Just manage to find some explanation, hope this help us save some £$ and make the most of it.


Currency conversions
So has foreign currency been surpassed in favour of cards? The answer is generally, yes. If you have the right card you will almost certainly save money when compared to exchanging your Sterling for foreign currency. However, for some, any forms of cards, whether it is a credit card with charges or the new breed of prepaid cards, are off-putting and of course the wrong card can carry risks. Cash is also the easiest to use but, at the same time, is the easiest to lose or have stolen so don't take more than your travel insurance covers. In those cases, exchanging money is probably right for you – but still make sure you're getting the best deal.
Don't assume that a sign saying 'commission free' automatically means you're going to get a great rate. In actual fact you should be very wary of 'commission free' offers because the chances are that you will be offered a worse exchange rate than the bureau itself receives, allowing them to make profit that way. The only way to tell is to ask how many euros/dollars, etc, you will get in exchange for your pounds. Simple as that!

Some companies don't have commission charges – so if their exchange rate is competitive they are worth a look. However, don't rule out those that do charge commission, as their rates can still be more competitive.

Be wary however, of flat fees and minimum charges. Minimum charges make it difficult to change small amounts of money but flat fees can offer good value if you are changing larger sums of money. Watch out for handling fees too, which are normally about £3 but can be higher. Also consider your own bank or building society as they might have preferential rates for their account holders.

Cheque Mate
Option two is the trusty travellers cheque, which is certainly one of the most secure methods of carrying your money abroad. Indeed that’s the overriding advantage of travellers cheques because as long as you make a note of the cheque number or make a photocopy (and don't lose that too!) you can travel with peace of mind.

The downside however, is that they're not always the cheapest way to carry your money abroad. In fact expenses can mount up as you are usually charged commission when you buy Sterling cheques and an exchange rate is applied when you exchange them into local currency. Once again, shopping around for the best deal becomes crucial.

With foreign currency travellers cheques those who think ahead, get ahead. Keep an eye on the exchange rate and look to transfer funds potentially well ahead of time. If you find a good rate, capitalise on it – and if you think the rate is going to drop further then why not play safe and change half your money? Also look out for good deals. Some providers may offer free commission, especially for students.

Deals that don't charge commission won't automatically be the best deals – you have to check their exchange rate and make sure it is competitive. Also be aware that when cashing in cheques abroad you are likely to face an additional charge (normally an extra couple of pounds) – so try and take your cheques in larger amounts, as it will cost the same to cash-in £100 as it will cost to cash-in £10.

As with foreign currency, exchange rates for foreign currency travellers cheques constantly change so shop around and take a thorough look at the market before deciding on the right option for you.

Plastic fantastic – debit cards
Carrying cards abroad is certainly a lot safer than carrying cash, as the vast majority of card providers will offer free card replacements that can be sent to you in the event your card goes missing. Cash cannot be replaced in this way. Finding the right card will allow you to make impressive savings and will work out much cheaper, safer and convenient than a foreign currency exchange or travellers cheques. Find the wrong card however, and, as with any form of credit or debit card, you'll pay for it.

The most important element to watch out for with a card is the fees. There are two main charges for using a debit card abroad. One is a loading fee (also known as a conversion fee) - this is usually about 2.75% (which is far too high - anything more than this and you're paying way over the odds). Indeed there are a handful of issuers who don't charge a loading fee at all.

Cash withdrawals will also incur charges – this is normally a percentage of the amount withdrawn though the total fee for one withdrawal is usually capped, making it more cost effective to withdraw larger sums of money. Other banks will just charge a flat fee. Also be wary of any potential charges delivered by the overseas bank itself when you withdraw– always try and scout around to find a lower charge.

Be wary of fees for spending too. Unfortunately, this is an increasingly common practise with banks grabbing every penny they can from holidaymakers and charging fees as high as £1.50 for every transaction. Among the chief offenders are the debit cards from Lloyds TSB, Halifax, RBS, Intelligent Finance and NatWest.

OK it sounds like there are a ton of fees and that debit cards are worth avoiding like the plague… but frankly, cards are a great way to make purchases. You just have to find the right one – and there are a number of very good cards out there with fees that are limited and attractive rates.

Give me credit
A lot of providers will have special travel credit cards purposefully targeting the frequent flyer with points and other loyalty rewards. Of course these bonuses are great but the fees and the interest rate should always be your first consideration if you intend to use your card abroad and also if you plan to borrow. With that in mind it's often a good idea to have a credit card just for using when overseas – and that can be paid off in full each month.

As with debit cards, watch out for loading fees - conversion charges that incorporate the processing fee - usually set at 2.75%.

If you have a credit card then watch out for immediate interest charges, particularly for cash withdrawals. These incur interest when your balance is not repaid in full. In general it's best to avoid using a credit card to withdraw cash abroad, as you would at home.

Despite the potential charges, if you shop around there are some fantastic credit cards to use overseas which don't carry loading charges and have low ATM fees.

One of the crucial advantages of a credit card is that there are a host of cards with 0% on purchases for as much as 12 months. This will allow you to make purchases without being stung by interest charges - but do be wary to make sure you are not being hit with a loading fee, and make sure there are no restrictions on overseas purchases. Also, the majority of credit card providers will supply a free replacement card. So if you misplace your credit card or it is stolen, contact your credit card company and they will send you a replacement. This offers a level of security that simply isn't available with cash.

Post Office Classic – The Post Office Classic card is one of the leading credit cards to use at home and abroad with its typical rate of 14.9%APR. Where this card comes into its own for travellers however, is that it is commission free for use abroad. There is an introductory offer for purchases of 0% p.a. fixed for three months and an introductory offer for balance transfers of 0% p.a. fixed for eight months. In addition, there is a 24hr service available so if you do misplace your card whether at home or abroad you can call the emergency contact number and receive a replacement card for no charge.

The new plastic power
Prepaid cards are the alternative way to pay abroad, acting as the effective 'pay as you go' debit card. The advantages of prepaid cards are numerous as they offer increased safety and, if you're buying online or on the phone and your card is used fraudulently you will be able to get your money back. Furthermore, there is no debt risk as you control the funds you place on the card, and prepaid cards are more accessible – you can get a prepaid card without having to worry about your credit history.
From a travel perspective, there are numerous advantages to prepaid cards. Safety is again a key feature because if you lose your prepaid card, you can contact your provider and they will cancel your lost or stolen card and issue a replacement. Additionally, depending on the provider, you can use a prepaid card worldwide and some providers will even offer 0% foreign exchange fees.

So what's the downside? Unfortunately, with prepaid cards being a relatively new phenomenon the market isn't too competitive just yet (though it is expanding). Consequently, there are still a lot of fees to be wary of such as card application fees, ATM withdrawal fees (which is often higher overseas) and charges for top-ups. However, more prepaid cards are emerging which drives these fees down, and, additionally, there are prepaid cards designed specifically for travel which limit overseas costs such as spending overseas, ATM withdrawals, etc.

It's also important to consider HOW you can top up. Some prepaid cards will only allow you to top up face-to-face, while others give you the chance to top-up face-to-face, on the phone or on the internet. When travelling it is crucial to think about how you can top up your card overseas - face-to-face is instantly ruled out and phone calls are often difficult to make, so look for a prepaid card that allows you top-up over the internet.

Again, take a complete look at the market before opting for the right card for you.

So what’s the downside? Unfortunately, with prepaid cards being a relatively new phenomenon the market isn’t too competitive just yet (though it is expanding). Consequently, there are still a lot of fees to watch out for:

Card application fees - There could be a charge for obtaining a prepaid card.
ATM withdrawal fees (which are often higher overseas) - Generally you shouldn't need to withdraw cash because it will be pre-loaded on to your card, but if you do you are likely to face charges.
Charges for top-ups - Will you be charged on each occasion you top-up - and does this depend on the manner in which you top-up?

Card users beware: dynamic currency conversion
Merchants and retailers overseas might offer you something called 'dynamic currency conversion'. This means they charge you in Sterling (or for overseas readers, whatever your currency may be) rather than the currency of the country you're travelling in. This can be convenient and gives you a familiar perspective of the price you're paying - but you will normally be hit with a higher exchange rate for this service so never use it and always CHECK before signing anything or entering your PIN - they might not always ask! So if you see a conversion, make sure you ask to be billed in the local currency.

Recommends...
So with all these alternatives what do we suggest you do? Well generally, we'd say opt for a debit or credit card as your main source of travel money, when travelling abroad. Choose one that doesn't charge loading fees. Currently the Post Office comes out on top in the credit card category with no commission charge for use abroad. If you can't be bothered applying for a new card then do not use them for cash withdrawals unless you really need to. That is why we also suggest taking cash with you for small ticket items - such as buying drinks and for transport. Change your cash before you travel and be sure to shop around to get the best exchange rates. As a back up, for security, you might also consider travellers cheques and prepaid cards in case of emergencies. Good luck and enjoy your trip!


What is foreign currency and foreign exchange?
Foreign currency is the money used in the country you are planning to visit - so for example, dollars in the USA and euros throughout most of Europe. Foreign exchange is the purchase of one country's currency against another - so how many dollars do you get for your pounds and so on. Exchange rates can vary between providers and there are often commission and handling fees charged for making an exchange.

What is a debit card?
This is a card, issued by your bank, which is used to make electronic withdrawals from the funds in your bank account, purchasing goods or to obtain cash advances. Using credit or debit cards overseas is the most economical way of converting currencies as the bank card rates will invariably work out cheaper than a bureau, airport or other point of cash exchange. They are also the safest and easiest way of making purchases abroad.

What is a credit card?
A plastic card that bears an account number - this is assigned to a cardholder who has a credit limit that can be used to buy goods and services. Credit cards can also be used to obtain cash disbursements on credit. The cardholder is billed for the repayment of credit, usually on an instalment basis, and can be charged interest - though some cards have interest free offers. Credit cards are a safe and easy way of making purchases abroad and, despite potential fees (which you should look to limit), generally work out as a more cost effective way of converting currencies than travellers cheques or foreign exchange.

What are prepaid debit cards?
The concept is the same as a prepaid gift card, prepaid phone card, etc. You load money on to a card and this can be used at retailers' or online merchants. Money can be loaded using cash, a bank transfer or another credit card. You have control over the money on your card and therefore control the amount you can spend so there is no risk of running into debt.

What are traveller’s cheques?
Travellers cheques are one of the safest ways of taking money abroad. They are bought in the UK and as soon as you receive the travellers cheque you MUST sign each one. This is so that when you come to buy something abroad you can present the cheque, enter the payee and sign in front of a cashier – the idea is that the signature you make is proof you are the person who bought the cheque. Just like cash you will receive change if it's due – but the added bonus is that if the cheques are lost or stolen you can report this (as long as you have the cheque numbers) and receive a replacement - more on this in the Cheque Mate section of the main article.


Using a debit card abroad
The main advantage of using a debit card rather than a credit card abroad is that, as at home, withdrawals are a lot cheaper. Typically, with a debit card you will pay around 1.5% for withdrawals - most banks will have fixed fees making it better to withdraw larger sums of money. So if your bank account contains enough money for you to do this, stick to a debit card.

However, there are still plenty of fees to be wary of:

Cash withdrawal charges - As mentioned above, this will generally be a lot cheaper than using a credit card. However, fees can still be as high as 2% with a debit card, so make larger withdrawals where possible. Also be wary that many overseas banks will charge their own withdrawal fee.
Loading charges - When a card makes a travel money conversion a 'load' is often charged. The higher the load, the worse your rate as this is often in the region of 2.75%.
Spending charges - This doesn't apply to all debit cards, but does apply to some. Providers might charge for spending overseas, which ruins the concept of spending on the card rather than making cash withdrawals.
Despite these off-putting fees, there are some cards available that can be free of interest, free of withdrawal fees and spending charges and loading charges. They do exist! You just have to shop around and get the right debit card for you. If you can there are massive savings to be made.

Using a credit card abroad
A lot of providers will have special travel credit cards purposefully targeting the frequent flyer with air-mile points and other loyalty rewards. Of course these bonuses are great but the rate should always be your first consideration. With that in mind it’s often a good idea to have a credit card just for using when overseas – and that can be paid off in full each month.

The best form of credit card to take abroad is one that offers 0% on purchases. This means that you will not pay any interest on anything you buy making credit cards one of the most convenient and cost-effective ways of paying abroad.

Still, there are fees to be wary of:

Cash withdrawal fees - As with debit cards, be wary that taking money out will cost you often in the region of 2% and regularly a lot more with credit cards.
Loading charges - Again, much like debit cards, this can be as high as 2.75% and won't show up on a statement as a 'mark-up'.
Interest charges - If using a credit card be aware of immediate interest charges, particularly for cash withdrawals, which incur fees when you don't repay your balance in full.
Again the aim with a credit card should be to get a good rate and the lowest fees - and there are some providers who won't charge loading fees if you shop around. If possible avoid making cash withdrawals at all on your credit card, as you would at home, and retain it for purchases - a mixture of both cash and credit cards can offer the best money saving solution when travelling abroad.


Generally, using a debit or credit card overseas makes more sense than paying the heavy commission charges for a travellers cheque or foreign currency. However, in this instance it is vital to find the right card and be sure you don't get stung with fees.