/ Money

Travel money myths and why I miss travellers’ cheques


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?

Sue Arnold says:
27 June 2015

Why didn’t you mention Nationwide Flex Direct. I can withdraw cash at ATMs with no charge and an excellent exchange rate and buy goods with my credit card with no fees.

On the contrary, all Nationwide cards now charge a cash withdrawal fee. See http://www.nationwide.co.uk/support/travel/fees-charges#xtab:foreignCash

Harold says:
28 June 2015

There are no charges for a Nationwide FlexPlus Debit card

There are charges for Nationwide FlexPlus. It costs £120 per year (10 per month).

geoff says:
27 June 2015

I now use a prepaid card in Europe, pre-loaded with Euros. The card is readily accepted and the payment in Euros is simply deducted from the total remaining on the card. The only charge is when loading the card. If the card is unused for 12 months, a small deduction is made.

Reg says:
27 June 2015

I have found one issue with this type of card. They are generally not accepted at garages with auto card systems, also the same at all toll road barriers in Spain and France which are never manned. I used the Post Office pre paid card.

In one supermarket the voice on the self service til is so impatient that you’re always being prompted to go faster. It is so annoying that I sometimes shout back shut you stupid woman.

The other point is politeness. Most till say remove your card. Few add the word please

Hi Chris, thanks for sharing your views about self-service tills, however, they’re off-topic for this particular conversation. Here’s a better place for posting your comments ➡ 🙂 :


If we go to America we still use travellers cheques. They can be used to pay for most things and there is no charge.

No charge? You must be joking. Even if there’s no visible charge, don’t forget the hefty charge that is built into a poor exchange rate when you buy the travellers’ cheques. Compare the rate to the live wholesale rates at http://www.truefx.com, and the percentage difference from this rate is the charge you’re paying. With a credit card, you get a rate very close to the wholesale rate, sometimes even better.

I always shop around online for the best value to collect around £200 worth of the local currency before travelling – usually this turns out to be obtained by paying online then collecting at one of the supermarkets. I then draw currency abroad from ATMs by using my Halifax Clarity Card rather than my Nationwide Flex because Mastercard invariably offer a better rate than Visa and use the Clarity card for purchases where appropriate. My bill is paid in full by direct debit so that, despite spending between £2,500 and £3,000 whilst abroad, my total charges end up being well under £10 as they comprise only interest.

You can even avoid the interest charged by Halifax Clarity by paying off cash withdrawals as soon as they appear on your account. Using Halifax’s and your current account’s smartphone apps, this is extremely easy to do while travelling.

Why do you get around £200 of the local currency before travelling? Every airport has cash machines so you get the local currency upon arrival. This is an unnecessary expense.

David says:
27 June 2015

“We compared 15 transactions that Which? Travel researchers made on recent trips.”

Not exactly in-depth research!

I use a Santander Zero credit card for most things, and a pre-paid FairFx debit card in ATMs. I believe I’m getting a good deal, but what I really need is Which to make the same transaction at the same time in a number of different ways to prove it.

You don’t need to use a prepaid card to avoid interest on your Santander Zero credit card. If you withdraw cash on the Santander card, simply pay it off as soon as it appears on your account. Even if paying from a non-Santander account, your payment shows up on your Santander credit card account in under 10 seconds, thereby avoiding any interest.

Why were you using travellers’ cheques as recently as 20 years ago? Credit and debit cards were already widespread then, so why was it necessary to spend and withdraw cash in a different way outside the UK compared to inside the UK?

Another benefit of credit cards is that card holders are often given the opposite side of the price, i.e. the bid instead of the offer or the offer instead of the bid. This is because the card networks (MasterCard, Visa, Amex) only trade net amounts in the FX markets, i.e. the net flow of aggregate bought and sold amounts in a particular currency pair. On the same card network and same day, if for example more money is spent by US-based card holders in the UK than is spent by UK-based card holders in the US, then the card network will buy a net amount of GBP/USD on the offer price. This means that UK-based card holders, who are selling GBP/USD, are given the offer price instead of the bid price, i.e. a much better GBP/USD rate than the wholesale interbank rate. This is definitely the case with MasterCard, but I’m not sure about Visa or Amex.

Here’s an interesting article comparing the exchange rates used by MasterCard and Visa: http://www.moneysavingexpert.com/news/cards/2015/05/mastercard-vs-visa-for-using-abroad-which-wins

I use a combination of Halifax Clarity and a Santander Zero credit card, although the latter is no longer available to new customers. I don’t see the benefit of prepaid cards, except for children who can’t get credit cards, because prepaid cards mostly have fees.

Just returned from Belgium and France, using Ukash prepaid debit card. Got a good rate of exchange when I obtained the card and had no problems whatsoever using it anywhere. I even booked my Belgian train tickets on line using the card.

I particularly like Moneycorp. Their exchange rate varies in real-time with market fluctuations. So if you plan your trip in advance, you can track the exchange rate and jump in at an advantageous moment to order your travel money.

Like today, with the Greeks causing Euro chaos, you can order at a great exchange rate for picking up at the Airport when you travel. And you don’t pay until you collect. Early morning is a good time to check because neither the European Central Bank nor the BofE will have tried to stabilise overnight fluctuations that early on. This morning, the Euro was over €1.42 to the GBP. BUY!

We purchase £250 of Polish Zloty about 5 weeks before we travelled. When we picked them up at Gatwick North Terminal as we departed for a 5-day break: if we had waited until the day of travel, it would have cost us £41 more for the same number of Zloty.

Terfar, Moneycorp’s rate is terrible. You can see the live wholesale market rates at http://www.truefx.com. A few minutes ago, EUR/GBP was trading at 0.7099. Moneycorp was showing an inverted GBP/EUR rate of 1.3840 for buying €1000, which translates to a conventional EUR/GBP rate of 0.7225. That’s a 1.78% commission built into the rate – hardly a good deal.

Your comment about time of day has no truth in it whatsoever. The market moves at all times of the day and night, and intervention by central banks such as the ECB and BoE is far from an everyday event. Rates are much more commonly influenced by economic data being released at specific times on specific days. Last night’s drop in EUR/GBP below the psychologically significant level of 0.7000 was caused by a lack of liquidity amongst traders in New Zealand and nearby time zones; it’s very easy to move the market when it’s illiquid, quite common on Sunday night. Once traders in the European and New York time zones became active, it bounced back up, now at 0.7123.

I’m a former FX trader but still work in FX at large investment banks.

Rubbish. You must still be in the employ of an FX trader or one of the crap banks. MoneyCorp is best for the margin they charge and absolute convenience. You can order in advance choosing your moment to execute your purchase when the exchange rate is favourable and you don’t pay until you collect your money in the departure lounge at the nominated airport.

For holiday money, they are second to none. Now if you are shifting large sums for house purchase or something, that is a totally different market. We are discussing holiday cash here.

I use a Caxtonfx prepaid Dollar card. The rate is good and it’s safer than cash.

MikefromSA, CaxtonFX’s rates are terrible. You can see the live wholesale market rates at http://www.truefx.com. Just now, GBP/USD was trading at 1.5737 but CaxtonFX was showing a rate of 1.5377. That’s a 2.34% commission built into the rate – hardly a good deal.

With a no-fee MasterCard such as Halifax Clarity or Santander Zero, you would get a rate very close to or better than the wholesale market rate (as explained above).

NFH, you really are making this thread tedious – every time someone comes up with a suggestion (often good and valid ones), you poo-poo it as if you know everything. Whilst your FACTS may be right, your inference that everyone is wrong and you know it all, is wearing to say the least.

As someone who worked in FX at the retail end (i.e dealing with the public, not in some dealing room which is divorced from the reality of most peoples world) I am happy to disagree with you on several points. You say MoneyCorps rates are “terrible”. That’s a stupid assertion – for 95% of people in this country a rate that is 1.78% away from spot is pretty blooming good, difficult to beat on the high street! And a margin is not a commission, its a margin – a profit margin! There is no commission involved.

Oh, and as for your assertion that “prepaid cards mostly have fees” is not true either – some do, some don’t – many of those that you access on the High Street don’t, such as Thomson’s Travel Money Card. Sure they make a margin on the exchange rate, but then they are a business, not a charity, but they definitely don’t charge a fee.

If someone gets a good deal on their money and are happy to share it hear, please stop putting them down and making them feel like they wish they hadn’t bothered – it will only put them off commenting in the future and then where will that leave you? Talking to yourself!

Have a nice day 🙂

Hi all, thanks for all the comments you’ve been making. Some of you have broken our commenting guidelines – you can have a ready of them, here: https://conversation.which.co.uk/commenting-guidelines

Please do not make your comments personal. Share your experiences and thoughts on the topic, but try to be polite to other visitors.

One of the few benefits that I liked on a long tour through Russia was the easy money. Most major hotel lobbies and all banks have cash point machines (ATMs) that let you draw in US Dollars, Euros or Roubles. Just stick in your debit card (we used First Direct/HSBC and Barclay cards), enter your pin and take your money.

All these anti-laundering regulations imposed by the EU and USA are a real pain in the ass for us ordinary users.

FYI have a pilot Supercard (https://www.supercard.io/) based in a MSE recommendation, currently using for the first time abroad in Dubai and Maritius and looks even more promising at reducing bank charges. Whcih? do you have any comments on this concept?

We think Travelex has come up with a great concept. At the moment the product is in a pilot phase. Once it’s fully launched we will be give it a full test and review.