The Best Way to Spend Abroad

Best way to spend abroad

You might end up spending what you can’t afford when spending abroad; so, you must determine the option that can give you the cheapest deals on your trip. Being prepared and carefully planning your travel can help you make the most out of your travel money. We suggest that you check your travel money and find the best the best deals before going on a trip.

How can you spend abroad?

The following are the options on how you can spend abroad

Cash – you can consider foreign currency as travel money but you have to create a budget and stick to it. Failure to do so could end up falling short on your money abroad. Also, you must find the most affordable deals that you can get before going on your holiday.

Credit or debit card – You can take your existing credit or debit card overseas yet you have to check on the charges for foreign usage. Besides, you have to inform your bank of the possibility of getting blocked.

Prepaid card – You can load cash on to a prepaid travel card and use it in stores abroad or withdraw from the ATMs. These allow you to spend the money you have available on the card.

Travellers cheques – These can be exchanged into foreign currency in particular areas abroad. Thus, it needs your signature and proof of identity when converting it into foreign currency.

Taking Cash Overseas

Taking cash abroad is the fastest and easiest way to spend when getting into your holiday travel. However, you must take note of both its advantages and disadvantages.

Advantages

• can be used wherever and whenever

• easy to handle or manage

• no costs in terms of foreign usage

Disadvantages

• can be stolen, misplaced or easily lost

• notes of high value can be rejected

• costly when exchange to foreign currency

Read our guide on how you can get the best deals on travel money to find out more.

Credit or Debit Cards

Almost all credit and debit cards providers require charges for each transaction abroad. So, you can try looking for a credit or debit card that trims the expenses of your spending overseas.

Debit Card

Pros

• maybe free to use abroad

• you can easily cancel it when lost or stolen

• safe and secured with chip and pin

Cons

• may carry charges for using overseas

• can be blocked by the provider

• may unintentionally get overdrawn

Credit Card

Pros

• allows you to pay for your bills later

• maybe free when used overseas

• Protected under section 75

Cons

• costly in terms of cash withdrawals

• you might go beyond your credit limit

• can be blocked by the provider

Check to Compare Credit Card Deals

How much does it cost to use Debit or Credit Card in spending abroad?

The costs of using either credit or debit card abroad differ depending on the type of card you have.

Some of the usual fees that you can get when using debit or credit card are as follows:

Card Transaction fee – 0% – 2.99% for credits and debit cards

Cash withdrawal fee – 0% – 2.75% for debit cards while 0% – 5% for credit cards

Cash withdrawal interest – this is not applicable for debit cards, but credit cards usually cost approximately 6.5% – 69.9%.

Costs Breakdown for Debit or Credit Card to Spend Abroad

Debit Card Costs

This example explains the possible debit card costs.

Exchange rate = 0.73

Card transaction fee = 2.99%

Cash withdrawal fee = 2.75%

Debit card Conversion (€250) Charge Overall cost
Card transaction fee (2.99%) £182.50 £5.46 £187.96
Cash withdrawal fee (2.75%) £182.50 £5.02 £187.52
Total £365.00 £10.48 £375.48

With the figures above, the two transactions overseas can cost you as much as £10.48. This can still be reduced when you get a debit card that offers an affordable or non existent charge for foreign usage.

Credit Card Costs

This example explains the possible credit card costs.

Exchange rate = 0.73

Card transaction fee = 2.99%

Cash withdrawal fee = 5%

Credit card Conversion (€250) Charge Overall cost
Card transaction fee (2.99%) £182.50 £5.46 £187.96
Cash withdrawal fee(5%) £182.50 £9.13 £191.63
Total £365.00 £14.59 £379.59

With the figures above, the two transactions overseas can cost you as much as £14.59. You can avoid this charges when you get a credit card that does not charge for foreign usage. Once you do you can save approximately £5.46.

Daily Interest on a Credit Card

On top of your cash withdrawal fee, you have to pay for the interest of the cash you withdraw through your credit card.

This is one of the reasons why you have to avoid using a credit card overseas if you are to withdraw cash. As a result, you can end up getting excessive charges.

Using a Prepaid Card

You can use a prepaid card as an alternative way to spend abroad other than your credit card. You just have to load it with funds that you can use in spending rather than spending money and paying it off later.

The two types of prepaid card are:

Prepaid cards are designed to be utilised in the UK bit can also be used in spending abroad for card transactions such as cash withdrawal. When using these prepaid cards, you will be charged on the exchange rate every time you used it overseas.

Travel prepaid cards are also known as currency cards, which are loaded with a foreign currency instead of sterling. This means you’ll be charged a for a single exchanged rate at the point of loading it with funds rather than each time you use it.

Advantages

• You can use it around the globe

• Cheaper to use abroad

• Top up how much you’d like to spend

Disadvantages

• You can only spend what money you have on the card

• Sometimes charges for loading the card

• Possible charges or costs when applying

Check for travel prepaid cards that you can use abroad.

How much it costs for prepaid cards when used abroad?

Some prepaid cards come with several potential fees such as cards fee, load fees, card transaction fee, and card withdrawal fee.

The card fee for a standard prepaid card is between £0 – £15 and £0 – £50 for a travel prepaid card.

Load fees for standard prepaid card is around 0% – 5% while 0% – 2.85% for a travel prepaid card.

In terms of transaction fee, standard prepaid card will costs 0% – 5.75% while 0% – 5.75% for travel prepaid card.

Furthermore, the cash withdrawal fee for a standard prepaid card is around 0% – 5.75% while 0% – 5.75% for a travel prepaid card.

If you use a cash machine with a prepaid card, you might get further fees and limit in terms of withdrawal.

Travellers Cheques

Your travellers cheque works by converting your sterling into foreign currency in the form of a cheque. You can turn this cheques into cash overseas

When buying a travellers cheques, be cautious with the unnecessary charges. For instance, you’ll get charges when you used your credit card in buying travellers cheques. This means you’ll get charges for both credit card and traverllers cheques.

Advantages

• It’s a secure way of taking money overseas.

• You can easily cancel it when lost or stolen.

• If you need a replacement, you can get it within 24 hours.

Disadvantages

• You cannot exchange travellers cheques.

• You won’t have any access to cash in case you lost it.

• It can be used when stolen and not signed.

If you prefer to use travellers cheques to spend abroad, we suggests you sign them to prevent the risks of having someone used it fraudulently. It is provided by several travel money companies in connection with American Express. So, in case you need to cash in travellers cheques, you may need to look for an American Express kiosk.