First Direct scraps fees for spending abroad on debit cards – how does it compare?

First Direct has scrapped foreign fees on its debit card making it a good option for spending abroad. 

Most banks charge 2% to 3% in conversion fees on every transaction you make in foreign currency. You'll also usually get charged an additional fee if you withdraw money from an ATM.  

The change means First Direct could be a hassle-free way to spend money on your holiday. But how does it compare to other debit cards? And is there a better way to pay?

What's changing for First Direct customers?

The digital bank will remove the following fees for existing and new customers from its debit card. 

Non-sterling transaction fee Previously, customers were charged 2.75% for converting the local currency, which applies every time you use your card to pay for purchases and withdraw cash. Now you'll be charged no fees and get the Mastercard exchange rate. 

Non-sterling cash withdrawal fee Previously, customers were charged an additional 2% fee (£1.75 minimum, £5 maximum) for withdrawing cash from an ATM. Now you'll be able to withdraw up to £500 a day with no fees. 

The change means that you won’t be charged extra to use your debit card overseas and when making a purchase in the UK with a non-UK company. 

You won’t need to apply for this change as it will happen automatically. 

However, you’ll still be charged fees of up to 2.99% if you use your First Direct credit card abroad, so it may be worth taking out a travel credit card instead.  

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Is First Direct a good provider?

First Direct is a Which? Recommended Provider from our latest banking survey.

Nearly every aspect of its service was rated the full five stars by customers, including online banking, complaints handling and overall customer service.

Our analysts were also impressed with the provider's 1st Account. It offers a £250 interest-free overdraft (subject to status), has no monthly fees and has a linked Regular Saver account which pays 7% AER.

At the moment, First Direct is offering £175 to switch to its current account.

You must use the Current Account Switch Service to switch, deposit £1,000 within three months of opening the current account and you can't have been an HSBC current account holder on or after 1 January 2020. The bonus will be paid into your account within 28 days.

• Find out more: best and worst banks 

How does First Direct's debit card compare?

If you’re keen to use a debit card abroad, here are the best providers that don't charge fees on foreign purchases.

To find out about other current accounts that offer fee-free spending abroad, see our best debit cards to use abroad guide. 

Starling Bank current account 

Starling Bank is a Which? Recommended Provider, with customers rating its mobile app highly. 

The account is free – when you're spending abroad it uses the Mastercard exchange rate and doesn’t charge for ATM withdrawals. 

You can withdraw up to £300 a day. 

Monzo Bank current account 

Monzo's free current account doesn't charge any fees for spending abroad and uses the Mastercard exchange rate.

You can withdraw up to £250 in Europe (£200 outside Europe) every 30 days fee-free – withdrawals of more than this amount are charged at 3%.

Chase current account

This free account also uses the Mastercard exchange rate and you can withdraw up to £500 a day from cash machines abroad. 

There is a £1,500 limit on cash withdrawals for each calendar month. 

With the account, you also get 1% cashback on everyday purchases at home and abroad for the first year. 

• Find out more: best debit cards to use abroad  

Other options for foreign spending 

Besides a fee-free debit card, you could also consider a travel credit card or prepaid card.

Travel credit cards 

Credit cards come in handy on holiday, particularly if your hotel or car-hire firm asks to temporarily hold a specific amount of the available balance upon booking. 

You'll have added protection with a credit card as you're covered by Section 75, which means purchases of £100 or more have extra protection and you should be able to get your money back if something goes wrong. 

Some cards also allow you to earn rewards on your spending – just remember to pay off your balance in full every month to avoid paying interest. 

Top travel credit cards with no fees when spending abroad include the HalifaxClarity card and Barclaycard Rewards Visa (which also pays 0.25% cashback).

Both of these credit cards are Which? Best Buys, so they're the top cards for their category and customers of the brand rate them highly.

Read our best credit card deals 2023  to find out which other cards made the grade. 

• Find out more: best travel credit cards  

Prepaid cards

Prepaid cards can be easier to apply for than a new credit card, as there’s no need for a credit check. 

Loading up a set amount of money can also help you stick to a budget. 

However, there are several drawbacks to factor in. There may be an application fee (often £5 to £10) and some cards then charge £2 to £5 a month. 

There may also be minimum top-up requirements, which isn’t ideal if you only want to load a small sum to see you through the final days of your trip, for instance. 

If you’re keen to use a prepaid currency card, opt for one with the lowest fees and check sterling card options.

• Find out more: prepaid travel money cards reviewed   

Which? travel advice 

If you’re heading on holiday this summer, we’ve got loads of advice to help prepare you for your trip. 

For spending, we’ve rated best travel credit cards  , as well as best debit cards to use abroad   and have tips on buying travel money. 

If you need travel insurance, read our best and worst travel insurance guide to compare policies and find out the most common travel insurance claims , and how to challenge them.