Cheapest way to spend money when you travel

You can enjoy a stress-free holiday by handling the practical details in advance. However, many people overlook how they’ll manage payments abroad, even though getting it wrong could cost them hundreds of pounds. This guide breaks down the four main payment options, helping you get the best value for your money while traveling.

Top Tips for Maximizing Your Holiday Spending Savings

• Check your cards before you go: Never blindly use your existing cards overseas – research their fees and find a cheaper alternative if needed.
• Always pay in the local currency: If asked whether you’d like to pay in pounds or the local currency, always choose the local currency to avoid hidden fees.
• Avoid using credit cards for travel cash: Don’t buy travel cash or load a prepaid card using a credit card – you’ll incur interest charges.
• Stock your ‘overseas wallet’ wisely: Ensure your travel wallet is prepared with the right mix of payment methods.
• Use the right spending method: Spending the wrong way can make your holiday cost more than necessary.
• Credit card needed for car rentals: If you’re hiring a car abroad, a credit card is typically required.

Option 1 – Prepaid Travel Cards

With prepaid cards, you load them with cash before your trip and use them like a debit card. If the card is lost, you can contact the provider to block it and safeguard your funds.

The major advantage of prepaid cards is the ability to exchange cash in advance, locking in an exchange rate ahead of time. This ensures you’ll know exactly how much you have to spend in the foreign currency during your trip. We strongly recommend this option as it is often cheapest and easiest to use.

We recommend using Wise for prepaid travel cards as it has one of the best rates in the market with a user friendly app.

To view and exchange money click “Get Started”.

Option 2- Travel Debit Cards

You can also find debit cards that don’t charge ‘non-sterling transaction fees.’ Typically, you’ll need to open a new bank account to access these cards.

We recommend using Chase.

New Chase customers can earn 1% cashback (up to £15/month) on nearly all spending for the first 12 months. After that, you’ll need to deposit £1,500 or more each month to continue receiving the 1% cashback, although there are ways to manage this if it’s challenging.

Additionally, Chase provides a competitive 3.85% AER interest on its linked easy-access savings account, though higher rates are available elsewhere. There’s also a ’round-up’ account that pays 5% interest—if you spend £1.45, for example, 55p is saved into the 5% account.

To use Chase, your device must run at least iOS 14.1 or Android 8.1.

Option 3 – Getting foreign currency

Getting foreign currency before your trip, is often less favourable compared to using a travel card.

While it might seem convenient to have cash on hand, purchasing foreign currency typically involves poor exchange rates and additional fees from currency exchange services. This means you get less value for your money compared to the near-perfect rates often offered by travel cards.

Additionally, carrying large amounts of cash can be risky, as it’s vulnerable to loss or theft, and once it’s gone, it’s irreplaceable.

Option 4 – Travel Credit Cards

While travel credit cards offer perks like rewards points and cashback, they also have significant downsides.

One major issue is the added cost of using them abroad. Although your card provider typically secures near-perfect exchange rates, they often add a ‘non-sterling exchange fee’ of around 3%.

This means that for every £100 worth of euros or dollars you spend, you actually pay £103, and some cards may tack on even more fees.

Additionally, travel credit cards often come with high interest rates, which can quickly negate any benefits if you don’t pay off your balance in full each month.

Some also charge fees for cash withdrawals, and many have annual fees that can outweigh the rewards unless you spend heavily.

Moreover, using a credit card abroad can impact your credit score, especially if you withdraw cash, as these transactions are recorded on your credit report and may be seen negatively by future lenders.