Spend the wrong way abroad, and you could be wasting ££s every time you shop. Recent volatility due to Brexit talks means it's more important than ever to bag top rates. Specialist cards help you do that by allowing you to get near-perfect rates every time you spend overseas.
But it's not just having the right card. There are a host of other tools, tips and tricks that we've designed to help you get the most bang for your buck. Here are our top tips...
19 travel money savings, including...
Should I buy holiday money now?
Martin recorded the video below before Article 50 was triggered but the same principles apply to the current volatility around Brexit negotiations and the political landscape.
Warning: your holiday can cost £100 more if you spend the wrong way
Ultimately, when abroad you want to pay for only what you buy, yet by doing it the wrong way many also pay for paying, too. Here's how much spending €1,000 actually cost, in pounds, when we made comparisons on 29 January 2018 using our Travel Money Comparison tool (we assumed five €100 cash withdrawals, and 20 transactions on the cards).
- On a specialist credit card repaid in full: £879 (see point 2)
- Cash, via UK's cheapest bureau (pick up in London): £889 (see point 3)
- Cash from M&S (non-cardholder): £921
- Using a debit card from hell (Halifax in this case): £926 (see point 7)
- Change at airport (Gatwick South Terminal, ICE Travel Money, not pre-ordered): £960
As you can see, the differences can be massive, yet the winners are simple. Apply for a specialist overseas credit card, then use it every time you go.
The top-pick credit cards abroadNone of the following cards adds a sterling exchange fee, so all give near-perfect rates. However, Mastercard's rates tend to be slightly better than Visa's.
- Long-term winner: The Halifax Clarity* offers no fees on overseas spending, though ATM withdrawals incur interest even if you pay off the card in full - so it's best to prioritise spending where possible. Plus, if you apply by 31 Aug 2018, you'll get £20 cashback if you make a transaction in a foreign currency by 30th Sep 2018. . Repay IN FULL to minimise the 18.9% rep APR.
- Good for cash withdrawals: Barclaycard Platinum travel card as it has no cash withdrawal fee, and charges no interest on overseas withdrawals if you pay IN FULL every month. It's 18.9% rep APR on spending if you don't pay in full.
- Top easy-to-get: Aqua Reward Mastercard* primarily only use this to spend as its 34.9% rep APR is charged on cash withdrawals even if you clear in full. Though the boon is it's designed for those with poor credit and gives 0.5% cashback on spending.
You can find more information about these cards, and other top options in the Cheap Travel Cards guide.To find which you are most likely to be accepted for, use our overseas credit card eligibility calc which shows your odds for each of the top cards.
To make this work, ensure you always repay IN FULL, preferably by direct debit, or the interest cost dwarfs any gain you get from the better rate.
You also get Section 75 protection
On top of giving you the top rates when spending abroad, specialist overseas credit cards also give you Section 75 protection.Pay for something costing £100 to £30,000 on a credit card and the card firm's jointly liable with the retailer if things go wrong. This is useful abroad, as taking things back is tough. It's also good protection when buying from overseas websites. For more, read our Section 75 guide.
Credit cards are good if...
- You want the best spending rates
- You want Section 75 protection
- You've a decent credit score
Credit cards are bad if...
- Your credit score's poor
- You won't repay in full every month
Need cash? Compare top currency rates
Our TravelMoneyMax.com travel money comparison tool compares rates at about 30 online bureaux and orders them by how much currency you'll actually get after all fees and charges.
Though beware, pay a UK bureau by credit (not debit) card and it counts as a cash withdrawal, so there's a fee and interest even if you fully repay – best to always use a debit card or cash to buy.
Getting cash is good if...
- You want to lock in a rate
- You want to stick to a budget
- You have a secure place to keep it
Getting cash is bad if...
- You want the absolute best rates
- You need to pay by credit card
- You want Section 75 protection
- It's stolen
Buy cash trick to protect against currency swings
While they may not offer the very best rates on the market, a few bureaux's terms and conditions can be manipulated to give you protection against currency swings, as you order at today's rate for collection before your holiday. Then...
- If the rate gets worse, you're up as you got it at today's rate.
- If the rate gets better, you cancel it and buy at the new rate.
This was a corking trick when we first launched it just before the Brexit vote, as you could buy up to 60 days ahead and cancel at no cost. Now most bureaux have altered these terms. Of the big bureaux left (and you'd want big brands as they're holding your cash with little protection) there's...
- Travelex*: Order for collection up to two weeks ahead and cancel for free before last 24hrs (£10 fee if cancelling within 24hrs). If you've ordered less than £300, click and collect fees will apply, which won't be refunded. Good in case of imminent fluctuations.
- Moneycorp*. Order for collection up to 14 days in advance. The rate you get is the rate on the day you order but you don't pay until you collect. If you want to cancel, simply don't go and pick up the cash.
- Sainsbury's*: Order for collection up to eight days ahead, but it's £10 to cancel. Can be worth it for larger buys (above £500ish) - see the £10 as 'insurance'.
This is by no means a must-do, but it is an option if you're worried about currency moves. Use TravelMoneyMax to see which of these bureaux (they're all in there) gives the best rate.
Or sell your currency back at the same rate - usually £5ish but can be free
A couple of firms currently allow you to pay a £4-£5 fee, called a 'buy-back guarantee', that gives you the option to sell your currency back to them for a full refund of what you paid in pounds - and one will even let you do it for free, as long as you ask for it.
- Moneycorp* - Free if ordering £500+, otherwise £3.99 fee. You can sell back up to £1,000-worth of currency for a full refund at the rate you bought it, as long as you do it within 31 days of collection in store. To get the buy-back guarantee, ask in store when you purchase your currency.
- Travelex* – £3.99 fee. To sell the money back for a full refund, you’ve 45 days from date of collection in-store or from the date of ordering if it’s delivered. You need to pay when ordering your money.
If you want to lock in a rate or stick to a set budget, try a specialist overseas prepaid card
Here, you load with cash before you travel, then use it like a debit card. If you lose it, your cash is protected. You get the rate on the day you load/buy, not when you spend, so currency fluctuations may mean you get a worse deal (or better one).
However, there are a few places that don't accept them – car hire firms and pay-at-pump petrol stations are the major ones, but there are a few others to watch out for.
Our top picks are Revolut and WeSwap as they have decent exchange rates and low or no fees. FairFX is also good if you're loading £600+, as it gives an extra £20 of currency.
For more info and other top picks, see Cheap Prepaid Travel Cards.
Prepaid cards are good if...
- You want to lock in a rate
- You want to stick to a budget
- You lose it/it's stolen
Prepaid cards are bad if...
- You want the absolute best rates
- You need to hire a car
- You want Section 75 protection as there's none
The CHEAPEST debit card abroad
We prefer cheap credit cards, as it's a big schlep to change your entire bank just so you can get one that's cheaper to use abroad. Plus, if you're fed up with your own bank and want to switch, there are better incentives – you can get £125 just for switching or up to 5% interest (see Top Bank Accounts).
Yet if free overseas spending is what you want, new app-based Starling Bank's* current account charges no non-sterling transaction or cash withdrawal fees when you use its debit card worldwide.
If app-based banking isn't for you and you'll travel only in Europe, the Metro Bank current account charges no foreign exchange loading or cash withdrawal fees on its debit card. In the rest of the world, it charges a 2.5% load fee and £1.50 for ATM withdrawals. You can open the account online or in one of Metro Bank's branches located around London and southeast England.
Virgin Money's Essential Current Account also offers fee free spending worldwide, and charges a relatively low £1.50 ATM fee for overseas withdrawals. However, this account is a basic bank account, so may not have all the features you're looking for in an account to switch to. Check our main Travel Cards guide for more information about these accounts.
Specialist debit cards are good if...
- You're happy to open a bank account to get one
- You want to make cash withdrawals as there's no charge
Specialist debit cards are bad if...
- You switched from a better account to get one
- Or if you want to switch but pick a travel debit card instead of one of the more profitable debit cards available
- You want Section 75 protection as there's none
Debit cards can be the worst way to spend abroad
Eight debit cards (everyday bank cards) are our cards FROM HELL. Not only do they add a load and an ATM fee, they also charge up to £1.50 EVERY time you spend on them.
So, say you spend £5 on the card. After loading and spending fees, it can cost £6.65, which soon adds up over a holiday.
DO YOU HAVE A DEBIT CARD FROM HELL?
Bank of Scotland | Halifax | IF | Lloyds | Santander | TSB
NatWest/RBS & Clydesdale/Yorkshire (hell for small spends)
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If they ask 'Do you want to pay in pounds or euros?' – say EUROS
When paying on a card abroad, you're often asked if you want the transaction to be in pounds or the local currency.
As a general rule, never pay in pounds – that means the overseas store/bank is doing the conversion, and rates are awful. For a full explanation of how this 'dynamic' currency conversion works, see Martin's 'Using plastic overseas? Always pay in euros?' blog.
Find out what your existing cards are charging
A couple of years ago, banks and credit card providers didn't have to show a statement breakdown of what they were charging you when you used your card abroad. This all changed a few years ago, causing some confusion, with some people thinking they were only now starting to pay, though it's actually always been the case on all but a few cards.
So find out how much the cards you already have charge for use abroad – as you may not have the time to switch before your holiday – and make sure you use the cheapest (the best cards are listed in point 2). To help, we've built a How good is your current plastic? checker.
Don't change your cash at the airport (or at least order ahead if you're last-minute)
It's the easy option, but it's such a waste. Airport and ferry port rates are usually dismal, as they know they're the last port of call and you're a captive customer.
Far better that you use TravelMoneyMax before you go or, if you've left it too late, at least order in advance online to pick up at the airport to get better rates.
Is it better to change my cash once I get to my destination?
In general you don't get a better rate changing your pounds to euros, dollars, lira or dong once you're in that country than you do here. Yet that doesn't mean there aren't a few local bureaux overseas that may give tip-top rates.
The problem is there's no way of knowing until you're there, and as rates vary every day, once you're there, comparing to what was available back home is tough.
Therefore we suggest for safety you sort it before you go (if you can – some currencies, like the Lao kip, aren't available outside the country). The big advantage of that is you can use the TravelMoneyMax travel cash comparison to find the best rate from around 30 bureaux.
And getting a top rate here should usually beat relying on an unknown rate from a one-off local bureau once you're there.
Don't buy travel cash with a credit card
If you're buying currency at a bureau de change, or online through TravelMoneyMax, there's a hidden charge you could fall foul of if you're using a credit card.
Buying currency is counted as a cash withdrawal, so you could face a myriad fees, including cash withdrawal fees, interest, or even a fee for using a credit card charged by the money changer.
Therefore, if you're buying currency, ALWAYS use a debit card, which isn't allowed to charge this fee, or withdraw cash and pay with that instead.
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Can I go cashless and just use an ATM at the airport?
It goes without saying that for safety, many like to have a wad of euros, dollars or lire in their overseas wallet before they jet off – in which case our TravelMoneyMax tool will do the job.
However, it may be cheaper to travel cashless and simply withdraw money from an ATM at your destination airport with a top travel credit card. Do this and you’ll benefit from near-perfect exchange rates (which’ll beat the rates offered on exchanging cash in advance). When we checked on Tuesday 27 March, €200 cash cost £181.61 from a top bureau de change, compared with £175.26 using the Mastercard exchange rate typically offered on most overseas travel cards.
However, bear in mind that it may be difficult to avoid ATM fees in certain countries. From our experiences at MSE Towers, we’ve seen ATM fees in Vietnam, Thailand, India, the US and elsewhere – though going cashless may still work out cheaper than taking cash even after factoring in the odd ATM fee.
Remember that if using a credit card overseas, almost all card providers will charge interest from the moment you make a cash withdrawal. To minimise this, pay off the balance IN FULL while abroad. Also see the point below in regards to the potential credit score impact of withdrawing cash on a credit card.
It’s also worth being aware that not all airports will have an ATM at arrivals. Others will have them but may charge fees or worse, not be in working order. If you do plan on travelling cashless, it may be worth researching the airport online before you go
Withdrawing cash on a credit card could hurt your credit score
Withdrawing cash on some of the top specialist overseas credit cards is a MoneySaving thing to do. But, it can have unintended consequences.
If you withdraw cash on a credit card, it's recorded on your credit report. This isn't necessarily bad, in itself, but if you applied for a loan or other credit card soon after, the new lender might see it as a sign that you've no cash in your current account and you're so desperate for cash, you're willing to pay high interest to get it.
In isolation, the negative effect of withdrawing cash is minor and shouldn't be the root cause of a rejection. But if it's combined with other negatives on your credit report, it doesn't look good.
To be safe, if you've an important credit application, like a mortgage, to make – it's probably worth avoiding withdrawing cash on your credit card for the few months before the application.
You can read our short guide for more information about withdrawing cash on a credit card and its effect on your credit report.
What's in your overseas wallet?
Are you part of the 'overseas wallet or purse' club? Martin's pioneered this, and it's a clever way to make sure you're prepared on holiday. His rationale is that there are some things you only need when abroad:
- Specialist overseas plastic. These tend to be pretty poor for UK use, so leave it in your overseas wallet until you go away.
- Free EHIC for emergency medical issues in Europe. See our guide on how to get or renew your free EHIC card
- Driving licence & international driving permit. Check out when and why you need to take these, plus see our full Driving Licence Renewal guide.
- ESTA number for US travel. Check out our ESTA guide.
- Leftover currency. Left over from previous trips, good if you can't get to a cash machine right away.
Check out what else is in Martin's overseas travel wallet.
It's not just about the travel money
You need to be savvy with more than just travel cash. Fail to be clever about your money elsewhere and you could wipe out all the gains you've made from paying the right way.
So, whether you're chilling in Chile or roaming in Rome, there are loads of hidden tricks to save cash and ensure you're Havana great holiday.
We've a guide to help you find the cheapest flights, get free maps on your phone, find the best plane seats and more. Read the 50+ Overseas Travel Tips to make yours a happy holiday.
Hiring a car abroad? You'll probably need a credit card
Many car hire firms won't accept a debit or prepaid card when you come to pick up your car, and will instead need a credit card. As you'll usually be paying (or leaving the deposit) in the foreign currency, and this can be a substantial amount of money, a specialist overseas card is particularly good for this.
Plus don't forget travel insurance
Travel insurance is as important to your trip as getting currency, yet many go abroad without it.
A decent travel insurance policy will pay medical bills for you if you have an accident or fall ill – most countries charge for medical care, and some charge a lot. It will also cover you for cancellation, lost or stolen baggage, and for legal expenses should you get into trouble overseas.
It's a travel essential – and with prices starting from £9 for an annual policy for an individual in Europe –don't leave home without it. Check out the top policies in the Cheap Travel Insurance guide.