How to handle holiday money
Here are the top tips for dealing with cash, debit and credit cards while you are away
The sun is shining and summer is approaching, so have you thought about your holiday money yet? It pays to think ahead when it comes to buying currency. You have three main ways to pay when you’re abroad – cash, debit card or credit card. We’re going to look at the best options in each case.
Let’s start with cash. Never buy it at the airport. Currency providers know that by the time you get to the airport you have no choice but to buy from them, and they charge you a fortune as a result. Research by Eurochange found that you’d pay around £169 more for €1,000 if you bought it at the airport.
Time is money
Your best option is to compare rates online and pre-order your currency either for delivery or to collect. MoneySavingExpert has an excellent comparison tool at travelmoney. moneysavingexpert.com. Pop in your location, when you go abroad and how much of what currency you need, and it will show you the best prices.
For example, I put in that I needed €1,000 in the next month. The best price was £862 from TravelFX with delivery or collection both possible. If I needed it within the next week the price jumped by £10.
If you have left it to the last minute, then you can collect the cash at the airport, but order it in advance, as this will slash the cost. For example, if I ordered €1,000 to collect later today at Manchester Airport it would cost me £875. If I simply turned up and bought it at the airport the price could be closer to £1,000.
While it can be handy to have cash with you on holiday, it is safer to pay by card. With plastic you are protected from losing your holiday cash or having it stolen and, depending on the type of card, you can get added consumer protection, too.
Using your cards when you are abroad can be expensive, though. Many cards charge extra fees for using cash machines abroad or using your card outside the UK, while some offer poor exchange rates.
For example, if you have a TSB debit card and you withdraw money from a cash machine while you are on a foreign holiday, you’ll pay a 2.99% exchange load (that’s a mark-up on the exchange rate) and a 1.5%
ATM charge (minimum £2, maximum £4.50). Even if you use it to buy something there will still be the exchange load plus a £1 spending charge.
A far better option would be the Chase debit card. This has no charge for ATM withdrawals when you are abroad and no spending fee, plus you can earn 1% cashback on most of your spending.
Credit cards abroad
Unless you are abroad a lot, it may not make sense to shift your bank account to benefit from better rates on your debit card. A better option may be to get a credit card specifically for holidays.
Spend on the right credit card when you are on your foreign holidays, and not only will you get a great exchange rate and no extra fees, but you will also benefit from Section 75 consumer protection on purchases over £100.
This means that if there is a problem, your credit card provider is equally liable and can give you a refund if you can’t sort things out with the retailer – especially useful if the shop is hundreds of miles from home on a back street in Rome.
The top choice
The best credit card for foreign use is the Barclaycard Rewards card. There are no fees for spending or cash-machine withdrawals when you are at home or abroad. Unusually, it also doesn’t charge interest on ATM withdrawals if you pay off your balance in full within 30 days.
Many credit cards charge interest for cash advances like this from the moment the money leaves the machine. The key to keeping everything interest-free with the Barclaycard is to pay off your balance in full every month. The bonus with this card is that you will also earn 0.25% cashback on your spending.