One 'golden rule' helps you avoid hidden extra costs when on holiday

North Wales Live

16-05-2025

A card payment expert is warning holidaymakers to be aware of simple yet costly mistakes they can make when using plastic to pay abroad. CEO of Lopay, Richard Carter, urged holidaymakers to plan ahead to avoid extra and often hidden charges that can be imposed on foreign transactions.
With a typical debit card charging £11.88 when shoppers withdraw £250 in cash abroad, and some credit cards charging £14.95, it doesn't take long to rack up hefty fees when paying for things. Purchases can be costly too. For a £50 spend, a typical debit card can charge £1.38 and a credit card can charge £1.50.
Richard has highlighted five ways Brits can avoid being hit by additional fees when paying their restaurant bills or making purchases when overseas.
He says the best and simplest way to keep the costs down is to always pay in the local currency.
Always pay for things in the local currency - never convert to GBP
Whether using your credit or debit card, overseas customers are always asked whether they would like the transaction to be charged in local currency, or to be calculated in Pounds Sterling. This will usually be an option on the card reader or at an ATM.
Richard says it is essential to always choose the local currency to avoid extra fees and save money. This is true whether you're shopping online or using a debit or credit card.
When you pay in the local currency you avoid being hit by the vendor or cash machine's mark-up fee for converting the money. These additional charges are often around 3% but can be into the double digits.
Richard says: 'This is the one rule I tell my family, friends or anyone who asks - don't throw your money away just for the convenience of seeing the transaction appear in pounds and pence.
'Use a currency converter app on your phone if you're unsure about how much the price will translate to in your more familiar currency.
'One thing that certainly won't look familiar is the charge on your bank or credit card statement, once you've swallowed that hidden fee - and of course they all add up.'
Get a fee-free debit or credit card
Alongside bringing some local currency with you, you're best off finding a fee-free debit or credit card, that doesn't charge to spend or withdraw cash.
Starling and Monzo banks both offer cards that carry no abroad charges. Household banks like Halifax, Lloyds and Barclays will charge you for using your card overseas.
Use a credit over a debit card
Using a credit card abroad gives you protection under legislation from the Consumer Credit Act, known as Section 75. This hugely increases your chances of a refund, if the worst happens.
If goods are faulty, not delivered or a supplier goes bust, you will have the security of getting your money back. Section 75 doesn't only apply to purchases made in the UK, but transactions made abroad too.
Section 75 does not apply to debit cards at home or abroad.
Avoid withdrawing cash from ATMs abroad
It's becoming more common for the actual cash machine to charge you when abroad. There's no way around this, but don't assume all ATMs charge the same, so do your research and choose accordingly.
Most debit and credit cards do also come with a cash withdrawal fee, which kicks in every time you use your card abroad. This fee includes the currency conversion charge imposed by card firms like Mastercard, Visa or Amex and the administration fee imposed by the banks.
The average foreign transaction fee faced by debit card holders is 2.75 per cent [4], while credit card holders can typically expect a charge of 2.95 per cent. Brits with an HSBC debit card can expect to face a two per cent fee for withdrawals with a minimum charge of £1.75 and maximum charge of £5 for each transaction. They will also face a 2.75 per cent currency conversion fee on top.
Someone with HSBC's Rewards Credit Card Mastercard will face a 2.99 per cent transaction fee every time they use their card abroad.
No option available bar using an ATM?
If needs must, and you have to withdraw cash - always complete the transaction 'without conversion,' if prompted by the ATM.By selecting 'with conversion' or accepting the rate proposed by the terminal, the ATM provider can apply their own exchange rate, which is not the standard bank rate, and will make a profit on your transaction.
You should always choose to be charged in the local currency of the country you're in and not in your own currency.
Cash is (sometimes) King
Many of us don't bother bringing foreign currency with us on holiday, relying on credit or debit cards, or withdrawing cash via an ATM - which can be costly, as outlined previously. Arranging currency via your local bank is actually one of the most expensive places to change money - so avoid it at all costs.
You should also steer clear of using a Money Exchange desk at the airport, the exchange rates at Bureaux de Change in airports is generally very poor.
You're best off going to a travel money bureaux at supermarkets and retailers like Sainsburys, Tescos or Asda because they often offer the most competitive exchange rates.