4 December 2023
Best way to spend money abroad - cheaper and without fees
It can be easy to forget about the payment method you’ll use to make purchases on holiday.
Getting your planning done before you leave typically involves paying for your flights and hotel, looking into a hire car, considering car hire excess insurance and packing your suitcase. However, we don’t always think about the spending we’ll do once we touch down at our holiday destination.
Chances are, you’ve been asked for the bill in a restaurant in Europe, whipped out your credit card, then suddenly panicked about the potential fees.
If you want to get your finances in check ahead of getting on that plane, read on to find out the best way to spend money abroad.
What is the best way to spend money abroad?
For those of you who are really planning ahead, the best payment method is a travel card. There are multiple options – you can go for a travel credit card, travel debit card or pre-paid travel card depending on your situation and preferences.
If you travel frequently and don’t want to incur fees each time you spend in other countries, opening a travel card account may be a good idea. Bear in mind that, if you use a credit card, it’s advised to repay the credit in full each month. Also consider the fact that if you have a poor credit score, a travel credit card may not be for you.
You will need to be happy to take out another bank account if you get a travel debit card. You won’t get charged non-sterling transaction fees, but you will need to pay money into the account in order to use it.
For occasional trips and those who want to manage a set budget, a pre-paid travel card can be a good choice. You will know how much is set aside for your trip and avoid overspending. You can use our holiday planner tips to create a solid budget to assign to your pre-paid travel card.
If you do end up needing to use your usual debit or credit card on holiday, bear in mind that the transaction could be blocked if your bank doesn’t know you’re travelling. It’s wise to have some backup currency, just in case, and to talk to your bank ahead of time.
Is it cheaper to use cash or card abroad?
The answer depends on the way you take out cash. If you want to withdraw foreign currency from an ATM abroad, you will likely be charged between 1% and 3% of the transaction. As a result, especially if you will be primarily using cash during your trip, it’s recommended to get your currency before you travel.
As with many things in life, the key to getting cash prepared is planning. Booking your foreign currency ahead of time ensures you lock in the best rate. You will likely end up paying more if you go to change your money on the day you travel.
Generally speaking, if you’re looking for where to get Euros or other overseas currency, it’s cheapest to go to your local bank and pick up your foreign currency ahead of time. You can also go to a Post Office in person or get your currency delivered directly to your home. Be aware that if you do a last-minute withdrawal from your departure or arrival airport ATM, you will probably be charged a fee.
As described above, you can save on fees with card transactions if you plan ahead. Being aware of whether your bank charges fees for purchases is key. For the most part, though, you can use either cash or card if you plan ahead. Likewise, both options will be more expensive if you haven’t done your research beforehand.
Can I use my debit card abroad?
Generally speaking, yes, but there are disadvantages of using a debit card abroad. There may be transaction fees to pay. What’s more, if your bank blocks your card due to believing there’s a security concern, you may need to call them to resolve the issue. This could cost you more money if you don’t have free overseas minutes on your mobile phone.
Using a credit card abroad is generally worse, as the non-sterling transaction fee will typically be higher than with debit cards.
How to withdraw money abroad without charges
Certain banks will not charge you a foreign transaction fee for using other currencies in Europe and potentially further afield, while other banks are not generally designed for spending abroad.
If you want to withdraw money without charges, look into whether your current bank offers this benefit and consider switching if you will be travelling regularly.
Alternatively, if you are going on a one-off trip, then a pre-paid travel card or a withdrawal of physical foreign currency might be a better option.
Can you buy currency with a credit card?
Technically, yes, but it’s advisable not to. This is because, when you do so, you will be charged as if you made a cash withdrawal. You will therefore need to pay a cash advance fee as well as daily interest charges.
In essence, buying currency with a credit card is the least cost-effective way to get hold of foreign money for your trip.
About the author
Jon spent years travelling Europe and Asia before settling down in the UK when he met his wife.
He’s hired cars across the globe and is passionate about helping people save money with excess insurance.
Since co-founding Reduce My Excess, Jon has found that he can use the knowledge he picked up from his travels by sharing it in online guides and articles.
He hopes to save people from making the mistakes he learnt from over the years by giving them the travel information they need before they head off on their holidays.