Expensive holiday cash and card costs

Looking to get savvy about credit card costs before your holiday? Read on and discover how to avoid paying over the odds for your money and how to get the best deal on holiday currency.

There are many ways that banks and credit cards can take advantage of their holidaying customers; hidden charges and surcharges on accounts and current accounts seem to be increasing all the time. Here are some simple rules to avoid paying when you needn’t.

There are ways in which you can be charged for going on holiday before you even leave the UK, for example, a common surcharge that catches customers unawares is the additional interest you can often be charged on airplane tickets.

With some credit card companies charging up to 7% of your fare, this can be a startling and expensive extra cost. The best way to avoid it is to always buy your tickets online so you can see exactly what you are paying for, and to use a debit card for your payment.

You could also potentially be paying over the odds on your holiday currency. There have been instances reported of credit card issuing banks adding on 1% or 2% charges for currency transactions in this country. This fee is charged in addition to the surplus fee for the currency exchange itself.

You may also be charged by either your debit or credit card for exchanging currency. To get around this you can take the money from your bank to the Bureau de Change (some banks have a Bureau de Change teller in the branch itself) and exchange your hard cash for the relevant currency or Traveller’s Cheques.

Be aware of how you use your cards while abroad: if you use them wisely you can save yourself a fortune in charges, if not you will be paying, in effect to be on holiday! There are often a lot of hidden costs from using your debit card to access your current accounts whilst you are abroad as the system gets rerouted through Visa. Your bank will hide these charges as transaction or exchange rate charges, though these are not what you are paying for.
By far and away the cheapest way to pay when abroad is by credit card - every time you withdraw cash from a cash point you are being charged and yet when you use your credit card to pay for goods or services (rather than withdrawing cash) these charges don’t apply. It’s a good idea to shop around for a credit card with a competitive exchange rate loading fee and cash withdrawal fee – have a look at a credit cards comparison table such as the one featured on Motley Fool. At the time of writing the Nationwide and RBS credit cards appear to be offer good deals but do check before you start flashing the plastic abroad.

Another thing to bear in mind before travelling is to contact your card issuers before taking your trip. Knowing in advance that the customer is holidaying can stop unnecessary overseas charges, and prevent fraud checks. These checks if triggered regularly throughout your holiday can result in authorization denials thus rendering your credit card void, and subjecting you to bank charges on your debit card.