Ready to travel again? 5 ways to spend smarter abroad

Travel is on again. The US and France recently lifted restrictions on UK travellers, and the UK government has wiped out the red list of countries to avoid.

There’s plenty of pent-up demand, according to the travel industry body ABTA, with Spain and the US ranking 1 and 2 as the destinations Brits most want to visit.

But before you start dusting off your suitcase, polish up your travel money know-how with the help of our 5 tips for smarter spending abroad.

This guide is paid content brought to you by FairFX. The FairFX Currency Card covers all your travel money needs. Add money using great rates for up to 15 currencies and spend in over 190 countries around the world, wherever you’re heading. Terms apply. Find out more.

1. Plan at least 3 weeks ahead of your trip

Give yourself time to get the best deals and the right cards. Once you’ve decided on the type of cards you want to take with you – more on this below – you’ll want to allow around 2 weeks for any new ones to arrive.

If you’re planning to take a prepaid card or travel cash, or both, allowing yourself a bit of time to watch for the exchange rate to creep up could mean squeezing a few more euros out of your pounds.

You can even set up a currency tracker to alert you when the pound is peaking, so you can act fast.

2. Pick your cards

It’s smart to have at least 2 types of card with you as well as some cash when you’re travelling.

Many debit and credit cards charge fees for spending abroad so check yours by looking at your bank or card provider’s website – look for “non-sterling transaction fees” (typically around 3% of each transaction) and fees for withdrawing cash at a foreign ATM.

If your provider charges for these, you may be better off getting a dedicated debit or credit card for travel or getting a prepaid currency card – or both. One prepaid currency card which doesn’t charge fees for spending abroad is FairFX, as long as you use a currency you’ve loaded onto the card. It’s £1 for ATM withdrawals.

Compare travel money cards

Remember that if you’re applying for a new credit or debit card, that will require a credit check. If you’re applying for a prepaid card, there’s no credit check as you’re not using credit – you load up the card and spend the balance.

Some prepaid cards are free to get and free to top up and can be a good way to ring-fence your holiday spending so you don’t dip into next month’s grocery budget.

If you’re going to be travelling to more than one place – or you’re planning ahead for your next trip already – consider a multi-currency prepaid card. You can lock in good rates by loading up the card with currency when exchange rates are in your favour.

So if you’re on a cruise visiting several countries, or you’re skiing in France and fancy popping over the border to Switzerland – COVID restrictions permitting – your card will be all set up to pay for lunch.

3. Never get your currency at the airport

It was bad before the pandemic, but it seems to be even worse. Recent research has found that currency rates at the airport can be 30% lower than those elsewhere, meaning that for every £500 exchanged there, you’d get £149 less.

The foreign exchange specialist FairFX contacted 19 airport currency desks around the UK to check rates. Some refused to give them over the phone, but among those that did was one at Stansted Airport, which offered a deal 30% lower than the market rate, according to FairFX.

The company said a similar check in 2019 found average airport currency rates were 16% lower than the market rate.

4. Never withdraw money on your credit card

A travel credit card is a good holiday shopping companion because items you buy that cost between £100 and £30,000 are protected by section 75 of the Consumer Credit Act if something goes wrong, just the same as in the UK. So, if you return from that skiing trip with a flash pair of new boots but then discover they’re faulty, the card company is as liable as the shop for putting things right.

But credit cards are almost never a good source of cash when you’re abroad. If you use your credit card to get cash at an ATM, not only are you likely to be hit with a cash withdrawal fee, you’ll usually start paying interest on the amount immediately, regardless of whether you pay off your balance at the end of the month.

5. Pay in pounds? Non, no, Nein!

If a shopkeeper asks if you’d like to pay in pounds, it’s very likely to cost you more than paying in local currency. This is because of “dynamic currency conversion” (DCC) which means the transaction amount is converted at the point of sale – at a rate set by the shop. This is a way for shops and restaurants to make some extra money. If you opt for DCC, you’ll typically be charged an eye-watering 6% or more on each transaction, which could include extra fees.

FairFX calculated in 2019 that Brits were wasting £490 million a year on DCC.

Mastercard has banned the use of DCC in contactless transactions and multi-currency prepaid cards, but plenty of people could still be stung if they don’t use Mastercard cards.

The key to smarter spending is planning ahead for your holiday – the earlier the better.

Written by

Liz Edwards

Editor-in-chief

Liz Edwards has been a consumer writer and editor for more than 20 years. She led award-winning teams at the campaigning publisher Which?, and has covered a range of consumer rights and personal finance topics including pensions, credit, banking and insurance. Liz has appeared frequently in national media such as The Sun, Metro, HuffPost and The Independent. She loves to cut through waffle to give consumers the real lowdown. And she loves puns. See full bio

Liz's expertise

Liz has written 108 Finder guides across topics including:

• Consumer rights and protection
• Saving money
• Buy now, pay later
• Insurance
• Consumer trends