Whether you’re going abroad, or want to buy on foreign websites, you can save £100s by using specialist travel spending cards that give you the best possible exchange rates.
This is a step by step guide to the latest best buy credit and prepaid cards, how to compare currencies with the free Travel Money Maximiser, and a crucial warning for Halifax, RBS, NatWest, Santander & Lloyds debit cardholders.
In this guide
Best Buys:
The five facts everyone should know
The right credit card is the cheapest way to spend abroad
Most cards add a 3% cost to the exchange rates banks themselves get, yet a few specialist cards don't add this 'load', meaning you get perfect exchange rates beating even the best bureau.
Pocket one just for spending overseas, though always repay IN FULL to avoid interest. See the travel credit card best buys section, which also includes prepaid cards if you don’t have a decent credit score.
Never change money at the airport.
Airports and ferry terminals tend to give the worst rates, as you’re a captive customer. If you must get it from the airport, pre-order for pick-up to get a better rate (usually possible until four hours beforehand).
Better still use the TravelMoneyMax.com travel money comparison site to find the best possible deal inc. all fees and any commission.
Debit cards can be the worst way to spend
While specialist credit cards give good rates, most don't. And while any card which charges you interest is a bad deal, some debit cards (bank account cards) actually have the worst fees – as they add up to £1.50 every time you spend.
These include Lloyds TSB, Halifax, RBS, Intelligent Finance, Santander & NatWest. Don’t spend on these abroad (see cards from hell section).
If they ask ‘Want to pay in Pounds or Euros?’, say ‘Euros’.
If you’re paying on a credit or debit card and an overseas retailer offers to let you pay in pounds, reject it. It's called dynamic currency exchange and means the shop does the conversion, usually at a worse rate than your own card.
Beware how you pay for foreign cash.
While the holiday money comparison will find you the cheapest rates, there’s another possible hidden charge at bureau de change. All credit cards and some debit cards, including Barclays, Lloyds TSB, Natwest, Santander & RBS, charge a cash withdrawal fee.
Use a different card if possible or withdraw pounds on your debit card and pay with that.
How good is your current plastic?
Use your plastic overseas and you could be hit by a thwack of hidden charges (for full details read the hidden holiday spending charges note). This includes:
- Adding a 'load' on the exchange rate so £100 of foreign currency actually costs you £103
- Cash withdrawal fees on both credit and debit cards
- Interest charges even if you pay off in full
- Some even charge a penalty each time you spend.
The overall best cards are detailed below, first find out how much cards already in your arsenal charge abroad - as you may not need to switch, or have time to apply before your hols.
To help, we've built a quick checker to find out what you'll pay when using any cards in your wallet abroad
If you think any extra cards should be added to the tool, please email us and we'll see what we can do.
Avoid the DEBIT cards from hell
While the right card is absolutely the best way to spend abroad, the wrong one is absolutely the worst way.
Use most plastic overseas and you could be hit by a thwack of hidden charges. This includes a load on the exchange rate so £100 of foreign currency costs you £103; cash withdrawal fees on both credit and debit cards; as well interest charges even if you pay off in full. More info: Read the full hidden holiday spending charges note.
These are bad enough, yet six specific debit cards have yet another fee, so they're the cards from hell. Let's make this plain – do not use the following cards for spending overseas; any of the methods above beat them.
There's also another way for credit cards to become payment methods from hell...
Any credit card which you’re not paying off in full is a nightmare and will cost you serious cash.
If you can’t pay it off in full, choose based on the lowest interest rate for spending, not the cheapest overseas card.
The top cards for overseas spending
The below credit cards avoid most hidden charges and push themselves as specialist overseas plastic, hoping you’ll also use them in the UK where they’re not so competitive. Simply get one only for overseas spending and you beat the system (see Martin's Overseas Wallet blog).
However, even on these cards there's a trap, so always follow the golden rule.
Set up a Direct Debit to repay in full every month,
or the interest charges dwarf the cheap currency gains.
On these cards, it's far cheaper to spend on them than withdraw cash and spend it.
Halifax ClarityWorldwide 0% load & no cash withdrawal fee
- Loading (exchange rate fee) Europe: 0% | Worldwide: 0%
- Cash withdrawals Fee: FREE | Interest: Yes even if repaid in full
- Representative APRs Spending: 12.9% | Cash: 12.9% (see official rate example)
- Card Issuer Mastercard
The Clarity card from Halifax has no foreign exchange fee anywhere in the world, so you can get the best rate possible. Plus it doesn't charge a fee for cash withdrawals, although you will be charged interest even if you repay in full.
Overall best card worldwide as gives 'perfect' exchange rate and little other fee
The rate for cash withdrawals is a fairly low 12.9% representative variable APR (if you don't get this rate you'll be charged up to 21.9%). This works out as around £1 per month for every £100 withdrawn.
As an additional bonus, if you have a Halifax Reward current account and you apply for the Reward Clarity, in branch or by phone, you'll get £5 each month you spend over £300 in the UK or abroad the credit card (ensure you repay in full every month). Read the Best Bank Accounts guide for how it measures up.
For those who already have one of the cards below it's probably not worth switching away to this one as they're nearly as good. Or if you already have a Halifax card you may want an alternative
| Cost of £100 worth of.. | Spending | Cash withdrawals | Total |
|---|---|---|---|
| Worldwide | £0 | £1/month | £1 |
| These nearly match Halifax Clarity, so if you have one it's probably not worth switching | |||||
|---|---|---|---|---|---|
| |
Post Office* | Saga* | Nationwide (pre Feb 22 2011) |
||
| Load Europe | None |
None |
None |
None |
|
| Load Worldwide | None |
None |
None |
1% |
|
| Spending Fee | None |
None |
None |
None |
|
| Cash w/d fee | £3 or 2.5% |
£2 or 2% |
None |
£3 or 2.5% |
|
| Cash w/d interest (fully repaid) | 24.1% |
No |
27.9% |
27.9% |
|
| Rep APR (if not repaid) | 16.9% |
11.9% |
18.9% |
16.9% |
|
| Notes | |
Over 50s only |
Existing custs only (except in branch) £10 dormancy fee (never been charged) |
Newer Nationwide card nowhere near as good |
|
Sainsbury's Gold Includes travel insurance, but £5 a month
- Loading (exchange rate fee) Europe: 0% | Worldwide: 0%
- Cash withdrawals Fee: FREE | Interest: No, not if repaid in full
- Representative APRs Spending: 20.1% | Cash: 24.9% (see official rate example)
- Card Issuer Mastercard
The Sainsburys Gold* card charges no fees whatsoever for overseas spending, and gives you worldwide family travel insurance, but you have to pay a £5/month fee to get it.
Fees-free abroad plus annual worldwide family travel insurance included, but costs £60 per year.
It has a 0% load worldwide - meaning it gives a perfect exchange rate - no cash withdrawal fees and doesn't charge interest on cash if paid off in full each month, beating even Halifax for pure rate.
The travel insurance covers two adults under 65 and up to six children worldwide, including up to 17 days of winter sports per year. See how this compares in the Travel Insurance guide.
This is a good option if you'll use the additional perks. You can cancel at any time and only pay the fee for months you've used - though remember like all cards you will be credit scored.
| Cost of £100 worth of.. | Spending | Cash withdrawals | Total |
|---|---|---|---|
| Worldwide | £0 | £0 | £0 - but £5/month fee |
Think before adding the 'insurance'
Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).
There have been a myriad of cases where it has been missold eg, borrowers didn't realise they were signing up for it, or it was totally unsuitable for them, and some big lenders have been fined.
The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.
Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.
Do you want a debit card instead?
If you can't get a credit card due to a weaker credit rating, or would prefer a bank account with a debit card to spend on abroad, you have a few options:
-
Norwich & Peterborough BS has changed its current account range, for both new and existing customers, to have 0% overseas spending fees and no cash withdrawal fee worldwide. However to avoid all charges you must meet some requirements...
- Gold Classic
The Gold Classic card charges a £5 fee unless you pay in £500 per month (approx £6,100 salary). There's also a £5 monthly fee if you go into your authorised overdraft by more than £10.
- Gold Light
The Gold Light card charges £5 if you make fewer than five transactions a month. There's no authorised overdraft for new customers, so ensure you don't spend more than you have in the account or you'll be hit with some big fees.
- Gold Classic
- Santander Zero. If you have a Santander savings account with over £10,000 in, or a mortgage or investment product with it, you could apply for the Santander Zero* account, and get fees-free spending and ATM withdrawals worldwide.
- Top prepaid card. You top these up with cash, then can spend as much as is on there, see the specialist overseas prepaid cards section.
-
Load-free debit card (London only). New high street player Metro bank charges no foreign exchange loading or cash withdrawal fees on the card that comes with its current account. However, you have to go to one of its eight London branches to get one (it's opening more in future, but all in the south east of England).
Getting the cheapest foreign cash
If you want to get the best deal for spending overseas, it involves a combination of the best exchange rate and the lowest commission (read more on commission versus rate ).
To cut through this, we’ve built a special daily updated free website at TravelMoneyMax.com. It whizzes to all the main online bureaux de change to compare who'll give you the most foreign cash, after all charges and exchange rates.
Though do remember if your money is held by a currency provider, eg, buying in advance, it's not protected if it goes bust, so be careful.
TravelMoneyMax.com can only search companies with an online presence, luckily though these usually undercut their high street competitors. It’s occasionally possible to get a better rate at some local specialist dealers. Yet this is rare and they’re only located in areas with large amounts of overseas visitors where competition on rates is very high, such as Bayswater in West London.
Beware when paying on credit OR debit cards!
Sadly, buying currency from a bureau de change in the UK on a credit or debit card isn’t always treated as a UK transaction. All credit cards and some debit cards charge an additional fee on top of what you pay the bureau de change. See a full list of cards that charge
The cards that charge when paying at a bureau de change...
- All Credit Cards.
All credit cards charge a fee of around 2.5% (minimum £3) when you buy foreign currency at a bureau de change; it's treated like withdrawing cash from an ATM. In addition, you could be charged interest from the day you make the purchase, even if it's repaid in full at the end of the month. See a full table of charges - Visa Debit cards.
If you have one of the following debit cards, you'll be charged a 2%-ish fee when buying at a bureau de change. The banks that charge issue 'Visa Debit' (previously Delta) cards, though that doesn’t mean every Visa Debit card charges.
| Debit cards that DO charge a fee | Debit cards that DON'T charge a fee |
|---|---|
| Santander | Coventry BS |
| Alliance & Leicester | First Direct |
| Barclays | Halifax |
| Cahoot | HSBC |
| Co-op | Intelligent Finance |
| Lloyds TSB | Nationwide |
| Smile | |
| Natwest / RBS |
Got a card that charges?
There are a number of options...
- Use a different card if possible. This is the simple option.
-
With debit cards withdraw cash and pay with that.
Take the money out of a UK cash machin with a debit card and use that to pay at a high street bureau de change and you'll avoid the fee, though check the gain isn't defeated by a worse rate. - Spend on the card itself.
With most of the cards you're likely to be better off by just spending on it while overseas, than buying foreign cash with it.
The big exceptions are Lloyds and Santander debit cards, which if you spend on them abroad will slap ANOTHER charge on top every time you spend in a shop, as well as the normal foreign currency fees - these are the DOUBLE cards from hell.
Pick it up at the airport, but always pre-order
The worst place to exchange money is the airport. Don’t assume you’ll get the same rate there as at a bureau de change’s high street branch or online quote, it's usually much worse.
The best thing to do if you want the convenience of airport pick–up, is order it online first and then ask to collect it at the airport, you get a much better rate.
Prepaid cards for added security
Prepaid cards do exactly what they say on the tin; you load cash onto one, and then it can be used in shops and restaurants just like a debit or credit card.
While not quite as cheap as the specialist credit or debit cards, the vast majority are accepted by most shops which take the Maestro network (the substantial bulk) both in the UK and abroad.
Their big advantage over cash is if you lose your card, for a fee of around £10 most providers will replace it, with all the funds in tact. Lose a wallet of Dollar bills in Times Square and it's gone for good.
Prepaid cards have a variety of different charges, but the two top cards keep these to a minimum. More Info: Prepaid Card Fees
FairFxTop pick card, no spending or 'load' fees.
- Cash withdrawals€1.50 / $2
- Loading (exchange rate fee) 0%
- Currencies: Euros/Dollars
- Top up: Free via Debit card online
- Exchange rate: FairFX's own rate, determined daily
The FairFX* prepaid card charges no spending or foreign 'loading' fees, and can be topped up for free by debit card or bank transfer.
The link above takes you via comparison site Moneysupermarket, and means the standard £9.95 application fee will be waived if you top-up more than €60/$75. In addition, load more than £500 on to one, and you'll receive a £5 bonus, further boosting the exchange rate.
To get the fee structure described here, you must select either the Euro or US Dollar card- so no good if you need a more exotic currency. If you spend in a different currency to the one you selected, you'll be hit with a 1.4% charge for every transaction.
However, with FairFx it's the rate on each day you load up (not spend) that counts. So if the pound strengthens after you load the card, you will lose out. Though conversely if it weakens you'd gain. You get a different rate each time you load the card.
The only cost is €1.50/$2 to withdraw cash from an ATM, less than most credit or debit cards. You get FairFx's own exchange rate, which changes daily but generally beats the other prepaid cards and cash rates (compare it with TravelMoneyMax.com's best).
The next cheapest: CaxtonFxNo fees, but slightly worse exchange rate
- Cash withdrawalsFree outside UK
- Loading (exchange rate fee) 0%
- Currencies: Euros/Dollars/Sterling
- Top up: Free via Debit card online / tel
- Exchange rate: Caxton's own rate, determined daily
Next best is Caxton FX*, again available online, which also has no spending or foreign load fees and can be topped up online or over the phone for free by debit card. You get Caxton's exchange rate, which is usually worse than FairFX but beats the best you’d get for cash.
No fees, but not as good exchange rate
Again, the Euro and Dollar version of this card will charge less than the 'Global Traveller', and the former are the one's described here.
The minimum amount of foreign currency you can load up the card with is £100/€150/$200, and there's no ATM withdrawal charge outside the UK.
Travelex Cash PassportIf you need a card quick
- Cash withdrawals:FREE
- Loading (exchange rate fee): 0%
- Currencies: NZ $/AUS $/SA Rand/Euros/US/Dollars/Sterling
- Top up: Free (2% for Sterling card)
- Exchange rate: Travelex's own rate, determined daily
Not far behind is the foreign exchange giant Travelex’s* Cash Passport. There's no fee for spending abroad or to top up online, by phone or in stores.
No fees for foreign currencies
You’ll get the prevailing Travelex exchange rate, generally not as good as FairFX/Caxton, and the exchange rates you get on the best credit and debit cards.
The big boon over the above cards is it's available at Travelex branches, plus Sainsbury's travel money stores, meaning you can get one mega quick if your holiday is soon, though buy there and you can only then top-up in branches (where you'll be charged that shop's commission) or by bank transfer .
It charges a £2/€3/$3.50 monthly charge if the card goes unused for 12 months. If you’re heading towards that situation, simply cancel the card as it’s rarely worth it.
What happens if the Prepaid card company goes bust?
All prepaid cards listed are backed by a bank or building society. If the prepaid card company goes bust then the bank or building society that issues the cards will be liable for your cash.
However if the bank or building Society who provides the card goes bust your cash is NOT protected. While with some institutions the money can be ring fenced in separate accounts (though it may be with the bank themselves) there is always a very minor risk as the money is not counted as a deposit thus not covered by the Financial Services Compensation Scheme.
So as a precaution do consider it only a card to have enough cash on for immediate spending requirements rather than as a place to store your cash.
Currency Q&A;
When’s the best time to buy currency?
There’s no right answer to this, which is why this guide focuses on how to get the best rate at any moment. If the pound is strong and the Euro or Dollar weak, many people think, "I’m not going away for a few months, but I’ll grab my cash now.". If the pound's weak, many want to hold off.
There’s nothing wrong with doing this, but you need to understand it's currency speculation and you’re effectively gambling on exchange rate moves.
The fact the pound is strong at any time doesn’t mean it won’t get stronger and therefore buying your currency early can lose you money. Conversely, the fact it's weak doesn't mean it won't get weaker. Playing the currency market is something highly paid traders in the City can’t always get right. Those that do make a fortune; those that don’t, lose it.
Do the same rules apply when buying off overseas websites?
Absolutely, you’ll tend to pay the same costs on foreign websites as if you were actually abroad and spending there. If you’re paying in a foreign currency all the usual charges apply – the same cheap cards are cheap, the same expensive ones costly.
If I spend abroad & they let me pay in pounds, is it worth it?
No. This is called dynamic currency exchange, and should be avoided. Often the rate you get will be appalling and someone’s making big money out of it. If you’ve got one of the specialist overseas cards you’ll get a much better rate paying in the foreign currency not pounds. And even if you’re using a normal card as you’ve no idea of the relative exchange rates they could be playing you for a fool; so it's always best to stick with paying in the foreign currency.
If you're travelling to Spain, watch out for this when withdrawing money from cash machines too. You will often be asked if you want to have your money converted into Sterling when withdrawing Euros from ATMs. The general rule is say no as you could get a worse rate than the one you’d be given by your own plastic provider.
Yet a few machines now tell you the commission/load they add to the currency, if this is less than your card's own load (eg it's 2.5% and your card is 2.75%) do opt to pay in pounds. However if you have one of the special cheap travel cards, they’re always unbeatable so select euros.
Should I get my travel money out in the UK or overseas?
If you’re going to get the cash out on a specialist overseas card, then it's better to wait until you’re there.
However, if you’re just planning to use a normal card or convert pounds when you’re out there, there’s no guarantee you’ll get a better rate – and certainly changing in most hotels is normally a bad idea as they give poor rates. Overall it's safer to use the Travel Money Maximiser and get the cheapest rate while you’re here.
My card was blocked while I was abroad, can I prevent this?
To prevent fraud, most card companies track ‘unusual transactions’ and if there’s evidence they slam the breaks on and stop the card being accepted. The best thing to do, unless you’re a regular traveller who spends overseas a lot, is call up the card company to let it know you’re going abroad. Usually, though sadly not always, this stops any problems. If it happens to you while you’re away call up the card company as soon as possible.
Spending overseas: Q&A; with Martin Lewis
Filmed on 4 April 2011
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