Most people spend a lot of time researching and planning their overseas travel. It amazes me, however, how many are unaware of the fees their bank will charge on card purchases and cash withdrawals. So how do you avoid bank charges when travelling abroad?
Bank fees generally fall into three categories. Depending on your bank & type of account, you may be charged one or all of the following:
- Non-sterling transaction fees on card purchases. These are generally charged at between 2% and 3% of the total value of each transaction made by card.
- International purchase fees on card purchases. These are applied in addition to the transaction fee. It is usually a flat rate of up to £3.50 EVERY time you use your card, whatever the transaction value.
- ATM withdrawal fees. This fee charged for every cash withdrawal made from an ATM overseas. It is usually a percentage of the amount withdrawn – typically between 2.5% and 3.5%. Some banks will charge a flat fee instead.
Clearly, additional charges can soon mount up and add a lot to the overall cost of your holiday. Some basic planning can help you avoid bank charges when travelling, however, leaving you more to spend on what you really enjoy!
Here are my five top tips for avoiding bank charges when you are travelling.
1. Don’t Exchange Currency at the Airport!
OK, so let’s deal with this one straight away. Everybody knows that airport currency exchange agencies give abysmal rates, right? Yet you’d be surprised how often I see people on my tours queuing to change money before boarding the plane. If you need to take cash, order it online in advance and get the best rates available.
2.Talk to Your Bank & Understand Their Fees
This sounds obvious, but most people don’t understand the charges their bank will apply to foreign transactions. Talk to your bank before you leave & ask them to explain the fees that apply to your specific account. You need to know:
- What are the charges for withdrawing cash from an ATM?
- Do they charge an international purchase fee, and if so, how much?
- Do they charge a foreign transaction fee, and if so, how much?
Once you understand these fees, you’ll be able to decide if there are better options, such as those described below, to avoid bank charges on holiday.
3. Be Careful When Using ATMs
If you are withdrawing cash from an ATM, look for machines attached to large, recognised banks. Cash machines located in hotel lobbies, currency exchanges, convenience stores or just in a hole-in-the-wall usually charge an additional fee. These are not charges applied by your bank, but an ADDITIONAL fee charged by the machine operator. Additionally, the exchange rates in these ATMs will be much worse.
By sticking to machines in the recognised banks, you will avoid unnecessary fees, avoid being scammed and get better exchange rates.
4. Consider Specialist Credit & Debit Cards
Most credit & debit cards issued by the High Street banks will charge fees for withdrawing cash or making purchases abroad. Travel cards are available, however, which have zero or much reduced charges. They also give good exchange rates.
Travel Credit Cards
At the time of writing, one of the best travel credit cards is the Barclaycard Rewards Card. The key features are:
- No fees charged on foreign spending or cash withdrawals.
- No interest is charged on spending or overseas cash withdrawals, as long as they are repaid in full.
The Halifax Clarity card and Santander Zero card are also good options, although these do charge interest on cash withdrawals until repaid.
You will need to meet the banks’ credit checking criteria to be eligible.
Travel Debit Cards
To use a travel debit card, you will need to open an account with the card provider.
One of the best debit cards available is from Starling bank. The account is app-based, so you will need to manage it from your phone. The key features are:
- No fees for spending overseas.
- No fees for cash withdrawals anywhere in the world.
- Easy application – no full credit check required for an account with no overdraft.
Travel debit cards are also available from Virgin Money and Monzo although credit checks may apply.
Prepaid Travel Cards
Another option for managing your money overseas is to use a prepaid card. Prepaid cards allow you to load them with currency before leaving home. They are then used as a regular debit card while abroad. The key features are:
- Currency is pre-loaded on the card, so the rate is locked in.
- It is not possible to spend more than is on the card. This is reassuring if it is lost or stolen.
- If you need more money, the card can be topped up securely.
- There are no credit checks required for eligibility.
The Revolut Card
For several years I have relied entirely on the Revolut card for managing my money & to avoid bank charges when travelling. Revolut is a prepaid card but offers a lot more besides. The features offered with the standard (free) account include:
- Currency exchange based on the Interbank exchange rate. I know I am always getting the best rate available.
- No fees on purchases in over 150 currencies. I don’t need to worry about where I am going or trips that cover multiple countries.
- No ATM withdrawal fees up to £200 per month. A fee of 2% applied to anything above this.
As I travel a lot, I have upgraded to the Premium card which costs £70 per year and gives me:
- An increased monthly ATM withdrawal limit of £400.
- Travel insurance
- Delayed flight & luggage insurance
- Discounted access to airport lounges (£21)
There are various other features I like about Revolut. These include ‘virtual’ disposable cards for making purchases securely online and integration with Google & Apple Pay.
Revolut is regulated by the Financial Conduct Authority (FCA) and all funds are ringfenced by Barclays, so your money is safe.
5. Always Pay in the Local Currency
When you pay by card overseas, you will be asked if you want to pay in the local currency or sterling. ALWAYS select the local currency option. Your bank will then make the conversion applying their standard exchange rate. If you choose to pay in sterling, the foreign bank or card processor will make the conversion, and their exchange rate may be much worse.
Please note that the information given above is for guidance only. Please check current terms & conditions with any bank or card provider before entering into an agreement.
I do not have an affiliation with any of the companies mentioned. If you link from my page & enter into an agreement with a third party I may receive a small commission. This helps me to keep my site online.
If you have any questions or comments about this article, please don’t hesitate to contact me.