Getting the best euro exchange rate on your credit card

If you're planning a holiday to Europe, then you'll want to make sure that you're getting the most for your money when you exchange currencies. We'll help you find the best ways to get the best Euro exchange rates so that you don't lose out on any money when you go away.

In This Guide:

• Can You Buy Euros with a Credit Card?
• Using Your Credit Card Abroad
• Avoiding Additional Fees When Using Your Credit Card Abroad
• How Do Prepaid Currency Cards Work?
• Comparing Prepaid Currency Cards to Credit Cards
• Alternative Methods for Exchanging Foreign Currency

Using Your Credit Card Abroad

Arguably, the most convenient way to spend foreign currency is to just use your credit card abroad, where your sterling will be converted according to Visa and MasterCard's standard exchange rate. Their rate is generally only about 1 percent above the interbank exchange rate for Euros meaning that, at least before transaction fees, you'll be getting a great deal.

Benefits of using your credit card abroad include:

• Favourable Exchange Rates: Visa and MasterCard typically offer exchange rates that are just slightly above the interbank rate, ensuring you get a good deal on your currency conversion.
• Ease and Security: Credit cards are widely accepted across Europe and offer robust security features, making them a safe and convenient option for travellers.

Avoiding Additional Fees When Using Your Credit Card Abroad

To maximise the benefits of using your credit card abroad and avoid unnecessary fees, consider the following tips:

• Choose Cards with No Foreign Transaction Fees: Look for credit cards specifically designed for international travel, which waive foreign transaction fees, allowing you to take full advantage of favourable exchange rates without extra costs. Compare credit cards with no overseas transaction fees by using Money Expert's comparison service if you want to see what kind of deals and interest rates you could be enjoying. If you're not sure if your current card charges you for using it abroad, reach out to your credit card provider to check.
• Limit Cash Withdrawals: Avoid using your credit card for ATM withdrawals, as these transactions are treated as cash advances and incur higher fees and interest rates.
• Pay Off Your Balance Quickly: Cards without foreign transaction fees often come with higher interest rates. To minimise costs, it’s best to pay off your balance promptly to avoid accumulating interest.

Comparing Prepaid Currency Cards to Credit Cards

Budget Management and Control:

Prepaid currency cards offer excellent budget control as you can only spend the amount preloaded on the card. This makes them ideal for travellers who want to stick to a predetermined budget. In contrast, credit cards provide the flexibility of a credit limit, which can be useful for unexpected expenses or emergencies, though it requires disciplined management to avoid overspending.

Fees and Costs:

Prepaid cards often have lower or no fees for foreign transactions, making them a cost-effective option for managing travel expenses. However, it’s important to be aware of any fees for loading money or ATM withdrawals. Credit cards, especially those designed for travel, can offer competitive exchange rates and may have no foreign transaction fees, making them a convenient option for purchases abroad. It’s best to choose a card that minimises these fees to maximise savings.

Exchange Rates:

A major advantage of prepaid currency cards is the ability to lock in the exchange rate at the time of loading, giving you certainty over how much foreign currency you have available. Credit cards, on the other hand, use the exchange rate at the time of each transaction, often provided by networks like Visa or MasterCard, which are typically very competitive and only slightly above the interbank rate.

Credit Impact and Security:

Prepaid currency cards do not impact your credit score as they do not involve borrowing money, making them a good option for those who prefer not to use credit or who want to avoid potential impacts on their credit rating. Credit cards, while they do involve credit, offer robust security features and fraud protection, which can be a significant advantage for travellers. Using a credit card responsibly can also help build or maintain a good credit score.

Convenience and Accessibility:

Prepaid cards are accessible to a wide range of users since they do not require a credit check, making them an attractive option for those who may not qualify for a credit card. Credit cards, meanwhile, offer the convenience of not needing to preload funds and the flexibility to handle unexpected costs, with the added benefit of comprehensive consumer protections.

Alternative Methods for Exchanging Foreign Currency

Foreign exchange rates can vary significantly depending on how and where you exchange your currency. If you’re looking for other travel money options other than using credit cards, here’s a look at some common methods to help you find the best rates:

Bureaux de Change

Bureaux de change is often the most convenient way to buy foreign currency, especially if you need cash quickly. They are readily available in airports, train stations, and popular tourist areas. However, they tend to offer the least competitive rates. If you decide to use a bureau de change, it’s important to shop around as rates are not uniform across the market. With a bit of effort, you can find ones offering better rates and charging little to no commission on currency exchanges.

Remember, it's often best to use a debit card or cash in this scenario to avoid your credit card's cash transaction fee. However, if buying your currency when you're already abroad, you may need to check if your bank will charge you a fee on your debit card as well.

Online Euro Exchange Rates

Looking online can often yield better exchange rates than those found on the high street. While this method is less immediate—you’ll usually have to wait a few days for the money to be securely delivered—it can be worth it if you have the time to spare. Online exchanges can offer great deals and are a good option if you prefer to plan ahead.