop off a friend or family member.

“Sadly, though, drivers are a captive audience in these situations, so an airport is free to charge whatever it likes.”



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