Using credit cards abroad
Most Credit Cards charge you for using your Credit Card abroad. However there is one which doesn't and that is The Post Office, though this does have very specific Terms and Conditions and does usually still charge interest and fees for cash withdrawals, even if you clear the balance in full.
But which are the Best Overseas Credit Cards? Abbey have offered a Credit Card for use abroad which unlike The Post Office and Nationwide charge no fee for cash withdrawals. However to find out if this particular card is still available you would need to go into an Abbey branch or contact them by telephone as it is not advertised on their website.
When looking at which card would suit you best, look at the Terms and Conditions and also consider Cashback Credit Cards and Reward Cards as they may prove to be more appropriate. Other Credit Card providers usually would look to charge amounts around 2.75% for overseas use which means that you could end up paying quite a significant amount for your purchases.
What Credit Card Charges could you really be looking at?
You may decide that the overseas charges are worth paying for the convenience and security when travelling abroad. But you should consider problems which may arise, such as in France, Italy and Spain there is a trick being used by restaurants and retailers where they charge your bill and ask you to authorise in euros but then actually apply the charge in sterling. Doing this carries a fee of 4% as this is referred to as a Dynamic Currency Conversion.
Eastern Europe Credit Card Fraud
To read more about card fraud in Eastern European Countries, click here..
What other payment options are there when Travelling Abroad?
Travellers Cheque Charges and Information
Travellers Cheques can have charges applied dependant on where you purchase them from. For example if you buy your travellers cheques from The Post Office then no commission will be applied, unless you are buying American Sterling Travellers Cheques in which case a 1.5% commission will be applied.
There are many ways in which you can Order your Travellers Cheques though, and dependant on how much spare time you have or how long it is until you travel you should consider all the options and choose which would be the best for you.
How to use Travellers Cheques
When you first receive them, sign them all in the top right corner and then keep a note of the cheques serial numbers separate to the actual cheques. The reason for this is because if you lose your cheques or if they are stolen you will need the numbers to stop the original cheques and request replacements. When you are ready to cash in or use a Travellers Cheque you need to sign the lower left hand corner of the cheque at the time of exchange, in view of the cashing agent, and also provide ID such as your passport. The acceptor then will take the Travellers Cheque and provide you with currency according to that days offered Exchange Rate. There may also be a small fee charged for the currency but as most places do indicate their exchange rate and charges outside you should find it easy enough to shop around for the best rates.
Travellers Cheques do not expire, so if you don't use them on one trip you may be able to use them at a later date if that is what you would prefer to do and another advantage is that they can be replaced, usually within 24 hours, virtually anywhere in the world, should they be stolen, lost or damaged.
Travel Money Cards
Available in Euro, Sterling and US Dollars, and available from the Post Office or Travel Agents, such as Holiday Hypermarket. The cards must be pre-loaded with funds as this is not a form of credit.
Unlike travellers cheques you do not need ID every time you use your card, you can top up funds by phone or in a Post Office branch, you can make cash withdrawals and it is separate to your bank account.
Disadvantages You are charged transaction fees, cash withdrawal fees, top up via phone per 14 days is £350, and maximum initial web load is £2500.
In principle the Travel Money Card does seem like a great idea, however, once you have taken into account fees and the fact that you can only top up £350 via telephone over 14 days then maybe it does not seem as good as you would first expect it to be?
Using Debit Cards Abroad
You could choose to use your Debit Card Abroad and withdraw cash at a cash machine or make purchases. However most banks do charge for using your debit card abroad, especially where cash withdrawals are concerned and so it is wise to check with your bank prior to travelling exactly what charges you may incur. You will be charged the Exchange Rate at the time of making your purchase, which may or may not work in your favour.
Using Cash Abroad
You could decide that you would prefer to withdraw cash in the UK and then simply exchange it into the correct currency whilst abroad as many places offer currency exchange. This often includes your holiday representatives, the hotel you are staying in and many local shops. The disadvantages of this option are probably obvious in that if your money was stolen, you would not be protected.
You may be unsure as to if you should go with Travellers Cheques or Cash but no matter which option you decide to choose you should always look around for the best exchange deal available and this doesn't mean just looking for 0% Commission charges. Even if 0% is being offered the exchange rate might not be very competitive and so overall you could be better off choosing a higher exchange rate and paying commission.
The same applies when changing currency back into UK Sterling, though if you are a regular visitor the that country many people choose not to change their left over money back at all, especially in the current climate where the pound has lost it's strength against other currencies resulting in a much lower rate of exchange. This is certainly a point to keep in mind in the future when (hopefully) the pound will have regained it's financial position against other currencies. But you need to remember that guessing currency changes is a difficult thing, even professional brokers get it wrong. You have to consider that, if at that time the Pound is strong, it doesn't mean it won't get stronger, and if the Pound is weak, it does not mean that it will not get any weaker.