The best (free) bank cards to use on holiday

Your wallet might be chock-full of cards, but unless you have a piece of plastic specifically designed for use overseas, your holiday spending could quickly start racking up fees.

Some providers issue fees of around 3pc added to all foreign purchases, and ATM withdrawals can attract instant fees and interest.

To avoid this, the key is to seek out cards which charge no fees for foreign currency transactions. Rachel Springall, of financial analyst Moneyfacts, said: “Holidaymakers looking to make their cash go further should apply for a credit card designed for use abroad, or open a current account with a debit card which does not charge for making withdrawals.”

Here, Telegraph Money takes a closer look at the best bank cards to take on your next holiday.

How much could a travel bank card save you?

There are three charges that could be added to your foreign transactions:

• non-sterling transaction fee
• ATM fee
• spending charge

For credit or debit card purchases – such as buying a meal at a restaurant – non-sterling transaction fees are usually around 3pc. This may be charged in addition to a spending fee, which is usually between 50p and £1.50. A £100 meal could therefore cost you up to £104.50.

ATM fees vary between providers, but you could end up paying a cash advance interest – and in some cases this is charged every day until you pay it off. A non-sterling cash fee is usually around 3pc, with a minimum charge of £3. This means even a small cash withdrawal of £20 could cost £23 plus interest.

Top travel credit cards

The key to finding a good travel credit card is making sure it doesn’t charge any of these foreign spending fees.

Top credit card picks right now include the travel-friendly Barclaycard Rewards Card, and Halifax Clarity credit card.

Andrew Hagger, of personal finance website MoneyComms, said: “Unlike most credit cards, Barclaycard Rewards doesn’t charge any fees or interest charges on purchases overseas or cash withdrawals, provided you pay your statement in full by the due date.” As a small added bonus, you also get 0.25pc cashback on your spending.

Halifax’s Clarity card is another favourite with holidaymakers, as there is no exchange rate mark-up for purchases or ATM transactions. That said, you will pay up to 28.94pc interest on any cash withdrawals. This begins the moment they are made.

Mr Hagger added: “On a £100 ATM withdrawal, this will work out at around £2.30 over 30 days.”

The benefit of using a credit card for foreign spending is the Section 75 protection they offer. If something goes wrong, you can reclaim the value of purchases between £100 and £30,000 from your credit card provider.

Debit cards to use abroad

In recent years, the likes of Chase, Starling and Monzo (online and app-only banks) have made their mark on the market by offering current accounts with travel-friendly debit cards.

All of these cards offer fee-free spending and ATM withdrawals. However, there are caps on the amount of cash you can withdraw.

With Chase, you can take out up to £500 per day, and £1,500 per month. With Starling, there’s a cap of £300 a day. Monzo only allows fee-free ATM withdrawals of up to £250 over a 30-day period. If you go over this you are charged 3pc.

Chase offers an extra bonus of 1pc cashback on spending both at home and abroad.

If you don’t want to open a new bank account, Hagger says Currensea may be worth a look.

He said: “Currensea provides you with a Mastercard that you link to your existing current account. The beauty is, you don’t have to worry about pre-loading with euros or dollars before you set off.”

However, the card does come with some charges. There are three price plans to choose from. The essential package has no annual fee, but charges 0.5pc foreign exchange charge on both purchases and ATM withdrawals. There are no additional charges for the first £500 cash withdrawals each month, but anything above this monthly limit attracts a 2pc fee.

The premium plan is £25 annually, and the elite plan costs £120 per year. Mr Hagger said these might suit frequent travellers as they come with lower foreign exchange rates and additional features.

Are prepaid cards a better option?

Another option you might want to consider for your overseas trip is a prepaid card. These can be particularly beneficial if you want to stick to a budget, as you can load up the card before you go – either in sterling or your chosen currency – and then it’s ready to spend while you’re away.

Among its other features, Revolut’s card can be handy to take abroad. If you sign up to its free plan, you can exchange up to £1,000 per month fee-free – but only from Monday to Friday. There’s a 1pc exchange fee at weekends. 

You can also get free ATM withdrawals up to a maximum of £200 over a 30-day period. Over this, there is a 2pc charge.

The FairFX multi-currency card is another good alternative, as there is no exchange rate mark up for the 15 major currencies available to load on the card. There is, however, a £1 fee on all ATM withdrawals. Another fee to watch out for is inactivity fees. This card charges £2 per month on any remaining balance if it’s left loaded after its expiry date.

The similarly named EasyFX card doesn’t charge for ATM withdrawals or to load your card. However, if you lose it and need a replacement there is a £6 charge, and it will also take £2 per month if the card hasn’t been used for more than 12 months.

Always spend in the local currency

If you’re given the option of paying in sterling, as opposed to the local currency, whether you’re in a shop, restaurant or other outlet during your holiday, you should always say no.

Opting to pay in sterling means you’re giving the card payment provider the chance to decide the exchange rate, via a process known as ‘dynamic currency conversion’. The rate is unlikely to be in your favour.

Matt Sanders, of Go.Compare Money, said: “In most cases you will get a better currency rate from your card provider, so if you are presented with the option of paying in pounds, opt against it, as it may cost you more.”