Five cheapest ways to get holiday money

If you’re thinking of booking a summer holiday, what’s the best way to get your travel money? Here are five of the cheapest ways to get holiday money.

You’ll probably want to consider using one or two of these ways to get holiday money, as relying on cash alone isn’t the safest option unless you’ll need very little travel money. But if you take a card, you’ll probably still need cash for small purchases.

Using a debit or credit card abroad

If you don’t choose a card that has no or low fees when you use it abroad, these are the fees you could pay:

  • Non-sterling transaction fee, foreign purchase fee or foreign usage fee: Most credit or debit cards charge you up to 3% for purchases you’ve made in a currency other than pounds sterling. There’s often a minimum fee of £1 or £2.
  • Cash withdrawal fees. Most credit and debit cards charge you for using a cash machine overseas.  This is often up to 3%, with a minimum charge of £2 and a maximum charge of £5.
  • Cash withdrawal interest. Most credit cards charge interest from day one on cash withdrawals – including cash withdrawals made abroad.

No or low fee credit cards

Most credit cards charge one or more of the extra fees I’ve mentioned above if you use them to pay for things while you’re on holiday or to take out cash. However, a few credit cards have much lower fees.

The advantage of paying for something by credit card is that you get Section 75 protection if things go wrong. That means that you can make a claim against the credit card company if, for example, you buy something that falls apart and the shop won’t sort it out or you order something and it doesn’t arrive.

Barclays Platinum Travel Credit Card

Non-sterling transaction fee: 0%, although it will impose a non-sterling transaction fee after 31st August 2022. The fee will be 2.99%.

Non-sterling cash withdrawal fee: 0%

Cash withdrawal APR: 0% – but only if you pay off your card balance in full within 56 days.

Introductory APR: 0% on purchases overseas for 22 months (you must pay for them in the local currency).

APR on purchases: 19.9% after the introductory offer runs out.

You can check if you’re eligible for this card (or any other Barclaycard) on Barclaycard’s website.

Creation Card’s Everyday Card

This card charges interest if you use it to take cash out when you’re abroad, but you don’t pay a fee for using it to pay for things or a separate fee for withdrawing cash.

Non-sterling transaction fee: 0%.

Non-sterling cash withdrawal fee: 0%

Cash withdrawal APR: 12.9%.

APR on purchases: 12.9%.

Halifax Clarity credit card

This card uses the standard MasterCard exchange rate (namely, it doesn’t add a percentage on top).

Non-sterling transaction fee: 0%.

Non-sterling cash withdrawal fee: 0%

Cash withdrawal APR: 18.9%.

APR on purchases: 18.9%.

Santander Zero credit card

Non-sterling transaction fee: 0%.

Non-sterling cash withdrawal fee: 0%

Cash withdrawal APR: 18.9%.

APR on purchases: 18.9%.

Tandem credit card

This card uses the standard MasterCard exchange rate (namely, it doesn’t add a percentage on top). You also get cashback of 0.5% on all spending, whether that’s in the UK or abroad.

Non-sterling transaction fee: 0%.

Non-sterling cash withdrawal fee: 0%

Cash withdrawal APR: 18.9%.

APR on purchases: 18.9%.

Cheapest debit cards

You might think that paying by debit card is a cheaper option than using your credit card abroad, but that’s not necessarily the case. Many debit cards charge a non-sterling transaction fee or foreign usage fee, a purchase fee and a fee for taking cash out of overseas cash machines.

The cheapest debit cards include:

Starling Bank

This mobile-only bank has a debit card that has no fees at all if you use it abroad. Starling Bank uses MasterCard’s exchange rate and doesn’t add anything on top.

Non-sterling transaction fee: 0%

Purchase fee: 0%

Non-sterling cash withdrawal fee: 0%

Nationwide Building Society

Non-sterling transaction fee: 2%

Purchase fee: 0%

Non-sterling cash withdrawal fee: £1

M&S Bank

Non-sterling transaction fee: 2.75%

Purchase fee: 0%

Non-sterling cash withdrawal fee: 0%

Metro Bank

Non-sterling transaction fee: Free in Europe, 2.75% elsewhere

Purchase fee: 0%

Non-sterling cash withdrawal fee: 0%

Prepaid travel cards

Prepaid travel cards have three big advantages. Firstly, they’re a good option if you’re worried about fraud. Secondly, you can lock into a good exchange rate and thirdly, they help you budget because you can preload them up to certain limits and once you’ve spent the money, it’s gone. There are a number of prepaid travel cards. The one that’s best for you will depend on where you’re going and how you plan to use it (main source of spending money or for emergencies only).

The main disadvantage of prepaid cards is that they don’t give you Section 75 protection like normal credit cards do and some outlets, such as car hire, won’t accept them. Don’t rely on them as your only source of money while you’re abroad.

Revolut

Revolut is one of several relatively new names in banking and finance. You can sign up for an account in minutes but you’ll need a smartphone to use it. However, if you want a physical card (rather than a virtual one), you’ll have to order it and it will cost £5. If you have a Premium Account, which you pay a monthly fee for, the card is free.

You don’t pay fees if you exchange up to £5,000 a month, but you’ll pay 0.5% on money you exchange above that.

The real benefit of Revolut is that, with most currencies, you pay an exchange rate that is linked to the interbank rate. That’s the rate that banks exchange foreign currency with each other, which is very different to the rate that most of us get when we change money. Revolut says this rate is typically 3-5% better than the rate you’ll get from a bank. Over the weekend, the rate at midnight on Friday is used with a small mark-up.

Revolut is FCA authorised and your money is held in a ring-fenced account.

Order holiday money before you travel

If you order holiday money before you travel, the golden rule is never to just turn up at the airport. You can order it in advance and pick it up at the airport and you can generally get a much better rate. Or you can arrange for it to be delivered, or pick it up from a bureau de change before you travel.

Bear in mind that no commission doesn’t mean ‘fee free’. The foreign exchange company will be making its money on the spread between the rate it buys currency at and the rate it sells at.

Links with an * by them are affiliate links which help Rest Less stay free to use as they can result in a payment or benefit to us. You can read more on how we make money here.

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