Guardian Money tells you how you can save more than £400 on
credit and debit cards, foreign exchange, car hire and
airport parking before you even leave for your next holiday.
Picking the wrong plastic to use while abroad could quite
easily set you back £100 in fees and hidden commission, according to new
research.
However, by being card sharp when you're buying items and
withdrawing money, you can get the bill down to a fraction of that – and, in
some cases, reduce it to zero.
If you're a Norwich & Peterborough building society Gold
Classic current account holder, you're sorted because this is one of the very
few UK bank accounts that offers completely free debit card usage abroad, with
no nasties lurking in the small print.
For the rest of us, the best bet may be the Halifax Clarity
credit card, which charges nothing for foreign exchange, and doesn't impose ATM
fees either.
N&P's Gold Classic account and the Halifax Clarity card
came out top in a comprehensive survey of debit and credit card overseas
charges carried out by Andrew Hagger of personal finance website
MoneyComms.co.uk (see table).
Metro Bank – a relatively new player with branches mainly in
the London area – also scored highly, as its debit and credit cards are free of
fees, provided you are within Europe.
One of the big problems for consumers is that the fees and
charges for using your plastic abroad are often bewilderingly complex, with
stacks of jargon and small print. Someone using their debit card to withdraw
cash from a foreign ATM may well find they are charged 2.75% to 3% of the money
in hidden commission, plus a separate ATM fee that is usually expressed as a
percentage of the amount taken out. For example, NatWest's ATM fee is 2% of the
value, with a minimum of £2 and a maximum of £5, whereas the recently launched
M&S Bank current account doesn't impose an ATM fee.
If you have a Halifax, Santander, Lloyds or TSB debit card,
be aware that they all impose a fixed fee for overseas purchases in shops,
restaurants etc – and that's on top of the 2.75% to 3% they take off you for
"currency conversion". The fixed fee is £1.50 at Halifax, £1.25 at
Santander and £1 at Lloyds and TSB. It is applied on each transaction – ie,
every time you buy something. You can see why MoneySavingExpert.com's Martin
Lewis has dubbed them "the cards from hell" to be avoided at all
costs.
Hagger says it's important to check the charges that apply to
your card before you head off. "At least if you understand the overseas
charges, you can adapt your spending accordingly. For example, you don't want
to be making cash withdrawals or purchases of £10 or £20 if you're going to be
hit with £1.50-plus each time," he says.
The Halifax Clarity card boasts that it has "no fee to
use it anywhere worldwide". It applies MasterCard's exchange rate at the
time you make the transaction, and does not add any "loading" fees or
charges. In addition, it won't charge for ATM withdrawals. But make sure you're
paying off your bill in full every month. There is no interest-free period on
cash withdrawals, so you pay interest from the day you take the money out.
However, the representative APR is a not-bad 12.9%, meaning a £100 withdrawal
would cost just over £1 in interest at the end of the month.
Meanwhile, don't fall for the "dynamic
currency conversion" trap while you are away. If a shop, restaurant or
hotel gives you the option to pay in sterling, rather than the local currency,
insist you pay in the latter. The same applies to ATMs.
"I was asked if I wanted to pay in sterling at least
half a dozen times while in Valencia a month ago," says Hagger.
"Although you may think it's useful to know exactly how much you'll be
debited, the downside is that it gives the retailer the opportunity to use a
poor local bank exchange rate, which could see you paying well over the odds –
in some cases by 3% or 4%. Always choose to pay in the currency of the country
you're visiting." RJ
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