Here’s a look at your options…
It’s always worth taking some foreign currency away with you, if only for taxi journeys and tips. But avoid buying your foreign currency at the airport as you’ll pay inflated exchange rates and commissions.
Instead, plan ahead and shop around for the cheapest deal. The best foreign exchange rates are usually found online, and you’ll often save even more by picking the money up from the foreign exchange bureau rather than having it delivered to your home.
Tip: If you forget to organise your money in advance, don’t despair as pre-ordering it for collection at the airport (even a few hours before you need it) will still save you money. Travelex, for example, allows you to pre-order your money just four hours before picking it up at the airport desk.
Taking plastic with you on holiday means you don’t have to carry around a wallet full of cash. But be careful - use the wrong type of credit or debit card overseas and you could be charged a small fortune.
Many cards charge fees for using them abroad. For example, every time you spend on your card, a 2.99% ‘foreign load fee’ might apply – in other words, you’ll pay £2.99 for every £100 you spend.
Some cards will also hit you with fees for withdrawing cash at an ATM – again, it could be 2.99% of the amount you withdraw. Add these two fees together and you’re looking at £5.98 on every £100.
In addition, if you withdraw cash on your credit card you’ll be charged interest from the moment you take out your money, even if you pay off your balance in full that month.
Interest for this type of transaction (known as a cash advance) is often around 27% APR representative, which could make a serious dent in your finances.
Fortunately, a number of credit cards are designed specifically for overseas use and will help you to side-step these fees.
The MBNA Everyday Plus American Express credit card, for example, won’t charge you for using your card anywhere in the world – that means no fees when you spend on it abroad and no fees for making cash withdrawals.
Remember though, if you do make a cash withdrawal, you will still be charged interest from the moment you withdraw your money. However, the MBNA card charges one low rate of 7.4% pa (variable) on cash withdrawals, purchases, balance transfers and money transfers.
The card has a representative rate of 7.4% APR (variable)*.
The Halifax Clarity Card also won’t charge you for foreign transactions or cash withdrawals, but you’ll be charged interest at a rate of 18.95% pa (variable) if you don't pay off your balance in full each month (and from the moment you make any cash withdrawals). The card has a representative rate of 18.9% APR (variable)**.
Tip: Apply for an overseas credit card now if you’re hoping to use it this summer as it usually takes one to two weeks for you to receive your card once you have been accepted. If you’re unsure whether or not you are likely to be accepted for a credit card, use our Smart Search tool first.
A prepaid card is an alternative to taking a credit card or debit card with you. They can be used in the same way but must be topped up with funds in advance.
Because you can only spend what’s on the card, they are ideal if you are on a budget, though you can top them up with further funds should you need to. This also means if your card is stolen, only the amount on the card can be spent.
Use the wrong type of credit or debit card overseas and you could be charged a small fortune
What’s more, there are no credit checks so you don’t need to worry about whether or not you will be accepted (that said, an identity check may be carried out to ensure you are who you say you are).
You can typically load these cards with sterling, euros or dollars. Should you opt to load your card with sterling, your money will be exchanged to the local currency whenever you use your card abroad.
Often this type of card is cheaper than using a standard credit or debit card, but there are still fees to watch out for.
The Euro card and US Dollar card from FairFX, for example, won’t charge you when you spend abroad (providing it is in the correct currency), but there is a €1.50/$2 fee for ATM withdrawals.
The FairFX Anywhere card can be loaded in sterling but there is a 1.4% charge when used for purchases outside the UK (though this is still cheaper than most standard cards), as well as a £1.50 fee for cash withdrawals.
The FairFX cards are free to apply for, so long as you load £50 or more on to the card – otherwise you will pay £9.95. And new customers applying for either the Euro or US Dollar card through MoneySuperMarket will receive an extra £8 when you load £300 or more, or an extra £20 when loading £600 or more. If you apply for the Anywhere card, you’ll receive an extra £5 when loading £500 or more, or an extra £26 when loading £1,000 or more. T&Cs apply.
Another option is Caxton FX – again, there is a Euro Currency Card, a US Dollar Currency Card and a Multi-Currency Card. Providing you use them in the correct currency, there are no foreign transaction fees – but there is a 2.49% fee for the Multi-Currency card if you use it outside the UK, which you will no doubt be doing.
There are also no cash withdrawal fees if you use them in the correct currency.
New customers applying through MoneySuperMarket will also receive £20 extra when loading the equivalent of £600 or more in any currency. T&Cs apply.
You can compare a wide range of prepaid cards here - keep an eye out for application fees, loading fees and inactivity fees (applied to some cards if you don’t use them for a number of months).
Tip: Although there are no credit checks, it can still take one to two weeks for your card to be sent to you, so make sure you order it well in advance of your trip.
Following a successful pilot last year, Travelex launched its Supercard on June 14.
The card works by linking to your credit or debit card via a dedicated smartphone app, so there's no need to pre-load the card with cash. When you use the card abroad it charges your credit or debit card in pounds at that day's Mastercard exchange rate.
There are no application, registration, administration or usage fees for spending overseas, but be aware you will now be charged a 2.99% fee for cash withdrawals (this wasn't the case with the pilot).
However, if you have linked your card to a credit card and use it to withdraw cash at an ATM, it will be classed as a purchase, not a cash withdrawal, which means you won't be charged interest at expensive cash advance rates.
Tip: To get your hands on the card, you'll need to apply and download the app here. You'll then be sent your card in the post. There's no credit check for this card, but an identity check will be carried out.
*Representative example: If you spend £1,200 at a purchase interest rate of 7.4% pa (variable) your representative rate will be 7.4% APR (variable).
**Representative example: If you spend £1,200 at a purchase interest rate of 18.95% pa (variable) your representative rate will be 18.9% 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.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.