How to make your cash go further abroad, from using local currency to making use of promotions



Many of us will be heading on holiday or have plans to go abroad soon – some for the first time since the pandemic.

However, with the rising cost of living, many will be worried about spending on their trip, research has revealed.

The average Briton is taking £330 in spending cash abroad with them this year, but two thirds (58 per cent) are worried that it won’t be sufficient as the rising budgets are squeezed, according to Sainsbury’s Bank.

But there are ways to keep costs low when travelling overseas.

In a bid to help ease holiday-makers’ stresses, here i reveals some top travel money tips in an effort to help you make your budget go further, as recommended by experts.

Track currency and lock in rates

UK-based money transfer and currency exchange provider FairFx advises travellers to set up a currency tracker so they can keep a close eye on movements and buy at the optimum time. This means you will be able to buy at the best time before rates rise.

If you’re happy with the current rate on offer, buy now to guarantee that rate for your future holiday. Inline with planning ahead, you can also load a prepaid currency card in advance to lock in rates and protect yourself from any potential future decline.

Simon Taylor, director of Travel Money at Sainsbury’s Bank also notes that some firms will deliver currencies to your home free.

Keep an eye out for promotions

As summer approaches, Sainsbury’s Bank suggests looking out for promotions as there are “often lots of deals available for keen-eyed travellers looking to exchange currencies at the best rate”.

It may be worth checking once a week in the lead up to your holiday to see which outlet is offering the best deals.

Hidden costs – 0 per cent commission might not be all it seems

Travel debit card provider Currensea says if it sounds too good to be true, it probably is. There are two ways for foreign currency exchange providers to make a profit: via commission or adding costs into the exchange rate.

Zero per cent commission might sound like a great deal but many providers waive commission because they know they can bake a bigger profit into their exchange rate instead.

Research conducted by Currensea revealed that nearly a quarter (22 per cent) of people wrongly believe that zero per cent commission means you get the best rate possible.

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Avoid exchanging money at the airport

While it may seem convenient to exchange your holiday money at the airport, Currensea says that sometimes fees of up to 30 per cent can be imposed, plus extortionate service fees levied on top.

For every £500 you exchange, you could lose £150 in fees, slashing your holiday budget before you’ve even boarded the plane.

Don’t get hit by overseas ATM charges

For many people, cash is still king when spending overseas. However, if they run out of cash they also risk facing high fees from withdrawing cash from overseas ATMs. While it’s likely to be cheaper than exchanging cash at the airport, when withdrawing cash from a foreign ATM, Currensea notes that some ATM providers even charge around £5 extra for every transaction.

FairFX recommends using a specialist currency card or a card designed for overseas spending.

For example, FairFX Currency Card is free to use in shops and restaurants, while there’s a £1 fee for ATM withdrawals, meanwhile, Currensea, is a travel debit card that allows people to spend directly from their existing current account when abroad – without the need to set up a new account or apply for a travel credit card.

Always pay in the local currency when abroad

It might seem simpler or easier to budget by opting to pay in pounds but you’re likely to face a much more expensive exchange rate. When given the option of paying – or withdrawing cash – in pounds rather than the local currency, always say no. Currency highlights that otherwise the merchant gets to decide the exchange rate and “you’re likely to lose out”.

A FairFX investigation found that unsuspecting holidaymakers collectively paid out £881m in currency conversion fees according to data from 2019.

Another study by Currensea highlighted a lack of awareness among travellers, with more than half (55 per cent) of people still unaware that choosing to pay in Sterling when overseas can result in a much worse rate.

Set a realistic budget

Research from Sainsbury’s Bank shows that a third of Brit’s confessed to running out of money on day five of their trip, leaving holiday makers having to draw out cash while away, which could incur fees when using either a debit or credit card.

To avoid these unnecessary costs, experts recommend taking enough money to see you through the whole trip, not just the first few days.

Using a pre-paid card? Don’t forget about your unspent savings

Almost 8 million UK adults continue to use pre-paid travel cards for their overseas spending, but Currensea warns the fees are actually higher than using bank cards “plus you have the inconvenience of topping up before you travel”.

The company says that UK travellers are returning from their holidays with a staggering £438m still sitting on their pre-paid cards, and face additional fees and poor rates to withdraw the leftover amount – and many totally forget as soon as they’re back in the UK.

Researchers found that, on average, £55 remains unspent on pre-paid travel cards, with the figure rising to £96 for more frequent travellers.

Raid the coin pots

Before heading abroad, Sainsbury’s Bank recommends raiding any loose change pots and dig through old wallets and bags to find any foreign currency that might be left over from last time – even check down the back of the sofa.

While you might not find enough to cover the cost of your holiday, you might be able to bag yourself some extra ice creams with the found coinage.

Best credit and debit cards to use abroad

Top credit cards for new cardholders

Barclaycard Rewards Visa: This is a top pick as it charges no fees or interest on spending and overseas cash withdrawals, provided you repay in full. There are also several perks, including 0.25 per cent cashback on almost all spending and five months free access to Apple Music, Apple Arcade, Apple News+ and/or Apple TV+.

Importantly, there are no fees on spending or ATM withdrawals overseas and no interest on cash withdrawals if paid in full.

There is a 23.9 per cent representative APR.

Halifax Clarity Mastercard: The Halifax Clarity has no fees on overseas spending and low ATM interest. Customers will also not get charged interest on spending abroad, as long as you repay in full, but you will if you make cash withdrawals – so try to minimise these.

Customers are charged 19.9 per cent rep APR.

Next best specialist travel credit cards

Here are quick details of decent alternatives.

118 118 Money Mastercard for poorer credit scorers

– No fees on spending or ATM withdrawals overseas

– No interest on cash withdrawals if paid in full

– 34 per cent rep APR if not paid in full        

The NatWest Credit Card Mastercard

For existing NatWest customers only – No fees on overseas spending, 3 per cent fee (min £3) on ATM withdrawals

– 26.9 per cent to 29.9 per cent interest on cash withdrawals, charged daily until it’s paid off

– 12.9 per cent rep APR        

Virgin Money Mastercard      

– No fees on overseas spending, 3 per cent fee on ATM withdrawals

– 27.9 per cent interest on cash withdrawals, charged daily until it’s paid off

– 21.9 per cent rep APR

Zopa Credit Card Visa           

– No fees on overseas spending, £3 fee on ATM withdrawals

– 34.9 per cent interest on cash withdrawals, charged daily until it’s paid off

– 34.9 per cent rep APR

Top travel debit cards

Chase Mastercard: Customers will get fee-free spending and cash withdrawals worldwide, plus one per cent cashback for 12 months. Unlike the credit cards above, Chase only runs a ‘soft’ credit check when you apply – so there’s no permanent mark on your credit report. However, Chase is app-only, so you’ll need an Apple iPhone or iPod touch running iOS 14.1 (or later) or a device running Android 8.1 (or later) to get it.

– No fees on spending or at ATMs

– ATM limits: £500/day, max £1,500/month overseas

Top travel debit cards: Fee-free spending and cash withdrawals anywhere in the world. Like the Chase account, Starling only does a “soft” credit check (unless you also apply for an overdraft) so if you don’t get it, there won’t be a permanent mark on your credit report.

– No fees on spending or at ATMs

– ATM limits: six per day, max £300/day

Virgin Money Mastercard: Fee-free spending and cash withdrawals worldwide, but requires ‘hard’ credit check. As an added bonus, it also pays a decent 2.02 per cent interest on credit balances up to £1,000. Newbies switching to this account can also get 20,000 Virgin points, which can be exchanged for a variety of gifts and experiences.

– No fees on spending or at ATMs

– ATM limits: £500/day

Currensea Mastercard: Currensea is a good option if you don’t want to open a whole new bank account – though its rates are slightly worse than the three above. Here you link your existing current account to Currensea’s debit card.

Then when you spend or withdraw on the Currensea card, it charges your linked current account in pounds, neatly avoiding your bank’s exchange fees. Currensea doesn’t charge ATM fees, though it does have a flat 0.5 per cent exchange fee on the interbank/Mastercard exchange rates it uses.

– No fees on spending or at ATMs

– ATM limits: £500/month

The following cards and accompanying details, as outlined and recommended by Money Saving Expert, were correct as of July 12, 2022.

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