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How to avoid sky-high card charges abroad

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Written by:
02/06/2014
Brits abroad are set to be stung by millions of pounds worth of overseas credit and debit card charges this summer. Here's how you can avoid them.

Using your credit or debit card abroad can be costly thanks to extra fees and charges.

Often holidaymakers forget about these additional costs because they do not apply at home.

Last year, comparison site uSwitch.com found that 12 million people were likely to be hit by overseas transaction fees totalling £327m.

However, these charges can be avoided with a bit of pre-planning.

Here a few tips to help reduce your welcome-home bill.

1. Get the right credit card

Shopping around for the right card can remove all charge-related anxieties. Several credit cards – like the Nationwide Building Society Select Credit Card, the Halifax Clarity card and the Post Office Platinum MasterCard – are specifically designed to be used abroad. These have zero per cent usage fees both in Europe and worldwide.

However, the key to choosing a card to travel with, according to Jafar Hassan of uSwitch, is to be sure that it is a card that will work for you at home as well.

“There are a few options,” he says. “It comes down to what’s best for you and how you’re going to be spending.”

Many comparison sites have entire sections devoted to travel credit cards, so log on and select the one that’s right for you.

2. Know the charges

If you don’t have the time or inclination to get a new card just for your holiday, be sure to check your current provider’s policy before you jet off.

Some cards, for example, will charge you twice: once to make a transaction in the first place and a second time to convert the currency.

You may find that one of your providers has a more attractive overseas charging policy – so you’d be better to stick with them rather than using multiple cards.

Moneysavingexpert.com’s Helen Saxon says: “While some cards are pretty standard, others are really bad. This is especially true of debit cards, which can charge you every single time you spend.”

Also be wary of taking cash out with credit cards. Rather than functioning like a normal charge, where you only accrue interest if you don’t pay the provider back promptly, the interest on cash withdrawals will start to add up the second you leave the cashpoint. When you go to withdraw cash use your debit card instead.

3. Don’t convert currency at the till

Many holidaymakers will be familiar with this common conundrum at the till: just as you’re about to pay the chip and pin device asks whether you want to pay in pounds or local currency.

According to Hassan, the best rule is to always go local.

He explains: “It’s best to decline this offer and pay in local currency as the dynamic currency transfer rate – what the bank charges you to convert the currency – is two per cent.”

4. Explore your options

Despite the ubiquity of credit cards, it never hurts to consider other options.

Travellers cheques are safe but not always the most convenient as many merchants won’t accept them. Despite this, uSwitch recommends carrying at least one with you to cash in case of emergencies.

Another option is a prepaid currency card, which can be reported stolen like a credit card and will often secure you a good exchange rate.

Be wary of the charges that come with these – some companies charge more than others – but there are several good deals available.

Saxon recommends fixing the exchange rate at the time of loading rather than the time of spending. You may lose out a little if the pound increases in value during the course of your holiday, but fixing the exchange rate this way will protect you from swings in the other direction and ensures that you always know exactly how much you’re really spending.

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