How to avoid overpaying on holiday this summer

Category: Travel
03/07/2018

In all the excitement and planning that comes with going away on holiday for the summer, it's understandable that certain money matters may be forgotten about. With many focused on finding the best deals, however, we've taken a look at the best ways to withdraw money abroad to help you make the most of your holiday cash.

Choose your plastic wisely

Our latest research shows that sticking with your regular debit card for spending abroad can be a costly mistake; for example, the NatWest Select Account charges £11.88 on a £250 cash withdrawal made abroad using their debit card, while the HSBC Credit Card Visa would charge £14.95. Considering there are plenty of fee-free credit cards for use abroad, this would mean a few less cocktails for those who don't prepare properly.

"Using the plastic or exchanging cash doesn't have to mean paying out fees or getting a bad rate," Rachel Springall, finance expert at Moneyfacts.co.uk, comments. "There are some simple ways for travellers to save cash this year, just by making small changes to the way they spend."

The table below highlights some of the best cards out there for those who want to avoid excessive fees. Rachel explains: "Starling Bank's mobile-only bank account debit card and Nationwide's FlexPlus debit card allow free cash withdrawals worldwide, while Metro Bank's Current Account debit card is free to use to take out cash in Europe. On credit cards, Creation Financial Services, Halifax and Santander have deals that charge absolutely no fees when used overseas."

Those who have a strict budget for their holiday spending may want to consider a prepaid travel card instead. Not only will you be unable to spend more than you put on it, these cards can get replaced if stolen without you losing your money, and the top ones don't charge you for ATM withdrawals.

Such a card could be ideal not just for budgeting purposes, but also in cases where you can't pay by card. Additionally, Rachel mentions that "with the Caxton Currency Card MasterCard – one example of a prepaid card offering fee-free cash withdrawals – you can get an app, use the card worldwide, and lock into an exchange rate."

Don't forget about cash

Of course, travellers could also prepare their cash beforehand, so they won't have to use an ATM abroad at all. With tipping in particular often requiring cash, and some countries such as the United States requiring 10-20% in tips on top of meal costs, it's important to think about how much you'll need in cash before you go. Then you'll want to carefully consider where to get it.

"One of the golden rules of gathering spending money is not to leave it to the last minute, as travellers will usually get a poorer exchange rate on the high street," Rachel says. "Considering a currency specialist instead, such as HiFX, can mean more notes to take away on holiday, because the exchange rates are usually more competitive."

In the table below you will find one example of the competitiveness of a currency conversion service, with customers being able to save €15 when exchanging online compared to going into their local bank branch. While your high street provider may be more competitive, the main attraction of HiFX is that they don't charge any fees, which means you wouldn't have to worry about anything other than getting the best exchange rate. Note, however, that this service will require you to have either a prepaid card or bank account that can accept the currency you're converting to, as they don't post out cash.

"With only a few weeks left until families prepare to fly away from it all, now is the time for them to find out where and when they will pick up their holiday cash, and perhaps apply for a new cost-effective card to finish off the packing list," Rachel concludes.

What next?

Have a look at the top travel credit cards or prepaid travel cards, and consider an international money transfer service, to make the most of your money and your holiday at the same time