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Ask an expert: ‘What’s the best debit card to use overseas?’

We help a reader looking for a replacement to the valuable Norwich and Peterborough Gold account

Every week, Which?’s money experts answer your financial queries. You can submit your questions to money-letters@which.co.uk, or via our Facebook or Twitter pages.

Q. Years ago, I opened a bank account with Norwich and Peterborough Building Society for the sole reason that I could use my debit card in any country or take out cash and wouldn’t pay any fees. The building society is now closing down all of these accounts.

Are there any bank account providers that offer this facility now?

Submitted via the Which? Money Helpline.

A. When Norwich and Peterborough Building Society launched its Gold account back in 2011, offering fee-free spending and cash withdrawals all over the world, it was enormously popular – particularly with Which? members. By 2013, the building society had achieved the coveted Which? Recommended Provider status on the strength of the account.

Six years later, sadly, the Norwich and Peterborough brand is almost no more. Owned by Yorkshire Building Society, it announced that it was to close its 28 branches and, with it, customers holding current accounts would have to start looking for a new home for their money.

The truth is, hardly any current account providers allow fee-free overseas spending on debit cards. Most hit you with a ‘non-sterling transaction fee’ or ‘foreign-loading fee’ for paying for things with your debit card that isn’t in pounds and pence, while others may charge you a purchase fee. You’ll also get charged for making cash withdrawals.

The latter point is particularly pertinent. It costs card issuers money when you withdraw cash. Most pass this on – but some don’t.

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The banks that let you use your debit card for free abroad

Starling Bank is a new player in the current account market and is pretty unique – it’s a bank without any branches. You control your finances through a mobile phone application – from setting up payments to chatting to customer services.

And Starling charges you… zilch for using your debit card abroad. No cash withdrawal fees, no card spending fees. The exchange rate you get is the Mastercard rate, which is pretty close to the interbank exchange rate (the rate at which banks exchange currency).

You may get charged by the ATM owner but that’s not caused by Starling. And you get helpful notifications on your phone every time you make a withdrawal, telling you how much the transaction cost in pounds and pence and what the exchange rate was.

Metro Bank, funnily enough, is almost the opposite of Starling Bank, in that it wants to keep opening new bank branches at a time when branches are being closed at a record pace.

It’s overseas debit card deal isn’t quite as generous as Starling’s – it’s free to use in Europe but if you use it elsewhere, you’ll get charged a foreign-loading fee of 2.5% and cash withdrawal fees of £1.50.

The most expensive cards to spend abroad

It’s worth investigating a new bank that offers these benefits, as the cost of taking the wrong card away with you can be astronomical. Using the scenario of making two £50 debit card purchases and three £50 cash withdrawals, we’ve ranked all of the major banks and building societies to calculate their fees.

You can find them in our debit cards to use overseas guide, but the worst offenders – TSB, Bank of Scotland and Lloyds Bank – are listed below.

Provider Network Foreign-loading fee Purchase fee Cash withdrawal fee Total cost in our scenario
Bank of Scotland Visa 2.99% £1.00 1.50% or £2.00 min, £4.50 max £15.48
Lloyds Bank Visa 2.99% £1.00 1.50% or £2.00 min, £4.50 max £15.48
TSB Visa 2.99% £1.00 1.50% or £2.00 min, £4.50 max £15.48

Alternatives to debit cards

If you want to take something that looks and smells like a debit card – but isn’t one – there are two sterling prepaid cards that offer fee-free spending abroad.

Revolut and Monzo are similar to Starling, as they are operated through a mobile app. But they are not current accounts (although Monzo has one on the way) – you load money onto them and can use them to spend abroad. Like Starling, they ping you with notifications to tell you whenever you’ve spent money on the cards.

You can find out more about Monzo, Revolut and Starling in our mobile banks guide.

It’s worth knowing that Revolut limits cash withdrawals to £200 per month, and charges 2% over that. You could upgrade to its Premium card, which allows you to double the amount you can withdraw, but it costs £6.99 a month.

Monzo currently charges nothing for purchases and withdrawals – but that won’t last forever. This week, it revealed that it was planning to introduce charges for taking cash out of an ATM outside of the UK.

Credit cards for overseas use

The other advantage that Starling Bank has is that when you apply for an account, you don’t go through a hard credit check (which leaves a record on your file).

But if you were happy to apply for credit, there are a handful of credit cards that don’t charge you when you spend abroad or withdraw cash.

Barclaycard’s Platinum Travel Credit Card, Halifax’s Clarity card and Creation’s Everyday card levy no foreign usage or cash withdrawals fees. Many others won’t charge you for spending on plastic, but will levy a fee for withdrawals.

Find out more about fee-free credit cards.

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