The best debit card to use abroad

When it comes to overseas spending, all debit cards are not created equal! Find out which one you should be using this summer.

Don't get stung by you bank while on holiday (Image © Fotolia)


What happens if you want to use your current account debit card when you're on holiday? Many people assume they won’t be charged... but unfortunately, they’re mistaken.

In fact, overseas charges on debit cards can really mount up. However, there are a couple of providers that charge you nothing, although they won't be suitable for everyone.

A host of sneaky charges

There are several charges to watch out for if you use your debit card abroad. Use the wrong one, and you could be hit with four separate fees.


Cash conversion charge

If you use most debit cards to withdraw money from a foreign ATM, you’re likely to incur a cash conversion charge - typically of around 2.75% of the amount withdrawn.

Essentially, the higher the percentage fee, the worse the rate of exchange you’re getting.

Cash transaction charge

Confusingly, many debit card providers also hit you with another ATM fee - a cash transaction charge (also known as a cash withdrawal charge).

This is also a percentage fee (typically 1.5%-2%) but beware: there is usually a minimum charge of around £1.50-£2.

This means that customers withdrawing lots of small amounts will be the hardest hit: they could be paying an extra £2 for every £10 they withdraw - ouch!

So, it’s worth planning ahead so you know how much money you’re likely to need, and withdraw larger amounts all in one go.

Putting these first two charges together - you could easily end up paying an extra £4 (or even more) on every £100 you withdraw from a foreign cash machine.

Paying for purchases

You might think you can avoid fees by paying by debit card directly for your purchases, rather than using it to withdraw cash. Unfortunately, most debit cards will charge you to do this as well.

Retail conversion charge

The first fee you’re likely to face in this instance is a retail conversion charge. As with the cash conversion charge, this is typically around 2.75% of the amount spent on the card.

Retail transaction charge

And you may also be hit with a retail transaction charge. This is sometimes a flat fee (typically around £1.25), but can also be a percentage of the overall spend (typically around 2.75%).

All this means that if you use the wrong debit card to pay for something in a foreign shop, you could, again, be charged £4 or more for every £100 you spend - no better than withdrawing cash.

In summary

Are you wondering what your current debit card will charge you? Here’s a breakdown of what to expect:

Bank/Building Society

Cash Conversion Charge

Cash Transaction Charge

Retail Conversion Charge

Retail Transaction Charge

Barclays Bank

2.99%

2%: min £1.50, max £4.50 (free if you're using an ATM that's part of the Global Alliance - see http://www.barclays.co.uk/Helpsupport/Usingcashmachinesabroad/P1242558955276 for more on which banks are included)

2.99%

Nil

Bank of Scotland

2.99%

1.5%: min £2, max £4.50

2.99%

£1 (free for Premier and Platinum account holders)

Lloyds TSB

2.99%

1.5%: min £2, max £4.50

2.99%

£1 (free for Premier and Platinum account holders)

NatWest

2.75%

2%: min £2, max £5

2.75%

£1.25

Royal Bank of Scotland

2.75%

2%: min £2, max £5

2.75%

£1.25

First Direct

2.75%

2%: min £1.75, max £5 (free for First Directory customers)

2.75%

Nil

Santander

2.75% (free if using a Santander ATM in Spain)

1.5%: min £1.99 (free if using a Santander ATM in Spain)

2.75%

£1.25

HSBC

2.75%

2%: min £1.75, max £5 (free for Premier and Advance account holders)

2.75%

Nil

Halifax

2.75%

£1.50

2.75%

£1.50

Clydesdale Bank

Nil

3.75%: min £1.50

Nil

2.75%: min £1.50

Coventry BS

Nil

2.00%

Nil

2.00%

Nationwide BS

2.00%

£1

2.00%

Nil

Metro Bank

Nil

Nil

Nil

Nil

Norwich & Peterborough BS (Gold Classic and Gold Light accounts only)

Nil

Nil

Nil

Nil



The free to use cards

As you can see, both Norwich & Peterborough and Metro Bank offer accounts with debit cards that don't charge any fees if you use them abroad. However, there are some things to be aware of.

Norwich & Peterborough's Gold Classic current account requires you to pay in at least £500 each month or you have to pay a £5 'underfunding charge'. Alternatively, with the Gold Light account you have to have a balance of at least £5,000 or make five transactions in and out of your account each month. If you don't, you'll pay a 'low usage' fee of £5 a month.

If you don't want to use the account as your main one, you'll probably be better off with the Gold Classic – just make sure you transfer the £500 over a month by setting up a direct debit from your main account.

For an account with no strings, Metro Bank's current account is perfect. There's just one catch – you need to visit a branch (or store, as they prefer to call them) to open one. At the moment, all of its branches are within the M25, with the exception of High Wycombe. But if you're planning a trip to the capital anyway, you could spend half an hour opening an account and then manage it online.

[Related link: Compare current accounts]

The alternatives

Of course, there are certain circumstances when a debit card won’t do the trick.

For example, some hotels and car hire companies insist you pay by credit card. And using a credit card mean you’ll have extra spending protection under Section 75 of the Consumer Credit Act.

Whatever method you choose, forewarned is forearmed. A bit of research could help you avoid a host of charges - so you can spend your holiday money on something fun, instead.


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