Best ways to spend abroad - from cash to credit cards

Summer holidays don't come cheap, so if you're heading abroad this year, you'll want to get the best possible deal on your holiday money. Here's how.

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Buy foreign currency in advance

It's always worth taking a bit of cash with you, so take the time to shop around for foreign currency in advance. The most competitive deals are usually found online, and collecting your money from the foreign exchange bureau will be cheaper than having it delivered. 

If you prefer to have your currency delivered, compare delivery fees carefully as they can vary depending on the amount of money you're ordering. 

Many companies also charge a commission to exchange sterling into foreign currency, so be sure to factor that in when you're comparing costs. In some cases, you may be offered a commission-free exchange, but be aware the exchange rates may not be as competitive.

Try not to leave buying your foreign currency until you get to the airport as you will pay inflated exchange rates and commissions. 

If you have left it a bit late, you can still save money by pre-ordering it for collection at the airport. Travelex, for example, will allow you to pre-order your currency just four hours before picking it up at the airport desk.

Use the right credit card

Taking a debit or credit card with you can be a good choice if you don't want to carry around stacks of cash on holiday. But choose your card carefully as you could get caught out by expensive fees. 

Many cards will charge a foreign exchange fee for overseas use. Often this is around 2.75% to 2.99%, so for every £100 you spend, you could be charged £2.75 to £2.99. 

On top of that, if you use your credit card to withdraw cash (known as a cash advance), you could be charged another fee of around 2.99%, plus interest from the moment you take out your money, even if you pay off your balance in full that month.

Interest for cash advances is usually high, at around 27% APR representative, so avoid withdrawing cash on your credit card if you can.

If you do want to take plastic with you, look for a card that's specifically designed for overseas use.

The Halifax Online Clarity credit card, for example, won't charge you for foreign transactions or cash withdrawals anywhere in the world. However, you will be charged interest at a rate of 19.95% pa (variable) if you are unable to clear your balance each month, and from the moment you withdraw cash from a machine. The card has a representative rate of 19.9% APR (variable)*.

Alternatively, the Virgin Money Travel credit card won’t charge you a fee for foreign transactions abroad, and it offers 0% on purchases for 12 months, so could be a good choice if you want to spread the cost of your spending interest-free. But try to clear your balance before the 12 months are up as after this you’ll pay 21.9% pa (variable).

It’s best not to use the Virgin Money card for cash withdrawals as you’ll have to pay a 3% fee, plus interest at a rate of 27.9% pa (variable) from the moment you get your money.

The card has a representative rate of 21.9% APR (variable)**.

Consider a prepaid card

Another option is to use a prepaid card when you're away. 

With this type of card, you pre-load it with a cash amount before you set off (you can top it up with further funds later if necessary) and you can then use it in the same way as a debit or credit card. 

Although you may still be charged fees, prepaid cards are often cheaper to use than a standard debit or credit card. What's more, they are ideal if you're on a budget as you can only spend what's on the card.

They can also be a good choice if you're worried about being accepted when you apply for a credit card as there are usually no credit checks (the provider may still carry out an identity check).

Typically, prepaid currency cards can be loaded with sterling, euros or US dollars. If you opt for one that can be pre-loaded with sterling, your money will be exchanged into the local currency when you use your card abroad.

FairFX, for example, offers a Euro currency card, a Dollar currency card and an Everywhere card. These cards are free to apply for, so long as you load at least £50 onto them.

With the FairFX euro and US dollar cards, there are no transaction fees provided they are used in the correct currency, but there is a €1.50/€2 ATM fee. 

With the Everywhere card, you'll be charged a 1.4% transaction fee when you use it outside the UK, as well as a £1 ATM fee, but bear in mind this is still cheaper than many standard cards.

In addition, new customers applying for either a FairFX euro or US dollar card through MoneySuperMarket will receive £30 when loading £500 or more onto the card. T&Cs apply.

If you apply for the Everywhere card through MoneySuperMarket, you'll receive £5 when loading £500 or more onto the card, or £26 when loading £1,000 or more. T&Cs apply.

Caxton FX, on the other hand, offers one card that can be pre-loaded in euros, US dollars or sterling, or any other available currency. (A minimum of £10 must be loaded on to the card before you receive it.)

There are no foreign transaction or cash withdrawal fees when the card is used overseas.

New customers applying through MoneySuperMarket will receive £30 cashback when loading over £500. Note that this offer is only valid for 30 days after registration and T&Cs apply. 

*Representative Example: If you spend £1,200 at a purchase interest rate of 19.95% p.a. (variable) your representative rate will be 19.9% APR (variable).

** Representative Example: If you spend £1,200 at a purchase interest rate of 21.9% p.a. (variable) your representative rate will be 21.9% APR (variable).

All credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See MoneySuperMarket.com for further information.

MoneySuperMarket is a credit broker - this means we'll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a commission by the lenders - though the size of that payment doesn't affect how we show products to customers.

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