News Column

Pick of the plastic to use abroad

August 9, 2014

Choosing the wrong plastic to use while travelling could quite easily set you back pounds 100 in fees and hidden commission. However, by being card sharp when buying items and withdrawing money, you can get the bill down to a fraction of that - and, in some cases, reduce it to zero.

If you're a Norwich & Peterborough building society Gold Classic current account holder you're sorted, because this is one of the very few UK bank accounts that offers completely free debit card usage abroad.

Nationwide building society has a current account, FlexPlus, that gives you commission-free withdrawals from ATMs across the world, plus free travel insurance, breakdown cover and mobile phone insurance - but you have to pay pounds 10 a month.

If you don't want to shift your current account, the best bet is the Halifax Clarity credit card, which charges nothing for foreign exchange and doesn't impose ATM fees, either.

N&P's Gold Classic account and the Halifax Clarity card came out top in a comprehensive survey of debit and credit card overseas charges carried out by Andrew Hagger of personal finance website Metro Bank - a relatively new player - also scored highly as its debit and credit cards are free of fees within Europe.

One of the big problems for consumers is that the fees and charges for using your plastic abroad are often bewilderingly complex, and full of jargon and small print. Someone using their debit card to withdraw cash from a foreign ATM may well find they are charged 2.75% to 3% of the money in hidden commission, plus a separate ATM fee that is usually expressed as a percentage of the amount taken out. For example, NatWest's ATM fee is 2% of the value, with a minimum of pounds 2 and a maximum of pounds 5, whereas the recently launched M&S Bank current account doesn't impose an ATM fee.

If you have a Halifax, Santander, Lloyds or TSB debit card, be aware that they all impose a fixed fee for overseas purchases in shops, restaurants etc - on top of the 2.75%-3% they take off you for "currency conversion". The fixed fee is pounds 1.50 at Halifax, pounds 1.25 at Santander and pounds 1 at Lloyds and TSB, and is applied every time you buy something.

The Halifax Clarity card boasts that it has "no fee to use it anywhere worldwide" and won't charge for ATM withdrawals.

But do pay your bill in full every month. There is no interest-free period on cash withdrawals, so you pay interest from the day you take the money out. However, the representative APR is not bad at 12.9%, meaning a pounds 100 withdrawal would cost just over pounds 1 in interest at the end of the month.

Meanwhile, remember that if a shop, restaurant or hotel gives you the option to pay in sterling, rather than the local currency, insist you pay in the latter.

The same applies to ATMs. Otherwise you could pay as much as 3-4% extra.

Rupert Jones

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Guardian (UK)

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