Hands up who remembers the old days of travellers’ cheques??!
You’d pick them up from the post office or your bank and be terrified of losing them, as they represented all your holiday money for your 2-week trip.
Maybe you’d stash them in different places in your hand luggage, so if you lost one cheque, it wouldn’t be the end of the world. Then, at your resort, you’d queue at the reception desk to change them for local currency, at an abominable exchange rate.
You paid a fee to buy them and commission to cash them. They were a right royal rip-off. Plus having to write out and sign a cheque each time you needed money now seems so old fashioned!
Nowadays, there are much better options when it comes to taking your money on holiday. Here’s our guide to save you money and time with your holiday spends:
Best debit / credit cards to use aboard
Credit and debit cards are the most hassle-free way to get money when overseas. However, don’t assume that your everyday credit or debit card is the best option when you go aboard. Most of them charge transaction fees for using your card and many have miserable exchange rates.
The worst offenders: Santander, TSB, BoS, Lloyds and Halifax debit cards (all charge a min spending penalty of 50p to £1.50 per transaction and cash withdrawal fees up to £4.50!!).
Here are our picks of the best credit and debit cards to use abroad this summer.
Best Debit Cards:
Starling – no fee for cash withdrawals or spending on the card. Standard Mastercard exchange rate.
Monzo – let’s you take out up to £200 fee-free in a 30 day period, then 3% on cash withdrawals. No fee on spending using the card. Standard Mastercard exchange rate with no mark-up.
Metro – no fee for cash withdrawals or spending on the card in Europe; 2.75% fee outside of Europe (+£1.50 for cash withdrawals), so we don’t recommend it outside of Europe.
Best Credit Cards:
Halifax clarity – no interest charged on spending abroad, if you pay it off in full on your next statement; no fee for cash withdrawals (but you’ll be charged interest at 18.9% even if you pay it off in full on your next statement, which works out as approx £1.50 per £100 withdrawn).
Tandem – same as Halifax clarity; plus 0.5% cashback on purchases
Should I pay on my card, or withdraw the cash abroad?
Spending on your card is almost always cheaper than withdrawing the cash. Especially with credit cards, which charge you interest on cash withdrawals until you pay them off. If you do need to withdraw cash, then it’s generally better to make a few, larger withdrawals, than lots of smaller ones.
Should I pay in local currency or pounds?
Many ATMs or card payment machines ask you if you want to pay in pounds. Generally, we advise paying in the local currency, as the pound conversion will usually be a crappy exchange rate. If in doubt, whip out your phone to do the maths!
What about prepaid cards?
If you’ve got a holiday budget you need to stick to, or you want to lock in an exchange rate, so you know how much local currency you’re getting, then prepaid cards might be the thing for you. But be aware that prepaid cards typically have more fees than credit or debit cards.
Best Prepaid Cards:
Revolut – supports 23 different currencies for withdrawals and 130 currencies for spending; no spending fees; no fee for the first £200 cash withdrawal in a calendar month, then a 2% fee on subsequent withdrawals
FairFX – choose from pounds (to covert to other currencies), euro or dollar cards; £1/€1.50/$2 fee on cash withdrawals; 1.4% exchange fee