Spending abroad - the dos and don'ts

Holidaymakers are being warned that packing the wrong card could be costly.

Totally Money, a credit report and comparison site, found that withdrawing £100 cash could cost up to £7.99 in charges. 

And costs could quickly mount up for making multiple small purchases. Spending just £5 with a card that charges fees could set you back £1.15 - an additional 23%. 

Here, Which? reveals the dos and don’ts when it comes to spending abroad to help you avoid wasting money.

DON'T pack just any bank card

You can use your regular debit card abroad to make purchases and withdraw local currency from cash machines just as you would at home (look for the Visa or Mastercard logo), but unless you have one that is free to use abroad, you'll generally be charged one or all of the following fees:

• For purchases, you'll usually pay a non-sterling transaction fee for converting the local currency, which applies every time you use your card to pay.
• The worst debit cards add a non-sterling purchase fee on top, often of fixed value (eg £1.50), but it can also be a percentage of what you spent.
• Cash withdrawals at a foreign ATM incur a non-sterling transaction fee for the conversion as well as a non-sterling cash fee (as a flat fee or a percentage).

For example, a standard TSB debit card incurs fees of 2.99% plus £1 per transaction and 1.5% for cash withdrawals (minimum £2, maximum £4.50). So making two £50 purchases and three £50 cash withdrawals would result in charges of £15.48. 

DO consider a travel debit card

Travel debit cards won’t charge any extra fees for spending abroad, including withdrawing cash, making them an attractive option on holiday.

The top four in our guide on the best debit cards to use abroad are all free to use abroad, and the providers have good customer satisfaction ratings, according to our survey of the best banks in 2024.

• Starling: This Which? Recommended Provider is popular with travellers as it has no fees on spending abroad, including cash withdrawals. However, it must be operated via a mobile-banking app, which may not be ideal for everyone. You can make up to six cash withdrawals per day, with a daily limit of £300, regardless of what currency you are withdrawing. 
• First Direct: Is another Which? Recommended Provider. It scrapped foreign transaction fees in June 2023 – previously, the bank added a 2.75% markup on both purchases and withdrawals. There is a daily cash withdrawal limit of £500 (or the foreign currency equivalent).
• Monzo: The challenger bank is another great option for holidays but it charges 3% if you withdraw more than £250 a month in the UK or European Economic Area (EEA) countries or £200 in non-EEA countries.
• Chase: The debit card by JP Morgan has no fees on purchases or withdrawals and you’ll also earn 1% cashback on your spending for the first year. You can withdraw up to £500 a day from cash machines (in the UK or abroad). If travelling abroad, there is also a £1,500 limit on cash withdrawals from your Chase current account in any calendar month.

DON'T assume your credit card has no charges

You may be tempted to bring your everyday credit card with you, too, but like your everyday debit card, there may be some hidden fees.

There are three types of charges that can be layered on when using a credit card abroad:

• Non-sterling transaction fee This is a percentage of the value of each transaction. You'll typically pay up to 2.99% each time you use a credit card.
• Non-sterling cash fee You can also expect to pay a fee of around 3% (minimum £3) when you take money out of an ATM with a credit card.
• Interest on cash withdrawals When using a credit card, you'll be charged interest on cash withdrawals straight away, which can be a lot higher than the interest you are charged for purchases.

You should also avoid taking cash out with a credit card as it might show up on your credit report, and some lenders may view this as a sign you are struggling to manage your finances.

DO shop around for a travel credit card

The best credit cards for spending abroad charge no fees.

Which? has identified three Best Buy travel credit cards. The Halifax Clarity, Barclaycard Rewards Visa, and Bip credit cards all have no foreign transaction or cash withdrawal fees, and we like that they both have below-average APRs. The Barclaycard Rewards card offers 0.25% cashback, too.

The benefit of packing a credit card rather than a debit card is that you’ll also get Section 75 protection on purchases worth over £100, which means you can ask your credit card provider for a refund if there’s an issue with what you’ve bought.

• Find out more: best travel credit cards to use abroad 

DON'T buy currency at the airport 

Always avoid the airport bureau de change.  

The last time we checked you could end up with an astonishing €115 less when changing £500 in the terminal vs the high street.

Also, avoid paying for your currency with a credit card, as you may be charged an extra fee, and remember to carry only as much cash as your travel insurance covers in case it’s lost or stolen.

• Find out more: buying travel money on the high street

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DO shop around for the best exchange rate

It’s worth comparing the deals offered by several companies before changing your money. 

Many banks and supermarkets, as well as traditional foreign exchange destinations such as Travelex and the Post Office, now offer online currency exchange services. Their best rates are often reserved for customers who order travel money from them online.

You’ll often be able to get a better deal if you don’t mind having currency delivered. If you want to collect it from the high street, order online in advance, as most providers offer better rates this way.

• Find out more: buying travel money online

DON'T rule out a prepaid card

If you want to ‘lock in’ an exchange rate before you go, but you don’t want to use cash, you could use a prepaid card.

Prepaid cards can be easier to apply for than a new debit or credit card, as there’s no need for a credit check. They might help you budget better, and you can’t rack up debt on them.

Alternatively, Currensea provides a layer over your existing bank account that will allow you to spend in all 180 currencies without charges. It doesn't charge any non-sterling transaction fees. For personal accounts, there is a 0.5% markup on the exchange rate. ATM withdrawals are free under a limit of £500 a month. After this, a 2% fee will be applied.

• Find out more: best prepaid travel money cards

DO pay in the local currency

When using your card abroad you might be given the chance to pay or make a cash withdrawal in sterling rather than the local currency. 

Paying in pounds will mean a local bank does the conversion – not necessarily at the best rate, and often for a fee.

If you aren’t given the choice, ask the retailer why.

• Find out more: best holiday destinations in July

DON'T forget to check ATM fees

Some ATMs will add on a flat fee per transaction.  Try to swerve high-cost ATMs in places such as airports, in favour of those at local bank branches. 

If you do have to pay a flat fee, it’s worth taking out a bigger amount in one go rather than smaller amounts throughout your trip.

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