Using your debit card
There are two main charges for withdrawing money and making purchases abroad.
Some cards also charge a flat fee, which can add up to £1.50 to a transaction.
Foreign usage fee
. When withdrawing money or making a purchase, the money is converted from the local currency to pounds using the day's exchange rate. Your transactions are pooled with those of many other customers. By buying and selling currency in bulk, the card provider can typically get a good exchange rate. However, most standard credit or debit cards make this slightly worse for you by adding a 'load' of up to 3% (so £100 overseas would cost you £103).
Money fitness tip
Find out how much it will cost you to use your credit or debit card overseas. Some cards are specifically for holiday-makers while others could give you a nasty surprise!
Using your credit card
Along with the foreign usage fee you might also be charged interest, even if you pay off the bill in full at the end of the month.
Usually with a credit card, you only pay interest if you don’t pay off the bill in full at the end of the month – but when you spend overseas some cards will charge you interest. Don't withdraw cash using your credit card. You will be charged interest straight away, on top of all the other fees.
Imagine using a credit card to take out £100 at the cash machine. With the worst kind of card you might pay:
- £3 for the foreign usage fee
- £3 for the cash withdrawal fee
- £2 interest before you pay off your bill.
That's a total of £8 in fees, just for getting out a little cash. If you did this three times whilst abroad the total cost could be £24.
And remember, you get hit with these charges every time you use your card.
With the best kind of card you’d barely pay anything .
Like using a credit card in the UK, any purchase you make abroad on your credit card will still be covered under Section 75 of the Consumer Credit Act - see Credit cards.
How to choose the best card for your trip
There are lots of cards to choose from, but there’s no need to go through the details – that’s all been done for you. Several comparison sites cover cards for use overseas, and you can get expert recommendations from Which?, MoneySavingExpert.com and Moneysupermarket.com.
To find out more about the different ways to arrange your money for overseas travel, see Money and travelling.
What to look for in a good deal
If you already have a debit and credit card, find out how much your bank or provider will charge you for using them abroad. This information is usually available online or you can call your bank to find ou
Once you know the charges on your current cards, you will have a better idea of what a good deal would look like.
You can then use the comparison sites mentioned above to find out what card will give you a better deal.
Remember not to focus on just one charge. Some providers might have a low foreign usage charge, but charge a lot more for cash withdrawals, or visa versa.
Similarly, if you are not going to be withdrawing cash and will pay off the bill at the end of the month, the interest rate a credit card charges you is not as important.
For this reason, you should also think about how you should use your cards to minimise fees. For example, will you avoid charges by paying with your card rather than using it to withdraw money.
Stay safe when using your card overseas
Before you leave
- Only take cards you plan to use. Leave the others in a safe place at home.
- Note down the emergency phone number for your cards – it’ll be on the back of the card. Keep the numbers separate from your cards, in case they get lost or stolen. It’s better to write down the +44 number than an 08** number, as the second type may not work from abroad.
- Tell your card provider or bank where you’re going and give them your contact details (including a mobile number), or they might think your overseas purchases are fraudulent and cancel your card. It may be worth taking another card from a different bank, if you have one, so you’re not stuck for cash if your main card is blocked.
- If your cards are registered with a card protection agency ensure you have their phone number and your policy number with you.
Once you’re abroad
Keep your eyes on your card. Never let it out of your sight when you pay, especially in bars and restaurants.
Never give your PIN to anyone else – even if they claim to be from the police or your bank.
Always shield your PIN when using a keypad or cash machine, just as you would at home.
Avoid extra charges
- Only use your debit card if it has low international usage fees. If your card charges a fee each time you use it abroad, use cash or your credit card or prepaid card instead.
- Withdraw lots of cash at once. If you do it in bits you’ll have to pay lots of fees instead of just one (unless you have a card with no transaction fee for cash withdrawals abroad). Take out enough for several days, carry what you need and leave the rest securely where you’re staying.
- Choose to pay in the local currency if you’re given the option of that or pounds. It’ll probably cost you less, since most retailers won’t give you a great exchange rate.
When you get home
- Check your statements. If you find any transactions you don’t recognise, let your card provider know right away.
- Pay off your credit card bills in full on the repayment date – don’t bring debts back from holiday.
Prepaid travel cards
These are a great alternative to using traveller's cheques abroad. Simply load the card with money before you leave and use like a debit card.
Some of these cards will impose charges for withdrawing money from a cash machine. Others might have monthly fees or an extra charge if you don’t use the card in a set period of time, for example a year. For this reason, it’s important you read the small print - see Prepaid cards.