MILLIONS of holidaymakers could be at risk of making a costly credit card mistake.
With the summer holidays in full swing, it’s important to bear in mind that using your card in another country could see you paying foreign exchange fees and cash withdrawal charges.
Charges usually differ from provider to provider and card to card – but they can add up quickly.
They usually come in two forms – set cash withdrawal fees and non-sterling fees.
TotallyMoney has urged millions of UK holidaymakers heading abroad this Easter to use the right card.
It has also calculated the cost of using some of the most popular credit cards to withdraw cash when travelling.
And while they may seem like a small percentage of what you’re spending, they can quickly add up — especially when making multiple smaller transactions.
Taking out just £10 to buy your family some ice creams and drinks on the way to the beach could actually cost you nearly a fiver in fees alone.
Andrew Hagger, personal finance expert, and founder of Moneycomms said: “Although credit cards give you financial flexibility and help you manage unexpected expenses, using them to withdraw currency at ATMs overseas can be an extremely costly way of funding your holiday spending.
“Consider a fee-free credit card or a low-cost debit card as an alternative if you don’t want to see a big chunk of your overseas holiday budget swallowed up by cash withdrawal and non-sterling charges.”
The experts found that two providers, Aqua and Fluid, will charge a huge £4.30 in fees on a £10 withdrawal – that’s the equivalent of a 42.95% charge.
At the other end of the scale, Lloyds and MBNA charge 80p when withdrawing £10, which works out to be a 7.95% fee.
For larger transactions, the representative charge decreases, but they still wrack up.
Fluid customers withdrawing £20 are charged as much as £4.59 in total, which is the equivalent of 22.95%.
While MBNA and Lloyds customers pay £1.59 – or 7.95%.
When withdrawing £50 Fluid customers are charged as much as 10.94% – or £5.47.
Lloyds and MBNA customers taking out £50 in cash are facing charges of 7.94% – or £3.97 – by comparison.
Customers withdrawing £100 at a time pay the most at Virgin Money where they’re charged £7.99 a withdrawal, which equates to 7.99% effectively.
Aqua card holders pay the least at £5 or 5%.
THERE are several specialist cards that can give you a great exchange rate.
These cards include travel credit cards and pre-paid cards which can let you pay abroad without fees or at a set exchange rate.
Travel credit cards: Travel credit cards allow you to spend money abroad without being hit by any fees or hidden charges.
But, they may still charge you for taking cash out.
We recommend the Halifax’s Clarity Card as it won’t charge you for using it abroad, nor are there any fees for withdrawing cash.
But you will be charged interest if you don’t repay your balance in full at a rate of 19.9 per cent.
And you will be charged interest on cash withdrawals until your balance is paid off too, at a rate of between 19.9 and 27.95 per cent depending on your credit score.
In other words, just because you are using plastic abroad doesn’t mean you don’t have to pay these credit cards off like you normally would.
Always pay off your balance before the end of the month with these cards to make sure that any money you saved isn’t wiped away by paying interest.
For more on travel credit cards you can read our guide here.
Pre-paid cards: An alternative to carrying cash around is to get a pre-paid card.
These cards allow you to put a set amount of cash on the card at a fixed exchange rate.
So if the rate is good at the moment, you can put money on your card and it will stay that rate when you are on holiday.
Just keep in mind that these cards can sometimes have hidden costs and charges so be sure to read the small print.
Buying foreign currency ahead of travelling means you’re given time to search for the best rates.
One major thing to avoid is buying cash at the airport on the day, as exchange rates can be around 20% higher than normal.
So make sure you’re not left making a last-minute dash to the currency counter at your airport.
Compare travel money companies as these will show you how to get the best rates and any possible fees you might have to pay.
If you’ve left it last minute, you may still be able to order online and collect it at the airport.
You can use comparison websites such as MoneySavingExpert’s TravelMoneyMax, where you can compare pick-up and pre-order rates.
As well as a cash withdrawal or sterling fee, you may also be charged a higher interest rate if you don’t pay off the bill each month.
And try to not use your credit card abroad if possible, as you’re unlikely to get the best exchange rate unless you have one offering good rates for foreign travel.
If you do plan on using your credit card abroad, for example for a large purchase to get extra buyer protection with section 75, then check the fees in the T&Cs first to avoid any surprises later on.
If you want to use a card instead of cash abroad as you’re worried about safety, you can lock in the current rate by topping up a prepaid card.
If you’re happy to take whatever rates are available at the time you travel then choose a debit card that offers good rates and no fees.
Meanwhile, a major change to hundreds of corner shops is coming this year and holidaymakers will be thrilled.
Plus, we look at the best and worst credit and debit cards to use abroad.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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