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The best and worst ways to spend in Europe revealed

Written by: Emma Lunn
Credit cards can be the most effective way to spend overseas, while using a debit card for small payments can cost you dear.

Organising your holiday spending in advance can save you a fortune and help your money go further abroad, according to Defaqto.

Focusing on Europe, the financial information company analysed the market and concluded that credit cards generally come with lower fees than debit cards and more favourable exchange rates than foreign exchange bureaus.

Defaqto warned against most debit and prepaid cards which both come with a plethora of fees and charges.

The worst way to spend abroad: Debit cards

Defaqto found that debit cards were the most expensive way for travellers in Europe to spend.

Debit cards (especially ones allowing contactless payments) are easy and convenient to use. But the majority come with extra costs for overseas use – Defaqto calculated that a daily €5 breakfast over a fortnight could end up costing a whopping £21 in fees in addition to the €70 spent on your meal.

Most debit cards charge a foreign loading fee of up to 2.99 per cent for overseas use, plus a transaction fee (for card purchases) or an ATM fee (for cash withdrawals).

There are only five current account debit cards which don’t charge for card purchases or ATM withdrawals in Europe. These are from Cumberland Building Society, Starling Bank, Monzo, Nationwide Building Society, and Metro Bank.

The best way to spend abroad: Credit cards

Defaqto declared credit cards to be the “hero” of holiday spending. Credit cards can be as cheap as cash and they provide holidaymakers with consumer protection for purchases between £100 and £30,000.

An evening meal costing €25 could cost travellers between £0.46 and £0.68 when using their credit card. In comparison, the same payment using the average debit card could cost between £0.40 and £1.88.

Defaqto identified 21 credit cards from 14 providers including Halifax, Aqua, Natwest, Tandem and Santander, with no foreign transaction fees in Europe.

However, it warned that withdrawing cash from an ATM using a credit card can be eye-wateringly expensive. There is usually an additional cash withdrawal fee, while interest accumulates from the day the money is withdrawn.

Prepaid cards

Prepaid cards are a popular choice for travellers – they can be loaded with the foreign currency of your choice so you can only ever spend the balance on the card.

But only Revolut is free to use abroad (although it comes with a £4.99 set-up fee). Most other prepaid cards have high fees, other catches such as loading or renewal fees, or very poor exchange rates.

Asda’s prepaid travel card also comes with a hefty non-Sterling exchange fee of 5.75 per cent – so Defaqto says it should be avoided.

Holidaymakers might also find that prepaid cards cannot be used for car hire deposits or pre-authorisation at petrol stations.


Most people like the security that comes with carrying some foreign currency, to pay for relatively small purchases such as taxi rides and drinks.

However, exchange rates and commission rates can vary and carrying large sums of money can put you at risk of theft, so you should always have a travel insurance policy which covers lost or stolen cash.

Holidaymakers should watch out for currency sellers who claim they don’t charge commission as the exchange rate is normally about 2 to 3 per cent less than that used for credit and debit card purchases.

Katie Brain, Insight Analyst at Defaqto, said: “It’s easy to get stung by unexpected charges when spending abroad, which add up and eat into your holiday budget. For anyone going away this summer, it’s worth looking into your holiday money in advance to escape unnecessary fees, charges and poor exchange rates. There are a number of options available from credit and debit cards to prepaid cards and cash, each with its own benefits.”

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