Flights and hotels might be your starting point when planning a holiday, but spare a thought for your spending money – using your everyday card could add a hefty bill to your trip. So what’s the cheapest way to spend abroad?
Which? research found that spending £500 overseas can cost as much as £38 using a debit or credit card from major high street banks such as HSBC,Lloyds, Santander and TSB.
Card providers are allowed to slap on a variety of fees depending on the type of transaction and costs can really rack up – especially for multiple transactions or withdrawals.
Here we pick out the cheapest credit, debit and prepaid cards for overseas spending and expose the worst.
The cost of using the wrong debit card abroad
Using a debit card abroad makes sense if you want to spend money you have – rather than borrow – and avoid paying interest.
But debit cards are one of the worst ways to spend abroad, as current account providers can hit you with up to three different fees.
Your bank can charge a non-sterling transaction fee and a non-sterling purchase fee on card spending. Withdrawing cash from an ATM abroad, meanwhile, will usually incur a non-sterling transaction fee plus a non-sterling cash fee.
Which? found that Santander, which offers the popular 123 Current Account, had the most expensive debit card to take abroad in our scenario. It charges 2.75% plus a flat £1.25 fee on card spending. Or 2.75% plus a 1.5% fee on overseas cash withdrawals (unless in Spain).
For someone making five £10 card transactions, 10 x £20 card transactions, withdrawing £100 twice and £50 once, in a European country (apart from Spain), these fees would result in charges amounting to £38.
The best debit cards to use abroad
If you’re looking for a cheaper debit card option, the challenger banks have attractive offers compared to the high street.
Starling Bank offers an app-only current account with a debit card that charges zero fees when you spend or take out cash abroad.
Monzo is another app-only bank that offers fee-free spending overseas but has a cap of £200 on overseas cash withdrawals each month, with a 3% charge after that.
Alternatively, there’s Metro Bank. It doesn’t charge any fees on transactions or cash withdrawals in Europe. You can open an account online and print your debit card instantly in a branch or ask for it to be sent through the post.
Here’s how these options stack up on for someone making five £10 transactions, 10 x £20 transactions and withdrawing £100 twice and £50 once, in any European country.
|Overseas card spending||Overseas cash withdrawals||Total cost on £500 spend in Europe (a)|
|Non-sterling transaction fee||Non-sterling purchase fee||Non-sterling transaction fee||Non-sterling cash fee|
|Starling Bank Current Account||0%||£0||0%||£0||£0|
|Metro Bank Current Account||0% ( 2.75% outside Europe)||£0||0% ( 2.75% outside Europe)||£0 (£1.50 outside Europe)||£0|
|Monzo Current Account||0%||£0||0% (3% if over £200 in 30 days)||£0||£1.50|
a Five £10 card transactions, 10 x £20 card transactions, two £100 cash withdrawals and one £50 cash withdrawal
It’s worth mentioning that NatWest recently announced it will be waiving fees for 2.1 million customers using their debit cards abroad this summer, so that they’ll no longer have to pay a 2.75% non-sterling transaction fee (minimum £1) on card transactions.
But there will still be a fee on cash withdrawals amounting to 2% (min £2 max £5) plus a non-sterling transaction fee of 2.75%. As the offer is only available until the of August, it’s not really worth switching.
- Find out more: The best debit cards to use abroad
Why take a credit card abroad?
You might prefer to take a credit card abroad to help spread the cost of your holiday and to get extra shopping protection through Section 75 legislation.
It’s also a good alternative to opening a whole new current account just for overseas spending that you might only use once or twice a year.
However, if you need cash, a credit card is rarely a great option as most providers charge interest straight away – often at a higher rate than normal purchases – and lenders may report this to credit reference agencies, which can impact your credit score.
The cost of using the wrong credit card abroad
Using the wrong credit card abroad can also see a raft of fees being piled onto your transaction.
Credit card providers can also charge a non-sterling transaction fee and a non-sterling purchase fee on card spending. While withdrawing cash from an ATM will usually incur a non-sterling transaction fee as well as interest from the moment you take the cash out.
Which? research found that HSBC applied the highest fees in our scenario. It charges credit card customers a 2.99% non-sterling transaction fee as well as a 2.99% non-sterling purchase fee on card spending. On cash withdrawals, there is a 2.99% fee (minimum £3) applied and interest ranging from 18.9% to 29.9% APR.
For someone that made five £10 transactions, 10 x £20 transactions, withdrew £100 twice and £50 once (but paid it back straightaway via a bank transfer) in Europe, the fees would result in charges amounting to £26.95.
The best credit cards to use abroad
Luckily, there are far more travel credit cards to choose from that offer great deals on overseas spending compared with debit cards.
Here are the credit cards that don’t charge any fees for overseas spending or cash withdrawals. Just watch out for the interest on cash withdrawals as this will normally kick-in straight away with the majority of cards bar one.
|Overseas card spending (a)||Overseas cash withdrawals||Total cost on £500 spend in Europe(b)|
|Non-sterling transaction fee||Non-sterling purchase fee||Non-sterling transaction fee||Cash withdrawal APR fee (c)|
|Tandem Cashback Credit Card (d)||0%||£0||0%||18.9%-24.9%||Earn £1.25|
|Barclaycard Platinum Travel Credit Card(e)||0%||£0||0%||0% (f)||£0|
|Creation Everyday Card||0%||£0||0%||12.9%-21.9%||£0|
|Santander Zero Credit Card||0%||£0||0%||18.9%||£0|
|Halifax Clarity Credit Card||0%||£0||0%||18.95%-25.95%||£0|
a Interest will be charged on purchases if you don’ t repay your bill in full unless you have a 0% purchase offer.
b Five £10 card transactions, 10 £20 card transactions, two £100 cash withdrawals and one £50 cash withdrawal.
c We’ve assumed cash withdrawals are paid back straight away via bank transfer to avoid interest charges.
d Offers 0.5% cashback on purchases above £1.
e No non-sterling transaction fees on foreign spending or ATM withdrawals until 31 August 2022.
f Pay no interest for up to 56 days as long as you pay off your balance in full each month otherwise you will pay 27.9% APR.
- For more take a look at The best travel credit cards
Why take a prepaid card abroad?
Prepaid cards can be loaded up with money and used like a debit or credit card to pay in shops but they don’t have a borrowing facility.
You can choose from currency specific options – like a euro or dollar prepaid card – or go for a sterling prepaid card which can be used for multiple currencies worldwide.
They offer a safer option to carrying cash as you can get your money back if it’s stolen, plus you don’t need to pass a credit check to get one.
However, they normally can’t be used to pay for services that need pre-authorisation like car hire.
The worst prepaid cards to take abroad
Typically the worst prepaid cards will charge a range of fees including for loading money, for cash withdrawals, replacing the card and for not using the card regularly enough.
Some may also impose fees for loading the card with money and minimum top-up amounts which may impact your budgeting while abroad.
Apart from the charges, you should also look out for the rate the prepaid card provider uses. Some use the decent Mastercard or Visa exchange rate while some will offer the perfect interbank ‘spot’ exchange rate. The most expensive providers use one of these and add a percentage as an exchange fee.
The best prepaid cards to use abroad
If you like the sound of having a prepaid card for your trip, it’s worth checking out Revolut.
The prepaid Revolut card offers perfect interbank exchange rates (apart from on weekends when currency markets close) on most currencies. You can load it in sterling and exchange in the app with up to 24 different currencies.
There are no spending fees but ATM withdrawals are limited to £100 per month and a 2% charge applies above this. There’s no up-front cost for the card but you will need to pay a £5 delivery fee.
The Easy FX and Fair FX prepaid cards are also worth considering.
Additional reporting by Sam McFaul
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.