Using your rouble?

The Champions League has certainly proved a big money spinner, with Manchester United obviously netting the biggest prize.

Sainsbury’s Finance recently reported that fans travelling to Moscow for last night’s final would have spent in the region of £40 million on the two day trip alone. With much of that expenditure likely to be have been made using credit and debit cards the providers are likely to have made themselves a decent figure too.

We’re set to spend around £686 million on card charges for use abroad this year, with debit cards in particular proving an increasingly expensive option. With trips abroad looming for many, gives some top tips on keeping those charges in check.

What am I paying for?

When using cards abroad the charges that providers make can be broken down into three categories.

  • Exchange rate fees – When you pay for a purchase abroad your credit card provider will have to convert the price of the purchase back into sterling. While they will offer a competitive rate (in line with the Visa / Mastercard wholesale rate) they will also add a ‘load on’ fee. This is usually around 2.75% meaning that £100 worth of Euro spending ends up costing you £102.75
  • Purchase fees – Debit cards are increasingly charging fees for purchases abroad. For every purchase you make many will charge a considerable flat rate, normally between £1 and £1.50. Consequently the more purchases you make the more you’ll end up paying.
  • If you’re planning on paying for a coffee at every piazza you come across then making one sufficient cash withdrawal rather than several card payments is obviously the smarter option.
  • Cash withdrawal fees – Withdrawing cash with a credit card has always been a costly business but head overseas and you’ll find yourself being charged for using a debit card at an ATM as well. The fees charged are usually around £2%.

It’s important to know how your provider will charge you. The APR on cash withdrawals may be considerable so it’s important to clear the balance on your return.

Where to look

Sadly the choice of credit and debit cards for the thrifty traveller isn’t huge. If it’s a debit card you’re after then the best offer is from Nationwide. It boasts 0% on cash withdrawals and transactions and unlike many credit cards won’t charge a foreign exchange fee.

The obvious catch is that you’ll have to have a Nationwide current account to use the card, and while it’s competitive it’s certainly not at the top of the best-buy tables.

With credit cards there’s a little more room for manoeuvre. The clear leader is the Abbey Zero card, launched fairly recently to much acclaim. The card charges nothing for cash withdrawals and has no foreign exchange fee anywhere in the world. The only downside is the APR it’ll charge you if you do withdraw cash – a very considerable 25.9%.

Nationwide and the Post Office both offer decent alternatives. Whilst they will charge for cash withdrawals, at 2.5%, they don’t have any foreign exchange fees, and, as opposed to a lot of debit cards, they won’t charge a purchase fee.

Plan of action

There are obviously a number of ways of taking and spending cash abroad beyond credit and debit cards. Travellers cheques, pre-paid cards, and a simple wad of foreign currency have all proved popular to varying extents.

However, if you use the right cards at the right time and understand how you’re being charged, then credit and debit cards should be an efficient way of seeing you through the holiday season.

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