In the era of constant travel disruptions due to Covid tests, quarantine rules, and ever-changing travel lists, the desire for a summer holiday abroad remains strong. According to a recent MailOnline survey, 14 percent of Britons are determined to venture beyond the UK for a sunshine break. However, the savvy traveler knows that hidden fees on credit and debit cards can quickly turn a dream vacation into a financial headache.
The Pitfalls of Using Everyday Accounts Abroad
Before jetting off, it's crucial to scrutinize the cost of using your debit or credit card overseas. Many providers are notorious for charging hefty fees, with 3 percent or more for transactions or cash withdrawals outside the UK. A £250 cash withdrawal abroad with a typical debit card can incur an £11.88 fee, while a £50 purchase may accumulate £1.38 in additional charges. Credit cards can be even more punishing, with some slapping a £14.95 fee on cash withdrawals before interest kicks in, along with a £1.50 charge on a £50 card purchase.
The Decline in Fee-Free Options
Amid the pandemic, the landscape of fee-free options has shifted. The number of credit cards offering free foreign purchases has decreased from 21 to 15, and the availability of fee-free foreign cash withdrawals has also dropped. Major banks, including Lloyds, Fluid, and Opus, have raised their cash withdrawal fee to a staggering 5 percent.
Fee-Free Debit Cards – A Ray of Hope
For those determined to escape unnecessary fees, there's good news. The number of debit card products offering free cash withdrawals abroad has increased from 16 to 24 since the start of 2020. Well-established banks such as Starling Bank, Metro Bank, and Virgin Money offer fee-free current accounts that do not charge for using a debit card in Europe.
Top Debit Cards for International Travel
-
Starling Bank Current Account
- Monthly Cost: £0
- Transaction Cost in Europe/Worldwide: £0
- Withdrawal Fee in Europe/Worldwide: £0
-
Metro Bank Current Account
See AlsoHow to Choose the Right Debit Card - Connecticut Finance6 different types of debit card: Complete detailsSix best current accounts UK - Times Money Mentor3 banks are offering unlimited free ATM transactions across India, check details- Monthly Cost: £0
- Transaction Cost in Europe: £0
- Transaction Cost Worldwide: 2.99%
- Non-Sterling Cash Fee: £1.50
-
Virgin Money M Plus Account
- Monthly Cost: £0
- Transaction Cost in Europe/Worldwide: £0
- Withdrawal Fee in Europe/Worldwide: £0
-
TSB Spend & Save Plus
- Monthly Cost: £3
- Transaction Cost in Europe/Worldwide: £0
- Withdrawal Fee in Europe/Worldwide: £0
-
Nationwide FlexPlus
- Monthly Cost: £13
- Transaction Cost in Europe/Worldwide: £0
- Withdrawal Fee in Europe/Worldwide: £0
Navigating the Shrinking Landscape of Fee-Free Credit Cards
While fee-free debit card options are expanding, the same cannot be said for credit cards. The number of cards offering free foreign purchases has decreased, making it challenging for travelers to find cost-effective solutions.
Best Credit Cards for International Travel
-
Halifax Clarity Credit Card Mastercard
- Cash Withdrawal Fee: 0%
- Foreign Usage Transaction Fee (Europe/Worldwide): 0%
- Purchase APR: 19.9%
- Interest on Cash Withdrawals: 19.9%
-
Barclaycard Rewards Visa
- Cash Withdrawal Fee: 0%
- Foreign Usage Transaction Fee (Europe/Worldwide): 0%
- Purchase APR: 22.9%
- Interest on Cash Withdrawals: 22.9%
-
118 118 Money Guaranteed Rate Card Mastercard
- Cash Withdrawal Fee: 0%
- Foreign Usage Transaction Fee (Europe/Worldwide): 0%
- Purchase APR: 34.9%
- Interest on Cash Withdrawals: 34.9%
-
Zopa Credit Card Visa
- Cash Withdrawal Fee: £3.00
- Foreign Usage Transaction Fee: 0%
- Purchase APR: 34.9%
- Interest on Cash Withdrawals: 34.9%
-
Virgin Money Travel Credit Card Mastercard
- Cash Withdrawal Fee: 3.00%
- Foreign Usage Transaction Fee: 0%
- Purchase APR: 21.9%
- Interest on Cash Withdrawals: 27.9%
-
Santander All in One Credit Card Mastercard
- Cash Withdrawal Fee: 3.00% / £3.00
- Foreign Usage Transaction Fee: 0%
- Purchase APR: 23.7%
- Interest on Cash Withdrawals: 29.9%
Credit vs. Debit: Making the Right Choice
When it comes to choosing between credit and debit cards for international travel, each has its advantages. Credit cards offer superior protection under Section 75 of the Consumer Credit Act, making them ideal for purchases between £100 and £30,000. However, cash withdrawals using credit cards often incur high fees and may appear on credit files.
On the other hand, fee-free debit cards are a better option for cash withdrawals abroad. They provide convenience without the hefty charges associated with credit cards. Switching to a bank offering fee-free debit card options, such as Starling Bank, Metro Bank, or Virgin Money, can be a wise choice for frequent travelers looking to avoid unnecessary expenses.
Additional Features to Consider
Beyond fee structures, some credit cards offer commission-free currency conversion. This feature can be advantageous for those anticipating overseas expenses or holding multiple credit cards. Non-high-street issuers like Aqua, 118 118 Money, or Zopa specialize in travel credit cards, catering to individuals with lower credit scores.
The Final Word: Currency Exchange and Local Payments
While the focus is often on cards, the method of currency exchange should not be overlooked. Exchanging cash before traveling can provide peace of mind, but securing a favorable exchange rate is crucial. Comparison sites like Money.co.uk, Compareholidaymoney.com, and travelmoneymax.com can help find the best deals, ensuring your money goes further.
When paying for purchases or withdrawing money abroad, opting to be billed in the local currency is essential. This ensures favorable currency conversion terms from your bank, avoiding potentially unfavorable rates from merchants.
In conclusion, whether you choose a credit or debit card for international travel, thorough research and strategic decision-making can lead to a more cost-effective and enjoyable travel experience. Consider your spending habits, potential fees, and additional features before making the right choice for your financial and travel needs. Safe travels!
