Getting travel money used to be simple. When I first went abroad to Greece 20 years ago I brought travellers’ cheques – like everyone else seemed to do at the time.
After a childhood of holidays mainly spent in south coast seaside resorts (anywhere with a crazy golf course) the first trip abroad was unbelievably exciting. And the ceremony of buying travellers’ cheques was part of it.
They seemed like official documents on the same standing as your passport or your birth certificate.
My faith in their mystical powers was slightly diminished on arriving in Greece to find the banks were on strike – as apparently they often were in September – and there was no way of changing the travellers’ cheques for drachmas.
It was a nervous moment – not helped when the banks were joined on strike by other services. There were power cuts, the water went off. The locals didn’t seem bothered. Even when the rubbish collectors went on strike, they simply escaped to outdoor cinemas set in little parks where the stench was drowned out by the smell of bougainvillea.
Still eventually the banks did open – and my faith in travellers’ cheques was restored.
What form of money did you bring?
Fast forward 20 years and on holiday with friends this summer, it struck me for the first time how many different ways each of us had got our travel money. Not one of us had brought travellers’ cheques.
One of the group swore by cash – then fretted for most of the holiday that it would be stolen. Another had bought a pre-payment card.
My brother relied on using his debit card to buy most things, without even bothering to check the charges because he reasoned they probably wouldn’t amount to much.
In fact, our research has found that around 95% of the debit and credit cards on the market charge fees when used abroad. The charges may seem small but can quickly add up over even a short holiday. Among the top chargers abroad are Halifax, Santander, TSB, Lloyds Bank and Bank of Scotland debit cards. These apply separate purchase and cash machine withdrawal fees, as well as a foreign loading fee across all transactions.
On the other hand, the Halifax Clarity, Nationwide Select Visa, Post Office Platinum, Saga Platinum credit cards charge little or no fees for use abroad. And the N&P Gold debit card also charges no fees.
Should you pay in sterling or local currency?
Another question that preoccupied us was whether to pay in local currency or insist on handing over sterling. Known as Dynamic Currency Conversion (DCC), it lets you pay in either sterling, where the exchange rate and commission is set by the retailer’s bank, or the local currency and rely on the exchange rate offered by your card’s network provider, plus any extra fees.
We compared 15 transactions that Which? Travel researchers made on recent trips. With a card that has no foreign loading fees, such as the Halifax Clarity MasterCard, we’d always have been better off paying in the local currency. But, if we’d used a card with high overseas fees there wasn’t much difference – both were a poor deal because of all the charges.
In general, we found it’s the card you use that makes the biggest difference, not the currency. The cheapest method of all is to pay in the local currency with a card that makes no overseas charges.
How do you like to take your money on holiday and how do you choose to spend once you get there?