Beware of the cost of debit or credit card use abroad this Easter

The cost of debit or credit card use abroad is on the rise, according to research by uSwitch.com.

When using a debit card abroad, providers add a transaction charge, for both purchase or cash transactions.

This is either a fixed amount per transaction or a percentage of the transaction.

In addition to the transaction charge, the majority of debit card providers also add on a foreign exchange conversion fee.

This tends to be a percentage of the transaction amount, usually around 2 – 2.75%.

The number of banks who now levy a charge for the use of a debit card abroad has nearly doubled in the last year. Even the Nationwide who has long not passed on the foreign exchange fee will be doing so from this Summer.

Using credit cards for cash withdrawals on holiday is usually the most costly in that a high rate of interest is charged on the full amount of cash withdrawn from the day the withdrawal is made. On top of this there are then the normal overseas charges.

Prepaid currency cards can be a good alternative to using credit or debit cards abroad.

These currency cards can be loaded up with your currency before you travel and are accepted in shops, restaurants and hotels in the same way as debit or credit cards.

As well as being secure and easy to use, they often save money through reduced overseas transaction fees, compared with debit or credit cards, and the competitive exchange rates offered.

As currency cards become more popular, more and more providers are offering them – including Caxton FX, FairFX, Travelex, Lloyds TSB, Indigo Traveller and ICE Traveller.

As uSwitch points out though even if you use a prepaid card, some do levy a fee every time you spend, as either a percentage of the amount or a flat fee per transaction.

This needs to be taken into consideration – depending on your spending profile you’d be better to opt for one or other charging model, for example go for a percentage fee if you’re likely to make a high number of low value purchases.

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