Totally Money, a credit report and comparison site, found that withdrawing £100 cash could cost up to £7.99 in charges.
And costs could quickly mount up for making multiple small purchases. Spending just £5 with a card that charges fees could set you back £1.15 - an additional 23%.
Here, Which? reveals the dos and don’ts when it comes to spending abroad to help you avoid wasting money.
DON'T pack just any bank card
You can use your regular debit card abroad to make purchases and withdraw local currency from cash machines just as you would at home (look for the Visa or Mastercard logo), but unless you have one that is free to use abroad, you'll generally be charged one or all of the following fees:
non-sterling transaction feenon-sterling purchase fee non-sterling transaction feeFor example, a standard TSB debit card incurs fees of 2.99% plus £1 per transaction and 1.5% for cash withdrawals (minimum £2, maximum £4.50). So making two £50 purchases and three £50 cash withdrawals would result in charges of £15.48.
DO consider a travel debit card
Travel debit cards won’t charge any extra fees for spending abroad, including withdrawing cash, making them an attractive option on holiday.
Starling:First DirectMonzoChaseDON'T assume your credit card has no charges
You may be tempted to bring your everyday credit card with you, too, but like your everyday debit card, there may be some hidden fees.
There are three types of charges that can be layered on when using a credit card abroad:
Non-sterling transaction feeNon-sterling cash feeInterest on cash withdrawalsYou should also avoid taking cash out with a credit card as it might show up on your credit report, and some lenders may view this as a sign you are struggling to manage your finances.
DO shop around for a travel credit card
The best credit cards for spending abroad charge no fees.
Find out more:DON'T buy currency at the airport
Always avoid the airport bureau de change.
The last time we checked you could end up with an astonishing €115 less when changing £500 in the terminal vs the high street.
Also, avoid paying for your currency with a credit card, as you may be charged an extra fee, and remember to carry only as much cash as your travel insurance covers in case it’s lost or stolen.
Find out more:DO shop around for the best exchange rate
It’s worth comparing the deals offered by several companies before changing your money.
Many banks and supermarkets, as well as traditional foreign exchange destinations such as Travelex and the Post Office, now offer online currency exchange services. Their best rates are often reserved for customers who order travel money from them online.
You’ll often be able to get a better deal if you don’t mind having currency delivered. If you want to collect it from the high street, order online in advance, as most providers offer better rates this way.
Find out more:DON'T rule out a prepaid card
If you want to ‘lock in’ an exchange rate before you go, but you don’t want to use cash, you could use a prepaid card.
Prepaid cards can be easier to apply for than a new debit or credit card, as there’s no need for a credit check. They might help you budget better, and you can’t rack up debt on them.
Alternatively, Currensea provides a layer over your existing bank account that will allow you to spend in all 180 currencies without charges. It doesn't charge any non-sterling transaction fees. For personal accounts, there is a 0.5% markup on the exchange rate. ATM withdrawals are free under a limit of £500 a month. After this, a 2% fee will be applied.
Find out more:DO pay in the local currency
When using your card abroad you might be given the chance to pay or make a cash withdrawal in sterling rather than the local currency.
Paying in pounds will mean a local bank does the conversion – not necessarily at the best rate, and often for a fee.
If you aren’t given the choice, ask the retailer why.
Find out moreDON'T forget to check ATM fees
Some ATMs will add on a flat fee per transaction. Try to swerve high-cost ATMs in places such as airports, in favour of those at local bank branches.
If you do have to pay a flat fee, it’s worth taking out a bigger amount in one go rather than smaller amounts throughout your trip.
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