The cheapest way to spend money abroad

When spending money with a card abroad, what is the best way to pay?

Cost-effective spending overseas can be tricky to navigate. But there’s no reason to pay expensive foreign transaction fees abroad, nor to be charged a premium when you’re using cash.

It’s true that many high street banks, including Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander, still charge these fees on their current accounts. 

But digital banks such as First Direct and Starling let you use your card abroad for free. That adds up to around £15 saved every time you spend £500 on holiday. 

Crucially, all the cards featured in our guide to the best debit cards for spending abroad, below, are free-to-use current accounts. You can open all of them in an app, or in-store in the case of Virgin Money’s M Account. 

Should I open a separate bank account for travel and holidays?

This might be right for you if you’re happy with your current bank, but it charges fees for using your card overseas. In this case, you could open a second current account specifically for spending abroad. 

You don’t need to worry about this impacting your credit score, as opening another current account without an overdraft only involves a soft search. However, you may want to consider switching. Many of the accounts with fee-free spending abroad are from providers that top our survey of the best banks. 

First Direct has been a Which? Recommended Provider (WRP) for current accounts for more than a decade, and Starling Bank has been a WRP for five years. If you’re thinking of switching providers, make sure to look out for cash incentives.

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Best travel debit cards in 2025

Lots of banks charge fees for spending with your card abroad. Unless you have a fee-free card, these can quickly add up to an expensive mistake. For example, for purchases, you’ll usually pay a non-sterling transaction fee for converting the local currency every time you pay for something with your card.

• For purchases The worst debit cards also add a non-sterling purchase fee, which is often fixed (for example, £1.75), but sometimes it's a percentage of what you spend.
• For cash withdrawals Some banks charge a fee for withdrawing cash. At foreign cash machines, you will usually pay both of the above, and sometimes additional cashpoint fees, depending on the brand.

Fee-free debit cards

We’ve reviewed the best bank accounts for spending overseas — choose one of our top picks and you’ll get a debit card that’s travel-friendly and cost-effective to use outside the UK.

When we looked, we found 13 bank accounts that are truly fee-free to use abroad. 

Starling Bank and First Direct were joint winners, with a customer score of 83%. Both are popular accounts with travellers because they're fee-free for all purchases and cash withdrawals, with no nasty surprises. Both are Which? Recommended Providers. 

Read our full guides to find the best debit cards to use abroad – and the worst – according to our latest research.

Best travel credit cards

If you’re planning to shop abroad, especially if you're making larger purchases, consider a credit card with no foreign transaction fees. That’s because you’ll enjoy Section 75 protection under the Consumer Credit Act.

The legislation means that if you spend between £100 and £30,000 and something goes wrong, you can claim a refund from your credit card provider if the retailer won’t resolve it. For example, if you book a hotel that goes out of business before your stay, Section 75 has you covered (as long as the cost is between £100 and £30,000). It’s essential protection. 

Don’t withdraw cash, even with a card that doesn’t have fees, as you'll typically incur interest straight away and sometimes at a higher rate. Plus, there’s a small risk of harming your credit rating. And avoid borrowing if there's no 0% period, to prevent interest charges from mounting. 

When we checked, we found three travel credit cards that don’t charge foreign transaction or cash withdrawal fees. We made two of those Best Buys: the Halifax Clarity Credit Card Visa and Barclaycard Reward Visa, which both got a customer score of 72% and offer 0% fees.

Whichever card you use, make sure you spend in the local currency to avoid wasting money on costly conversion rates – scroll down to learn more.

Read more about these options – including their representative APR – in our guide to the best travel credit cards. 

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a credit card provider before committing to any financial products.

What about a packaged bank account for abroad?

This may be a worthwhile option, but only if you think you’ll make the most of the benefits.

What are they?

Packaged bank accounts – current accounts with added benefits – sometimes offer fee-free spending overseas alongside other useful benefits for travellers.

For example, Nationwide’s FlexPlus has fee-free spending abroad. It also includes travel insurance (which we’ve rated a Best Buy), European breakdown assistance and worldwide mobile phone insurance. The account costs £18 a month, but that might offer good value if you would otherwise pay to buy those elements separately.

If you find an account with benefits that suit you, check our guide to the best packaged bank accounts to make sure it measures up against other options.

Why you shouldn’t use your reward credit card abroad

The potential of earning points with an air miles credit card when splashing out on holiday is tempting; however, they should be left at home when you jet off. 

Cards that offer air miles points from American Express, Barclays and Virgin Money all charge a 2.99% foreign transaction fee at the time we checked. This means if you were to spend £500 abroad, you'd incur £14.95 in fees. It’s best to stick to booking holidays with these payment options.

The Barclaycard Reward credit card was our top fee-free choice. Even though its APR is higher than the Halifax Clarity credit card in our table, it doesn’t charge you interest for cash withdrawals on the date of the transaction, as long as you pay your balance in full by the due date.

Read more about the best cashback and reward credit cards.

Is it worth getting a prepaid travel card?

Only in two situations: if you have a poor credit score and can’t apply for a new travel credit card, or if you don’t wish to open a new bank account catering to spending overseas.

This is because generally, the best travel debit and credit cards allow fee-free and low-fee spending, respectively. So if you have a decent travel debit or credit card, an additional prepaid travel card isn’t necessary. It could also cost you extra – almost all prepaid travel cards currently come with a variety of fees and charges, such as application fees, top-up fees, withdrawal fees and even redemption fees to get unused currency back.

But if you can’t or don’t want to use a travel debit or credit card, a prepaid card might be your next-best option. 

Check our guide to the best prepaid travel cards to find out which. 

It’s important to know the difference between the two types available. One might suit your needs better than the other, depending on your itinerary or budget.

• Multi-currency prepaid cards These allow you to load several currencies onto one card and store them in a fixed wallet, locking in a competitive exchange rate.
• Sterling prepaid cards You load these with pounds and can spend in dozens of currencies. This option is more flexible, but can make it harder to forecast how much money you’ll have available, as the exchange rate isn’t locked in and instead depends on the day.

Why you should never pay in pounds

Increasingly, when you're paying at a restaurant or shop, or withdrawing cash from a cash machine, you’ll get the option to pay in the local currency or in pounds. Whatever card you use, always choose to pay in the local currency.

Paying in pounds might seem more convenient, but it means the retailer sets the exchange rate, usually at a worse rate than your card provider would charge. NatWest found that one accommodation provider in Spain charged up to 13% more when customers paid in pounds instead of euros. On a €500 stay, that could mean paying more than £50 more, simply because of the choice of currency you pay with. 

Opting for the local currency means the exchange rate is set by your card network, such as Mastercard or Visa. These rates are usually far more competitive, helping your money go further. 

To find out which card network is the most competitive, we analysed five weeks of exchange-rate data, comparing how much it would cost to spend €1,000, $1,000 or ¥100,000 (Japanese yen) using Mastercard, Revolut and Visa.

Is it worth using Revolut abroad?

When we compared Revolut exchange rates with Mastercard and Visa, Revolut consistently offered the best exchange rates when converting €1,000, $1,000 or ¥100,000 into pounds. The savings ranged from as little as 82p to more than £14, with Revolut typically being £2 to £6 cheaper than Mastercard and Visa. 

However, there are many caveats. On Revolut’s free plan, you can only exchange the equivalent of £1,000 a month before a 1% fee kicks in. A 1% fee also applies to currency exchanges made over the weekend. Ultimately, while Revolut often offers better exchange rates than the major payment networks, we think the conditions for accessing those rates, such as monthly limits and weekend fees, make it more hassle than it’s worth. 

Nor is Revolut yet a fully licensed UK bank, although it's expected to be soon. For consumers this means you aren’t protected by the Financial Services Compensation Scheme (FSCS), which covers deposits of up to £85,000 per person, per institution, if a provider goes bankrupt. Revolut is currently in a period of ‘mobilisation’, during which it's updating its systems and processes in preparation for gaining UK banking status.

What is the best way to use cash overseas?

Cash is still the most common way to pay in many Eurozone countries, according to research from the European Central Bank. But habits vary. In Belgium, Finland and the Netherlands, card payments are far more popular – only 22% of point-of-sale transactions in the Netherlands are with cash. In Malta, that's as high as 67%, and even in Portugal and Spain, cash is used in more than 50% of transactions.

Outside Europe, research from the World Bank highlights the importance of taking local currency when travelling. In Egypt and India, fewer than 30% of people have a credit or debit card.

Where to bring euros

What’s the cheapest way to take out cash abroad?

Tips for avoiding fees:

• Think ahead. By withdrawing all the cash you’ll need in a single go, you’ll reduce cash machine fees.
• If you’re taking out cash, avoid using banks offering free plans, such as Revolut. They place restrictions on the number of fee-free withdrawals you can make.
• Use a cash machine attached to a high street bank, rather than standalone machines that can often charge extra premiums on withdrawals.
• Choose the card wisely – go for a debit card or prepaid travel card to limit fees.
• When paying in restaurants or shops, opt to pay in local currency, rather than accepting conversions.

Tipping etiquette: factor tipping abroad into your budget

Even the most experienced travellers can be tripped up by knowing how much to offer waiters, hotel staff, taxi drivers and tour guides on holiday.

Tipping etiquette differs all over the world. If you say ‘thank you’ before getting your change in a restaurant in Poland, the wait staff might assume that the rest is a tip. But trying to tip in Japan could lead to crossed wires – as it isn’t really customary there, particularly outside of big cities. 

Navigate your next holiday with our county-by-country guide to tipping abroad, from taxis to hotel staff, tour guides to waiters. We’ve also included tips to help you save, such as tipping before tax, and always in cash. 

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