We’re all looking forward to the summer holidays, and why not? The dollar is weak against the pound, there are special discounts galore in travel agents and online, and low-cost airlines are still offering great deals to some of our favourite holiday destinations.
But it’s not all rosy. Maybe you’ve been put off by reports of fuel surcharges, or maybe you’re worried about your baggage getting lost in Heathrow’s Terminal 5.
Or perhaps you’re more concerned about how to deal with money abroad. It used to be the case that you’d swap cash for travellers’ cheques in the UK and that was that. But now there are several ways to spend money on holiday and it’s not always easy to work out the best method. MoneyExpert.com is here to help you through the decision making process.
Credit card. Debit card. Traveller’s cheques. Pre-paid card. Cash.
When it comes to spending money abroad there are plenty of options, that’s for sure. So what’s best?
The first question is: Do you want to take cash with you?
If you’re ok with the security risk of taking cash, the most important thing is to make sure you exchange money without paying commission. The Post Office still does this.
If you’re not keen on carrying cash around, then the next question is: Do I want to pay for things on a credit card, or can I afford to use my current account?
The difference here is that most banks charge you every time you take money out of a cash machine abroad. And not just on the foreign exchange rates, either – you’ll pay an admin fee for putting through the transaction.
The only card where that doesn’t apply is Nationwide’s FlexAccount. It doesn’t have any foreign usage loading fees, and there is no fee for cash withdrawals abroad either. Compare current accounts here
Using credit cards abroad is a bit more complicated, although for most of us it’s a necessity as few people are diligent enough to save up before they travel.
Just like current accounts, credit card providers charge fees, typically 2.75 per cent, on any purchases made outside the UK. They also charge fees for withdrawing cash out of an ATM.
One of the best options here is the new Abbey Zero card, which – as the name suggests – charges no fees whatsoever. That means you can withdraw cash and make purchases abroad without fear of incurring large charges. There’s also a handy 0% deal on balance transfers on the card so it’s a good all rounder. Compare credit cards here to see the competition.
Whatever you go for, bear in mind how you’ll be using your money – are you going on a credit card spending spree in New York, or will you need lots of local currency to pay for your family on a beach? This should help you make the right decision so you have no regrets on return to Blighty!