Travelling the world offers incredible experiences and memories, some we hope to hold onto for a lifetime. If you’re planning on a dream getaway or even just looking at a mini break, whilst the fun aspects are what we look forward to, it’s crucial to consider the factors that can drain your funds without realising, such as the often unnoticed card charges that can accumulate during your adventures.
There were approximately 2 billion debit card transactions in January 2023 by UK cardholders in the UK and overseas, totalling £64.7 billion. When you consider £3.2 billion of this total was spent abroad, it’s clear that we all love using our debit cards for purchases both at home and when travelling. Add to this credit card use, which saw approximately 321.3 million transactions in January, totalling £18.8 billion, being aware of potential card charges when travelling will help you avoid adding to your spending and plan accordingly.
In this guide, we’ll navigate the world of card charges during travel, from foreign transaction fees to ATM withdrawals. We’ll reveal savvy ways to avoid these financial obstacles and enhance your trip while maintaining financial stability. Read on to uncover how you can avoid card charges when travelling abroad, improving your financial confidence for your next adventure.
Understanding Common Card Charges
Travelling to foreign shores can be a feast for the senses, but it shouldn’t be a feast for unnecessary fees. Before you head off, it’s a good idea to understand the common card charges that might lie in wait whenever you use your card, whether paying for a meal or simply withdrawing cash. These seemingly innocuous fees can quietly nibble away at your travel budget, leaving you with less to spend on the experiences you’ve been looking forward to.
Here are the three primary culprits to consider: foreign transaction fees, ATM withdrawal charges, and currency conversion fees.
Foreign Transaction Fees
When you use your card to make purchases abroad, your bank may charge you a foreign transaction fee or a ‘non-sterling transaction fee’. This fee, usually a percentage of the transaction amount ranging from 0% to 3%, can accumulate swiftly, making even small purchases feel like unexpected drains on your finances. Imagine indulging in a local delicacy or purchasing a souvenir, only to find your bank statement dotted with these stealthy charges.
ATM Withdrawal Charges
While it’s convenient to withdraw cash from ATMs on foreign shores, convenience can come at a cost. Many banks impose ATM withdrawal charges for using machines outside their network. These non-sterling cash fees can stack up, particularly if you’re making multiple withdrawals. That picturesque street market might be brimming with treasures, but those frequent ATM visits can chip away at your treasure trove back home. You may also be charged interest on cash withdrawals when using a credit card to withdraw cash too.
Currency Conversion Fees
Picture the scene: you’re at a bustling market, haggling over the price of a handcrafted memento that will be a great gift for a loved one. As you reach for your card, the vendor offers to convert the price into your home currency. Seems convenient, right? But what might seem convenient often comes with a price – in this case, a currency conversion fee that’s often less favourable than what you’d get from your card provider or a local bank.
Choosing the Right Travel-Friendly Cards
Whilst considering the types of travel money card charges, you’ll want to decide on what are the best charge cards for travel to use. You may already have travel-friendly credit and debit cards to use, which can help you avoid unnecessary charges and enjoy a smooth financial journey. If not, which do you choose?
- Debit Cards – Most of us won’t go anywhere without one, so look for debit cards that offer low or no foreign transaction fees if your current one isn’t up to the task. Opting for a debit card that prioritises fee transparency can ensure you’re not paying more than you bargained for with each swipe. You may also find those that provide cashback on transactions too, helping you earn while you spend.
- Credit Cards – Credit cards can offer not only financial flexibility but also an array of travel perks. Seek out travel credit cards that waive foreign transaction fees and provide benefits like travel insurance, airport lounge access, and even rewards for your spending. By choosing wisely, you can transform your credit card from a mere payment tool into a powerful plastic asset that enhances your travel experience.
- Prepaid Travel Cards – Prepaid travel cards are a popular choice for globe-trotters, allowing you to load various currencies onto a single card, saving you from fluctuating exchange rates and additional conversion fees. While they might not offer the same rewards as credit cards, their ability to lock in exchange rates can provide stability.
You’ll want to spend some time selecting the right card companions for your journey. As you search through the options available, remember that your chosen cards should align with your travel goals, spending habits, and comfort level with various fee structures. Use a comparison site to look at your options and consider whether your current cards are the best option. Once you have the appropriate cards, you’ll be better equipped to navigate any financial challenges on your travels, so you can focus on enjoyment instead.
Before You Go, Research Card Policies
Setting off on your travels without thorough preparation is like setting sail without a map. Just as you wouldn’t want to venture into uncharted waters without a clear plan, researching before your trip is important. Consider if your debit cards charge travel currency fees and understand your card policies before you set off. If you can be proactive, it can save you from unexpected financial turbulence along the way. Here are some crucial steps to take before you depart:
Contact Your Bank or Credit Card Provider – Reach out to your bank or credit card provider well in advance of your trip. Check their policies regarding foreign transactions, ATM withdrawals, and currency conversion fees. Clarify whether your cards are equipped with travel-friendly features such as waived foreign transaction fees and global ATM network access.
Understand the Terms and Conditions – Reading the fine print is never as exciting as picking out sightseeing spots, but it’s a vital step in ensuring a smooth financial journey. Take the time to thoroughly review the terms and conditions associated with your cards. Pay close attention to any potential fees, their amounts, and the circumstances under which they may apply. Being well-versed in the contractual details can help you avoid any surprises when you see your bank statement post-trip.
Using Local Currency for Transactions
Using the local currency for transactions offers several benefits. Firstly, it allows you to have a clear understanding of the actual cost of the item or service you’re purchasing. This transparency enables you to make informed decisions, helping to prevent any surprises when you check your statement for charging on your credit card after travelling. Paying in local currency can often result in more favourable exchange rates too, helping you get the most value out of your money.
Dynamic Currency Conversion (DCC) is a service offered by merchants that allows you to pay for transactions in your home currency. While this might seem convenient, it often comes at a cost. Merchants typically apply their own exchange rates, which can be less favourable than the rates offered by your card provider. This means you could end up paying more than necessary for your purchases.
When making a purchase abroad, ideally always choose to pay in the local currency whenever possible. This small yet significant choice can help you avoid DCC fees and ensure that you’re getting the best value for your money. If you’re uncertain about the currency you’re being charged in, take a moment to clarify with the merchant or check your transaction receipt.
Minimising ATM Withdrawal Fees
As you navigate through new streets and cultures, having access to local currency in cash can be helpful. However, if you didn’t bring currency before you travelled, frequent ATM withdrawals can quickly accumulate fees and put a dent in your travel budget. Here are some ways to minimise ATM withdrawal fees and make the most of your cash withdrawals while on the go.
- Locate ATMs with Partner Networks – Before you travel, research if your bank has partner networks or affiliations with banks in your destination country. These partnerships can grant you access to a network of ATMs where you can withdraw cash without incurring additional fees.
- Withdraw Larger Amounts, Less Frequently – While it’s important to be mindful of your safety, withdrawing larger amounts of cash in one go can be a way to minimise ATM fees. By reducing the frequency of withdrawals, you’re effectively decreasing the number of times you’re charged. Just ensure that you secure your funds appropriately and avoid carrying excessive cash at once.
- Choose a Debit Card with ATM Fee Reimbursement – Some banks offer accounts with features that reimburse a certain number of ATM withdrawal fees each month. If you’re a frequent traveller, exploring these types of accounts could be beneficial. This way, you can make the most of your cash needs without being burdened by extra charges.
Tracking Your Expenses
Exploring new cultures and landscapes is undeniably enriching, but it’s essential to keep your financial mindfulness as a priority. Tracking your expenses during your travels will help to guide your financial decisions. When you need clarity on where your money is going, this will enable you to adjust your spending habits as needed and see exactly what charges have been added to your account. Not only that, but it will also help prevent overspending so that you can stick to a travel budget. Here are some tips to help:
Utilise Budgeting Apps and Tools – With a smartphone in your pocket, there are many budgeting apps and tools available to simplify the process of tracking expenses. Many apps allow you to categorise your spending, set limits, and receive alerts when you approach your budget thresholds, all thanks to open banking which allows third parties to access your data. These tools not only save time but also offer valuable insights into your spending patterns. Check out apps including Plum, Emma and Money Dashboard that have free access as well as premium options for budgeting bliss.
Set Spending Limits and Priorities – Establish a daily or weekly spending limit that aligns with your budget and travel goals. Allocate funds for key experiences you don’t want to miss, such as local attractions, dining, and shopping. This proactive approach helps you enjoy the highlights of your destination while remaining mindful of your finances.
Document Every Transaction – Whether you choose to use a mobile app, a dedicated travel journal, or a simple spreadsheet (Money Helper has a free budget planner), make it a habit to record every expenditure. Include details such as the date, location, amount, and purpose of the expense. It may feel time-consuming, but it will prove invaluable when you review your spending at the end of your trip to see what charges you may have accumulated.
Treat your travel budget as a roadmap, ensuring that your travels remain harmonious with your financial wellness goals. We all tend to overspend a little bit when on holiday, but by tracking expenses, you can have peace of mind that you’re making conscious choices that align with your priorities.
Avoid the Charges, Travel With More Money!
Navigating the world of travel expenses is not just about saving a few pounds here and there, but about developing a sense of financial wellness, so you can fully immerse yourself in the joys of exploration without worry. Hopefully, you’re now better prepared for common card charges you will want to avoid where possible, so you can focus on an enjoyable trip, whether it’s a weekend break or a dream holiday.
However, your financial journey doesn’t end here – at QuidMarket, we have plenty more where that came from with helpful insights and resources dedicated to enhancing your financial wellness, including help and advice when considering further borrowing.
Remember, your travels are not just about the places you visit, but the financial freedom you cultivate along the way. Stay safe and bon voyage!