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Cut Your Holiday Costs with the Right Plastic

Holiday makers using their debit and credit cards while abroad could be in for a shock when they see the extra charges applied.

With contactless card usage growing rapidly in France, Spain and other countries, it is important for holidaymakers to be aware that with some cards, making lots of small contactless purchases can end up generating a big bill.

This is because some cards apply a purchase fee on each transaction, which is in addition to the ‘currency conversion’ – or non-sterling transaction fee – imposed when purchasing something in anything other than pounds.

Financial information firm Defaqto has stated: ‘Using a debit card for small payments, such as contactless to buy a coffee, can be very expensive.’

As an example, it told how a daily ?5 (?4.37) breakfast of a coffee and croissant over a fortnight could end up incurring up to ?21 in fees, on top of the ?61 total cost of the breakfasts.

Santander for example will charge ?1.37 for each of the ?5 breakfasts, made up of a ?1.25 ‘purchase fee’ and 12p currency conversion charge per transaction.

Other banks also charge a purchase fee, with TSB charging ?1 per transaction, while Lloyds and Halifax charge 50p (though some accounts at banks are exempt).

In addition to the purchase fee, using a debit card from a major UK bank to pay for purchases overseas will cost almost 3 per cent for a non-sterling transaction fee.

ATM users do not get away with it either, with the majority of UK travellers getting charged the non-sterling transfer fee.? In the case of Barclays, HSBC and NatWest, the typical charge is 2.75 per cent, while at Lloyds, Halifax, and TSB it is 2.99 per cent.

However, help is at hand. There are a number of new cards available that do not charge such exorbitant fees.

Starling offers a mobile-based current account that comes with a debit card. It won?t charge you to use your card abroad or to withdraw cash from ATMs.

Tandem also offers a cashback credit card that has no fees for making purchases or withdrawing cash abroad. Cardholders earn 0.5% cashback on purchases anywhere in the world.

The new challenger bank Metro also offers a good deal where you don?t have to pay any fees when you use its debit card to make purchases or withdraw money in Europe.

The major UK banks do have some accounts offering fee-free credit cards, but you will have to research the accounts carefully to make sure they do not cost you in any way.

Prepaid currency cards are also an option for travellers, though many prepaid cards have high fees or other catches, such as loading or renewal fees. Many of them cannot be used for car hire, and customers might also have difficulties at places such as petrol stations.

Investigate your card options well before you travel, giving yourself enough time to apply for a new one if necessary.

Happy Holidays!

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