HOLIDAYMAKERS should be mindful to never push this button cash machine when heading abroad this summer.
Travellers might end up losing cash and get stung by simply making the wrong choice at a foreign ATM or at tills.
Holidaymakers should be mindful to avoid this button.Cash machines will usually give you the option to pay in the local currency or in pounds.
It may seem like the obvious option to pay in pounds, as it’s more familiar and the currency linked to your card.
However, by choosing this option you could end up paying more for the cash coming out of the ATM or for the goods you’re paying for at the till.
That is because the overseas bank will do the conversion to pounds and the rates are unfavourable.
However, if you choose to pay in the local currency your card will instead do the conversion which is usually much more favourable.
So if you are keen to save cash when abroad, you should opt to pay in the local currency and not pounds.
Your bank may also charge you for using your debit card abroad.
For example, Lloyds Bank charges customers who use their debit card abroad a 2.99 per cent foreign transaction fee.
This would cost you £2.99 for every £100 you spend.
NatWest also charged customers a 2.75% fee for spending your debit card abroad.
That would add a £1.16 charge to the cost of a jacket which cost £42.16.
The bank has a handy calculator for customers to help them work out how much they will be charged when spending abroad.
You simply enter in the currency you will be shopping in and how much you intend to spend.
This can help holidaymakers plan ahead not be blindsided by any unexpected costs.
But some banks don’t charge you for spending abroad.
For example, Monzo does not charge its customers foreign transaction fees nor does First Direct.
USING YOUR CREDIT CARD ABROAD
Many credit cards also charge foreign transaction fees of around 3%, which would add £1.50 to the cost of a £50 meal out.
But there are several credit cards that let you withdraw money from ATMs or spend in shops and restaurants fee-free.
The Barclaycard Rewards Card does not charge you transaction fees when you are abroad.
It uses Visa’s exchange rate, so you will get the best value on conversions.
If you are heading abroad, if may also be worth bringing some cash in case of emergencies.
Many high street banks have currency exchanges within the branch, and you can also find the service inside airports or some train stations.
Are there other options to for spending abroad?
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.
Senior Consumer Reporter Olivia Marshall explains all the options.
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.
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