Bitterwallet Guide to Currency Exchange: Picking The Right Credit/Debit Card For Abroad

13 January 2009

Having made the mistake of using my credit card abroad during my younger innocent years, I've learned that there are a few key things you want to look for when using it abroad: (a) withdrawal fees (b) spending penalties (c) interests, and (d) additional loads on the foreign exchange rate.

In the process, I've developed my own streamlined process of obtaining and using foreign currency at the best rates possible, and hope this guide will help you ease through the process and save you from fees and rates that chow down the pounds you could potentially be saving, just by picking the right card for you.

1. Know your credit cards: With so many cards out there, it's worth investigating what the best ones are for using abroad.  As of this moment, Abbey Zero is my personal top choice.  It's a Mastercard, which goes by rates from xe.com. My second choice would be Nationwide and Post Office. They have no foreign exchange loads, but both cards charge a minimal withdrawal fee (2.5% for a £3 minimum) which make them less appealing. Abbey Zero has no withdrawal fees and no exchange rate load.  I spent about 2 months pondering whether to get one, only to realise all it took was a visit to a local Abbey Branch and got it sorted within a few days.

2. Pay off your cards in full: My Abbey Zero is setup with direct debit to pay off in full at the end of every month.  A bit anal I know, but this ensures that I don’t end up paying more with interest rates.  The downside of the Abbey Zero is a high (25.9%) withdrawal interest rate, even if you paid the card in full.  Nationwide has a withdrawal interest of 22.9%, while Post Office takes 20.83%. Finally, Saga is worth a quick mention, due to having no currency exchange load in the EU. It has, however, a 1% charge outside the continent, and a withdrawal fee of 2% for a minimum of £2.

3. Hedge your bets: Along with a healthy amount of cash at the best exchange rate possible obtained prior to departure,  I carry cards I can use abroad with the best terms possible (discussed below).  How do I decide when to use cash or my card?  I subscribe to the xe.com daily currency update, which notifies me of any major fluctuations by text (to a local sim to avoid roaming charges), along with email updates.  With the current fluctuant market, currency exchange is a potential roller coaster ride.  So when the exchange rate improves above the cash rate I exchanged, I will use my Abbey Zero to save a few pounds.  Should it drop significantly, I use cash.  That way, I cover both directions.

4. Debit card option: As law dictates (specifically Section 75), your purchases are insured with a credit card abroad. If you've purchased defective or unclaimed goods or services ranging from £100-£30,000, you can barge right through the credit company’s front doors to demand they refund your money's worth.  But if I were to pick a debit card for overseas use, I would go with Nationwide's Flexaccount Visa Debit Card. It has no currency exchange load, no withdrawal charges, and is free from interest (as long as you haven't maxed out all your money.)  All you need is to open an account at Nationwide.   The account doesn’t have the best terms of service nor interest rates, but having it to load for usage abroad could come in handy.  I wish I followed through with my application!

5. Avoid certain cards: Your bank probably charges sky-high rates for using your card abroad, especially if you have an RBS Debit Card, Halifax Debit Card, Lloyds Debit Card, and Natwest Debit Card. Halifax and IF have a spending penalty of £1.50. RBS and Natwest have a 2% withdrawal fee. Lloyds, on the other hand, has a whopping 2.99% currency exchange load.  I therefore keep all my regular bank cards in a different wallet (the British Bitter Wallet, that is) to ensure I don’t accidentally use them, especially on an alcohol fueled night.

Finally, having the right card and knowing when to use it is just one way to hedge your currency.   I will discuss tactics and methods I use to get the best exchange rate possible prior to leaving the UK in another post.  If you have any tips / suggestions, please share them in the comments below.

TOPICS:   Travel   Credit Cards   Banking

12 comments

  • anon
    Good to see some regurgitated info off a good money saving site :rolleyes http://www.moneysavingexpert.com/travel/cheap-travel-money
  • Norm
    Yeah, I was going to say MSE is the place to go if you want reliabile info. Bitter Wallet is just starting out and a huge tip/suggestion is: find a niche and done some orginal reporting. At the moment the site is just full of articles or info copied straight from other sites. And is very fast becoming full of comments pointing this out.
  • Mike H.
    Yes, I'd stick to stories about banned DFS adverts for midget discrimination.
  • Posterboy
    But Norm isn't it funny how it's the same handful of names and writing styles pointing this out, the same serial moaners? :( I'd recommend a Nationwide account for their debit card, it lets you make withdrawls abroad without any handling fee.
  • Norm
    I've seen the number of negative comments grow exponentionally in recent weeks.
  • Paul S.
    That'll happen when you post under four different names.
  • anon
    Posted by anon | January 13th, 2009 at 2:55 pm Good to see some regurgitated info off a good money saving site :rolleyes http://www.moneysavingexpert.com/travel/cheap-travel-money Great minds!! Thanks Martin Lewis Guide to Currency Exchange
  • Liddle m.
    Posted by Norm | January 13th, 2009 at 3:31 pm I’ve seen the number of negative comments grow exponentionally in recent weeks. Posted by Paul Smith | January 13th, 2009 at 3:38 pm That’ll happen when you post under four different names. Nice riposte! Nationwide Debit and Credit card for me - no need to use credit card for cash withdrawals, hence no fees and bases covered. I'm also impressed by Nationwide's CS. For bankers, they are a pretty good bunch.
  • tony
    maybe its time to get registered users only who can post. that way we can limit to norm to only 1 pointless moan to each topic!
  • Mike H.
    ZZZZZZZZZZZZZZZZZZZZZZZZZZZZ how long to get to a valid point :( I would go with Nationwide’s Flexaccount Visa Debit Card. It has no currency exchange load, no withdrawal charges, and is free from interest (as long as you haven’t maxed out all your money.) All you need is to open an account at Nationwide. moan moan.......Vince What the fuck more do you want: "The account doesn’t have the best terms of service nor interest rates, but having it to load for usage abroad could come in handy" YES has been VERY handy for me and many others I recommended in withdrawing about £15000 @ €1.41 to the pound in cash with NO charges. You can't beat Nationwide’s Flexaccount Visa Debit Card. :) Stop moaning, Get off your lazy "I wish I followed through with my application!" arse and do it.
  • funny
    I have a Nationwide debit card and have not noticed the hidden charges mentioned in the repory. Could someone please tell me what they are?
  • Nationwide B.
    [...] part of the Bitterwallet Guide to Currency Exchange, we wrote a basic guide on ‘picking the right credit/debit card  for abroad‘. Nationwide was mentioned as a second choice only to the Abbey [...]

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