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These credit and debit cards WON’T hit you with a hefty fee when you use them in Europe

Despite the headaches caused by Covid tests, quarantine rules and the constant yo-yo-ing of countries between the green, red and amber lists, plenty of us still have our hearts set on a holiday abroad this summer. 

A recent MailOnline survey revealed that 14 per cent of Britons plan to travel outside the UK for a sunshine break.  

Those doing so are being warned to check the cost of using their debit or credit card before they go, however. 

Customers using their everyday accounts abroad are more likely than not to get stung, with many providers charging 3 per cent or more for purchases or cash withdrawals made outside the UK. 

The number of credit cards offering free foreign purchases has dropped from 21 to 15 since the start of the pandemic

The typical debit card charges £11.88 for a £250 cash withdrawal abroad, according to Moneyfacts.

And purchases can also be costly, with a £50 spend on a typical debit card racking up £1.38 in fees.

Credit cards can be even more expensive to use, with some cards charging £14.95 on cash withdrawals before interest is applied, as well as £1.50 on a £50 card purchase.

Rachel Springall, finance expert at Moneyfacts, said: ‘Consumers may well be overdue a break abroad and decide a last-minute getaway after months of unpredictability due to the Coronavirus pandemic.

‘Using a credit card or debit card abroad may be the easiest way to pay or withdraw cash, but it’s a convenience that can cost depending on the fees charged for each transaction.

‘Saving money on card usage fees is a sensible thing to do, and consumers can easily do this by bringing along a cost-effective credit or debit card or even considering a prepaid card.’

Particularly for those who are keen to avoid paying through the nose when using their debit card abroad, there are now a healthy number of options.

Switching your account may be a little tedious, but if you plan to travel fairly regularly now restrictions are being eased, the savings could be significant.  

Top debit cards for use abroad
Debit card Monthly cost  Transaction cost in Europe/worldwide Withdrawal fee in Europe/worldwide
Starling Bank Current Account £0  £0 £0 
Metro Bank Current Account  £0  £0 in Europe but 2.99% worldwide Inside Europe £0 but outside Europe 2.99% fee + £1.50 non-sterling cash fee 
Virgin Money M Plus Account  £0  £0  £0 
TSB Spend & Save Plus  £3  £0  £0 
Nationwide FlexPlus  £13  £0  £0 
Credit: Moneyfacts       

The number of debit card products offering free cash withdrawals abroad have increased from 16 to 24 since the start of 2020, according to the research foundation, Fairer Finance.

A number of well-known banks are offering fee-free current accounts that do not charge for using a debit card in Europe, including Starling Bank, Metro Bank and Virgin Money.

Those wanting to use their credit card abroad may find things a little trickier, as the number of cards offering free foreign purchases has dropped from 21 to 15 since the start of the pandemic, according to Fairer Finance. 

Then number offering free foreign cash withdrawals has also dropped from six to four, and banks including Lloyds, Fluid and Opus have increased their cash withdrawal fee to 5 per cent. 

Some credit card providers are charging customer as much as 5 per cent each time they withdraw from a cash machine

Some credit card providers are charging customer as much as 5 per cent each time they withdraw from a cash machine

The median foreign purchase fee for credit cards has increased from 2.85 per cent to 2.95 per cent since the start of 2020, while the average withdrawal fee has increased from 2.97 per cent to 3.31 per cent during that same period, according to Fairer Finance.

Credit cards that don’t charge foreign usage fees are also harder to come by, with some challenger banks including Tandem and Jaja having withdrawn their offerings. 

However, savvy holidaymakers can still find a few fee-free options, as we outline below. 

The best debit cards to use abroad

Starling Bank current account

Starling Bank’s current account offers both fee-free debit card withdrawals, and card spending, abroad.

It does limit cash withdrawals to six each day, with a daily limit of £300, however – so it’s worth bearing that in mind if you intend to exceed that amount on any given day.

The debit card that comes with the Starling account doesn’t charge for card spending or cash withdrawals, wherever it is in the world you journey to

The debit card that comes with the Starling account doesn’t charge for card spending or cash withdrawals, wherever it is in the world you journey to

There aren’t many other perks that come with the account, but Starling has won huge acclaim for its customer service and app.

It was voted the best current account provider at the British Bank Awards in 2019 and 2020, and earned the best customer score in the latest Which? survey.

The bank also only charges 15 per cent on overdrafts, much lower than many high street banks which charge closer to 40 per cent.

Setting up an account should take about five minutes of your time, according to Starling, requiring just your smartphone and either a passport or driving licence.

Metro Bank Current Account

Metro does not charge customers for debit card payments or cash withdrawals anywhere in Europe.

However, for those looking to travel further afield, this may not be the best option. 

In countries outside of Europe, there will be a non-sterling transaction fee of 2.99 per cent on purchases made, as well as a non-sterling cash fee of £1.50, and a 2.99 per cent transaction fee for any cash withdrawals from ATMs.

Outside of your holiday, the Metro account offers arranged and unarranged overdrafts with a fairly typical interest rate of 34 per cent APR.

But in any given month, Metro says it will never charge you more than the monthly cap of £60 for charges relating to an unarranged overdraft.

Virgin Money M Plus Account

The Virgin Money M Plus debit card provides customers with free withdrawals and card payments outside the UK.

Those switching to the Virgin Money account will be paid 2 per cent on balances up to £1,000

Those switching to the Virgin Money account will be paid 2 per cent on balances up to £1,000

It also offers 2 per cent interest on balances up to £1,000, which given the low interest rate environment, makes it stand out against its peers.

Arranged and unarranged overdraft rates range between 18.29 and 34.05 per cent per annum, although there is a monthly cap of £40 on unarranged overdrafts.

TSB Spend & Save Plus

TSB offers a debit card that is free to spend on and withdraw cash with outside of the UK, albeit for a £3 monthly account fee.

It is possible to offset the £3 monthly fee by earning £5 cashback each month, but to do so, you will need to make at least 30 payments using the debit card each month.

The account also offers an £100 interest-free overdraft.

The Nationwide FlexPlus account

Nationwide’s debit card for its FlexPlus current account offers fee-free spending and cash withdrawals abroad.

The FlexPlus account also includes worldwide family travel insurance, mobile phone insurance, and UK and European breakdown cover.

However, it does come with a hefty account fee of £13 per month.

To help stomach the cost, Nationwide is currently offering cash bribes of £100 to new customers who switch their account across.

For anyone worried about dipping into their overdraft, the interest rate is 39.9 per cent per year.

Monzo current account

Monzo customers can use their debit card for free when abroad. 

However, from 28 August £250 monthly cap is being placed on all ATM withdrawals in the UK and Europe, which means you will be subject to a 3 per cent charge if you exceed the limit.

Outside of Europe, customers will be hit by the 3 per cent fee if they withdraw more than £200.

For a £5 monthly fee, Monzo customers can opt instead for the Monzo Plus account which will enable them to withdraw up to £400 for free, anywhere abroad, each month.

For those concerned about the interest they might be charged when dipping into their overdraft, Monzo offers rates of either 19, 29 or 39 per cent, determined by your credit score.

Switching your account to any of these providers should be easier than it was in the past.  

Springall says: ‘Switching a bank account is simple and using the Current Account Switch Service, customers can move their account within seven working days.

From 28 August Monzo's standard current account customers will only be able to withdraw £250 a month from ATM's in the UK and Europe without being charged.

From 28 August Monzo’s standard current account customers will only be able to withdraw £250 a month from ATM’s in the UK and Europe without being charged.

‘If consumers plan to travel more frequently in the months to come, either for work or leisure, choosing a current account that will not charge for using their debit card abroad could be a wise choice.

‘Starling Bank, Metro Bank and Virgin Money all offer fee-free current accounts which do not charge in Europe for using a debit card, either for a cash withdrawal or retail transaction.’ 

The best credit cards to use abroad

Halifax Clarity Credit Card Mastercard

This credit card has no transaction fees to worry about, and also offers worldwide fee-free cash withdrawals.

Standard interest is set at 19.9 per cent which compares well to others, but it’s worth being aware that the interest of between 19.93 and 27.95 per cent is charged immediately on cash withdrawals abroad. Customers can minimise the cost by repaying in full as soon as possible.

Top credit cards for use abroad
Credit card Cash withdrawal fee min % / £ (per withdrawal) Foreign usage Europe / worldwide transaction fee  Purchase APR  Interest on cash withdrawals
Halifax Clarity Credit Card 0% 0% 19.9%  19.9% 
Barclaycard Rewards  0%  0% 22.9%  22.9% 
118 118 Money Guaranteed Rate Card  0%  0%  34.9%  34.9% 
Zopa Credit Card  £3.00 0%  34.9%  34.9% 
Virgin Money Travel Credit Card  3.00%  0%  21.9%  27.9% 
Santander All in One Credit Card  3.00% / £3.00  0%  23.7%  29.9% 
Credit: Moneyfacts         

There is no annual fee, so there are no extra costs if you pay off your balance in full every month.

If you don’t and your payment is late, you will incur a £12 late payment charge.

Barclaycard Rewards Visa

With the Barclays Rewards Visa there are no fees for usage abroad, so customers can withdraw cash from a cash machine and buy souvenirs without any charges.

Outside of your holiday, the card also comes with the added perk of 0.25 per cent cashback on everyday spending.

You’ll need to pay off your balance each month to avoid being subjected to the 22.9 per cent interest rate.

There will also be no interest charged on cash withdrawals, as long as the balance is paid in full. 

Late payments will also mean having to cough up for a £12 charge.

118 118 Money Guaranteed Rate Card Mastercard

This card offers customers fee-free spending abroad as well as cash withdrawals, but again customers need to ensure cash withdrawals are paid in full to avoid a 34.9 per cent APR.

Challenger banks have made no-fee foreign transactions a staple feature

Challenger banks have made no-fee foreign transactions a staple feature

The card provider also claims to be fee- free in every regard, so bar the interest charged on any outstanding balances, customers will not be subjected to fees for late payment or exceeding their credit limit.

Zopa Credit Card Visa

The Zopa credit card does not charge a foreign transaction fee when used abroad.

Zopa does however charge a fee of £3 per cash withdrawal from an ATM, regardless of whether the customer is in the UK or abroad.

It will also charge interest daily on cash withdrawals, so it’s vital to pay this off as soon as possible. 

It also charges a missed payment fee of £12 if you don’t make your minimum monthly payment on time.

Those who fail to pay it off in full each month will be subject to a rate of 34.9 per cent.

Virgin Money Travel Credit Card Mastercard

There is no transaction fee when using the card abroad, however, each cash withdrawal made will be subject to a 3 per cent charge.

Anyone failing to repay their balance in full each month will be subject to a rate of 21.9 per cent APR.

Those who withdraw money from an ATM will be charged 27.9 per cent interest on a daily basis until it’s paid off. 

Customers also need to avoid paying off their monthly balance late or exceeding their credit limit, as in either case they will incur a £9 charge.

Santander All in One Credit Card Mastercard

On top of having no transaction fees on any purchase made abroad, this card also offers 0.5 per cent cashback on spending – although there is a £3 monthly fee associated with the card. 

Like with Virgin card, customers will incur a 3 per cent charge when withdrawing money from an ATM.

Santander's All in One credit card is one option if you are willing to pay the £3 monthly fee.

Santander’s All in One credit card is one option if you are willing to pay the £3 monthly fee.

Another benefit of this card is that it charges 0 per cent interest on balance transfers for 26 months from account opening, with no balance transfer fee and 0 per cent interest on purchases for 20 months from account opening.

At the end of the 0 per cent period, interest will be charged on any outstanding balances and new purchases at the standard rate of 17.9 per cent per annum. 

Expert view: What other features should I look for? 

Another feature credit cards are increasingly offering is commission-free currency conversion. 

Chris Lilly, credit expert at the personal finance comparison site Finder.com, says: ‘If you expect to rack up some debt overseas that you won’t clear immediately, or if you already have card debt and don’t want to hold multiple credit cards, then this might appeal to you.

‘There are also non-high-street card issuers – such as Aqua, 118 118 Money or Zopa – that specialise in travel credit cards for those with lower credit scores, or very limited credit histories.

‘Halifax’s ever-popular Clarity card offers the additional perk of commission-free cash withdrawals, however these may appear in your credit file and you may still be charged a fee by the local ATM provider.’

Should you opt for a credit card or a debit card?

Credit cards have one clear advantage over debit cards in that they offer greater protection on purchases you make under section 75 of the Consumer Credit Act – even for foreign transactions.

‘Consumers may prefer to use a credit card for spending abroad, which is understandable as they can easily be cancelled if lost or stolen,’ says Springall.

‘Spenders are also protected under Section 75 of the Consumer Credit Act on purchases between £100 and £30,000, if a service or goods are not provided or are damaged.’

The fees for purchasing and withdrawing cash abroad using a credit card are on the rise, according to Fairer Finance

The fees for purchasing and withdrawing cash abroad using a credit card are on the rise, according to Fairer Finance

But for those intending to withdraw cash when abroad, a debit card may be a better bet.

‘Cash withdrawals using a credit card typically involve high fees and can appear in your credit file,’ says Lilly.

‘If you opt for a credit card, bear in mind that outside of the EU, some merchants may charge a fee.’ 

What about travelling with cash?

Exchanging cash can provide some peace of mind before travelling, but when doing so it is vital to secure yourself a decent exchange rate.

Using comparison sites will help you ensure you make your money go further than it might otherwise do, were you to exchange your sterling at the airport.

For example, sites such as Money.co.ukCompareholidaymoney.com and travelmoneymax.com will help you locate the best deals on offer.

However, exchanging vast amounts of cash before travelling may not be the wisest option.

Springall says: ‘Carrying around cash might be convenient, but it is clear to see how quickly a holiday can become a disaster should someone’s hard-earned cash be lost or stolen – and getting cash last-minute at an airport is unwise due to poorer exchange rates.’

To pay in local currency or sterling?  

When withdrawing money or paying for a purchase, make sure you opt to be billed in the local currency.

Lilly says: ‘Whether you opt for a debit or credit card, don’t forget that if a merchant offers to bill you in sterling or the local currency, you should opt for the local currency.

‘That way it’ll be your bank, with its favourable currency conversion terms, converting the currency, and not the merchant’s.’

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