Taking money abroad was once a simple matter of stuffing your drachmas or pesetas into the socks at the bottom of your rucksack. In today’s more complex world, there are numerous ways to carry cash overseas, each with its own hidden costs, charges and other unexpected hikes to your post-holiday bill.
A survey last year by travel money provider FairFX found that while most people (around seven in ten) still prefer to use real money on holiday, almost three in ten just pack their plastic, intending to use it in the same way they do at home.
While this may be convenient, it could prove a costly mistake. Most banks will charge travellers cash withdrawal fees of around 2 to 2.5 per cent, plus an exchange rate loading fee, typically around 2.75 per cent. In other words, taking out £100 to spend could end up costing you £105.25. And as the loading fee isn’t shown on statements, you might not even be aware you have paid it.
In addition, with most cards, you will pay interest from the day you withdraw the cash, so you will still be charged extra, even if you intend to pay off your bill in full.
Using your debit card could involve a triple whammy. As well as a loading and withdrawal fee, cards from some top institutions, including NatWest, Halifax and Santander, also charge a penalty of between £1 and £1.50 every time you use them away from home.
So if you do intend to make frequent use of your plastic while overseas, it is worth having a card specifically for the purpose, such as the Halifax Clarity Card. This has a flat rate of 12.9% and no loading or withdrawal fee.
However, if you don’t want to add another card to your collection, the best way to save is to use your plastic sparingly and make fewer large withdrawals rather than a number of smaller ones.
Pre-paid cards for overseas use
In the 20th century, travellers’ cheques were considered the safest way to take money to foreign climes. They are still available today, and are still more secure than cash, but most come with commission fees and you are likely to face an additional charge when using them abroad.
The newest payment methods are pre-paid credit cards designed for foreign use, which are basically the electronic version of travellers’ cheques. You simply load the card with your holiday funds before you leave, and – as with travellers’ cheques – if the card is lost or stolen, the money will be refunded.
Unfortunately, charges on these travel money cards can also vary. Look out for application and cash withdrawal fees, and the cost of topping up the card should you run out of cash.
Among the top cards are the FairFX Anywhere Card, which is free to top up but has an ATM cash withdrawal fee of 1.50 Euros plus a £9.95 application fee, and the CaxtonFX card, which has no fees but a slightly poorer exchange rate. Both are free to top up online, using your debit card.
If none of these appeal, you could always go retro and stuff your wallet with real euros. But even this has its pitfalls. Beware of tempting zero per cent commission deals, as additional charges may be hidden in the exchange rate.
And don’t leave it until you reach the airport bureau de change, where the notoriously bad exchange rates are likely to leave you out of pocket before you’ve even left the country.