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What is the best way to spend abroad?
Spending money overseas can end up costing you a fortune in fees and charges, so find out what options you have and which is the cheapest for your trip.
How can you spend abroad?
Cash: Take foreign currency but make sure to budget correctly or you will be left with no money by the end of your trip. Make sure you find the best deal before you leave.
Credit card or debit card: Take your credit or debit card abroad, but watch out for foreign usage charges and your cards getting blocked by your provider.
Prepaid card: These cards can be loaded with cash and spent in shops or withdrawn from ATMs. They only let you spend the money you have put on the card.
Traveller's cheques: They can be converted into foreign currency in specific locations abroad. To do this, you will need to use your signature and provide I.D.
Take cash abroad
This is the easiest way to start spending when you get to your destination.
Pros
Can be used anywhere
Easy to manage
No foreign usage fees
Cons
Expensive to exchange abroad
It can be lost or stolen
High value notes can be refused
Use a credit card or debit card
Most providers will charge you for every transaction you make overseas, but you can find credit or debit cards which will cut the cost of your spending abroad.
Debit card
Pros
Chip and pin protection
Easy to cancel if stolen
Can be free to use abroad
Cons
Can be charged for using abroad
Can accidentally get overdrawn
Can get blocked by your provider
Credit card
Pros
Deal with the bill later
Can be free to use abroad*
Cons
Expensive for cash withdrawals
Can go over your credit limit
Can get blocked by your provider
* Card transactions only
How much do they cost to use abroad?
It differs significantly depending on the card you have.
This table shows some of the typical fees you could face when using a debit card or credit card overseas:
| Costs | Debit Card | Credit Card |
|---|---|---|
| Card transaction fee | 0% - 2.99% | 0% - 2.99% |
| Cash withdrawal fee | 0% - 2.75% | 0% - 5% |
| Cash withdrawal interest | n/a | 6.5% - 69.9% |
Debit card costs
This example shows an exchange rate of 0.73, a card transaction fee of 2.99% and a cash withdrawal fee of 2.75%.
| Debit card | Conversion (€250) | Charge | Overall cost |
|---|---|---|---|
| Card transaction fee (2.99%) | £182.50 | £5.46 | £187.96 |
| Cash withdrawal fee (2.75%) | £182.50 | £5.02 | £187.52 |
| Total | £365.00 | £10.48 | £375.48 |
These 2 transactions abroad can cost you as much as £10.48 extra unless you shop around and find a debit card which offers lower or non-existent charges for usage abroad.
Credit card costs
This example shows an exchange rate of 0.73, a card transaction fee of 2.99% and a cash withdrawal fee of 5%.
| Credit card | Conversion (€250) | Charge | Overall cost |
|---|---|---|---|
| Card transaction fee (2.99%) | £182.50 | £5.46 | £187.96 |
| Cash withdrawal fee(5%) | £182.50 | £9.13 | £191.63 |
| Total | £365.00 | £14.59 | £379.59 |
These 2 transactions can cost you £14.59, but you can find a credit card which does not charge for card transactions abroad, saving you the £5.46 seen above.
Daily interest on a credit card
On top of the cash withdrawal fee, you will also need to pay interest on the cash you withdraw using your credit card.
This table shows how much you will be charged over 10, 20 and 30 days if you withdraw €250 (£182.50) abroad:
| Cost (€250) | 10 days | 20 days | 30 days |
| Interest charge | £2.78 | £5.57 | £8.35 |
Avoid using a credit card abroad if you plan on making cash withdrawals due to the excessive charges that come with them.
Use a prepaid card
You can use a prepaid card in a similar way to a credit card, except you need to top up the account with funds before you can use them, rather than spending money and paying it off later.
There are two types of prepaid card:
Standard prepaid cards are designed to be used in the UK but you can still use them abroad for both cash withdrawals and card transactions. You are charged on the rate of exchange each time you use these cards abroad.
Travel prepaid cards, or currency cards, are loaded with a foreign currency instead of sterling, which means you are charged a single exchange rate at the point of topping up the card, rather than every time you use the card.
Pros
Can be used worldwide
Can be cheap to use abroad
Top up what you want to spend
Cons
Sometimes charges for loading card
Can only spend what is on the card
Possible application fees
How much do prepaid cards cost to use abroad?
Some prepaid cards can come with several potential fees:
| Costs | Standard prepaid card | Travel prepaid card |
|---|---|---|
| Card fee | £0 - £15 | £0 - £50 |
| Load fees | 0% - 5% | 0% - 2.85% |
| Card transaction fee | 0% - 5.75% | 0% - 5.75% |
| Cash withdrawal fee | 0% - 5.75% | 0% - 5.75% |
When you use a cash machine with a prepaid card, it may charge you further fees and limit the amount you are able to withdraw.
For example, a €250 cash withdrawal and a €250 card transaction on a prepaid card that charges 5.75% for both transactions, will charge you £10.49 for each*.
* Based on an exchange rate of 0.73
Use traveller's cheques
A traveller's cheque works by converting sterling into foreign currency as a cheque, which can be cashed when abroad.
When you buy traveller's cheques, be careful to avoid any unnecessary charges. For example, if you buy your traveller's cheques using a credit card, you will be charged both by your credit card provider for a cash withdrawal and by the traveller's cheque provider too.
There is usually no charge for using your debit card to pay for a traveller's cheque, but double check with the provider before you complete your order.
Pros
Secure way to take money abroad
Easy to cancel if lost or stolen
Replacement usually sent within 24 hours
Cons
Cannot be exchanged everywhere
No emergency cash if lost or stolen
If not signed can be used if stolen
You must sign your traveller's cheques when you get them or risk someone fraudulently signing and using them.
Traveller's cheques are provided by many travel money companies in association with American Express. This means that you will need to find an American Express kiosk abroad to cash in your traveller's cheques, though many hotels will also cash them in for you.
Use the American Express Travellers Cheques website to search for a location.
Spending abroad can be costly, so make sure you compare the market for the best exchange rates available on your travel money before jetting off.