Get cash cheaper when you are abroad - find the best cards and accounts to use.
Publication date: 20th April 2012, updated 30thJuly 2012
Subjects: cash, money, holiday, credit cards, debit cards, current accounts,
Get your money cheaper when you are abroad
One question we are frequently asked is what is the best card to use overseas, or how can I get Euros from an ATM without paying through the nose for it!
The first thing to say is that we would suggest taking a couple of our recommended payment methods at least, as many can be obtained free of charge, and this will give you greater flexibility should you have problems overseas. Losing a card or having your account stopped because the bank think a payment is suspicious can be very disruptive to your break if you only have one payment method.
Stating the obvious but your first option is to take some foreign currency with you, though how much you want to take will depend on the level of cover your travel insurance gives you and your personal attitude to risk. Don't expect to get the best deal at an airport bureau de change or by walking into a bank. Do try our online comparison service to find the best travel money rates as the cheapest currency suppliers can easily save you £5 on every £100 bought through a high street bank.
If you live or work in or around London you could consider a Metro Bank account - Metro Bank are a new bank launched in 2010, and currently have a few branches in London and are gradually spreading further afield. Their current account comes with a fee free debit card, but you have to visit a branch to open an account.
Further afield the Norwich & Peterborough BS has 'refreshed' its current account products with a 0% overseas purchase fees and no cash withdrawal fees anywhere worldwide. To qualify for a free Gold Classic account you need to pay in £500 per month or there is a £5 fee monthly. A similar fee is charged for using an authorised overdraft by £10 or more.
There is an alternative Gold Light current account where a charge of £5 a month is levied if you make five transactions or less a month.
The outstanding best buys
are detailed below, but the overiding rule is - use one of these cards for purchases and a prepaid card (see further down the page) for cash withdrawals.
Preloading Your Credit Card
A top moneymaxim tip if you have plans to use a credit card which either has no interest free period or charges interest on cash advances from the date of withdrawal is to 'preload' your card. Credit you account before you travel, and you won't pay interest on your spending, as your account will be in credit throughout. You can always top up using online banking abroad as well!
Overall the simplest card to apply for - no special requirements on where you bank, no charges anywhere worldwide, and a simple application process.
No additional charges worldwide (as Mastercard don't levy the fees VISA do)
Avoid using the Post Office Mastercard for cash advances. If you do cash advance fees will be charged at 2.5% (min £3), and the cash advance interest rate is both significant and charged from the date you use the cashpoint - all of which can add up to a fee well over £10 if you withdraw €300, and clear the credit card a month later.
With no foreign exchange fees or charges for cash withdrawals it sounds great - but preload the card so you can avoid paying interest on the balance outstanding.
No currency loading or additional fees as it's a Mastercard which doesn't levy fees for using it abroad)
Doesn't charge fees for cash advances either, but interest is charged from the date of withdrawals so preload the card. The interest rate is lower than that charged by many of its competitors, meaning an interest charge of £3 – £4 for that £300 withdrawal repaid a month later. If you can't preload try to repay the debt as soon as you can rather than waiting for the bill to arrive.
A complicated system here - you can earn credit for commission free transactions abroad by using your card in the UK - you can make a £1 fee free purchase abroad for ever £5 spent here - and the tally is recorded on your statement. As we say complicated and if you use the card over your fee free limit it will cost you 2% in fees. Full details of the card are shown on our balance transfer pages, as it does have an attractive 0% interest free period for new cardholders.
A fee of 2.5% will be charged for the cash advance (min £3), and again one of the higher rates on this page. Fees for a €300 transaction paid back a month later would be about £13.20, and for a similar sized transaction outside Europe it would be around £15.90.
Our two best buy cards are the Caxtonfx card and the Fairfx card. Both are available in Euros or US $ - and can be loaded at a pretty competitive rate (Fairfx normally has a slightly better rate, but Caxton doesn't charge for cash withdrawals so its a bit swings and roundabouts - both rates are normally better than the best exchnage raters you can get for notes). They can either used for purchases, or in the case of a Caxtonfx card at cashpoint machines cards free of charge (although in our experience some overseas machines, particularly in the US, charge a nominal fee as well).
Useful if rates are falling as you can lock in your money at a higher rate now and spend it in the days to come (if of course you are a financial wizzkid who can predict the markets!). Both the main two cards are offered free of charge (charges apply elsewhere) through moneymaxims pre paid currency credit card article, and given the prepaid nature of the card credit checking is far less stringent than for 'real' credit cards.
They can be easily topped up abroad from your bank account if you have access to the internet. Although these cards do not offer the same consumer protection that credit cards do - if the Bank or Building Society that issues the card runs into difficulties your cash could be at risk - Newcastle Building Society who administer both have said rhat any funds on them are 'ringfenced' for customers. However if you are looking at buying an uncomfortably larger amount of money we recommend you consider getting a few cards from various suppliers and spreading it between them.
This information is based on journalistic investigation and research. It is not financial advice. Any information should be considered in regard to specific circumstances. Any suggestions followed up are done so at your own risk and your own research is key. Prices and features checked and correct as at 30th April 2013
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Moneymaxim always recommend you take independent financial advice before acting on any article.