If you thought that you were being wise and saving your hard earned cash by using credit cards for your holiday abroad, think again, warns the Saga Group.
Between the merchants and the credit card companies, your overseas purchases could cost you as much as 5% more if you use the wrong credit card.
The culprit? All the little - and not so little - fees and charges for transaction fees, loading charges and currency exchange fees that credit card companies and banks add onto your purchases when you use their plastic abroad.
Those fees will add up to nearly £607M this year, according to uSwitch.
com.
It is possible to avoid contributing to that amount, though, if you take the time to compare credit card agreements before you go abroad and choose the best credit card to take with you.
It's not always easy to find the right credit card UK finance experts say, because many of those fees and charges are 'hidden' behind not so transparent terminology.
Here are some of the things to look for when choosing which credit card UK travelers should tuck into their wallet when they go abroad.
Loading fees are charged by the issuer of your credit card when you use it to purchase something or withdraw cash overseas.
It could be labeled a 'exchange rate administration fee' or a 'exchange rate adjustment charge', and may be as high as 2.
75%.
That fee is nominally a currency exchange fee, charged for exchanging the purchase from the local currency to your own.
If 2.
75% doesn't sound like much, look at it this way - if you purchase £1000 worth of goods on your credit card, it will cost you an extra £27.
50 just for that one fee.
Transaction fees are typically charged on cash withdrawals overseas using your credit or debit card.
That's likely to hit your pocket for another 1.
5-2% of the amount of money that you withdraw from your account.
Currency conversion charges are often rolled into the loading fee described above even if you opt to use dynamic currency conversion and pay for your goods in the local currency rather than your own.
Many merchants abroad offer dynamic currency conversion for credit card UK customers, since they're allowed to take a commission on the conversion rate.
If you're then charged again by your credit card company, you're taking a double hit on the currency conversion commission.
When using a credit card UK travelers abroad may also find that they pay far more for cash advances from their credit card company.
If you advance yourself £1,000 on your credit card, you may end up paying: £27.
50 loading fee £25.
00 (2.
5% of total) foreign ATM fee £15.
00 (1.
5% of total) transaction fee £12.
40 (Interest charges) Note that many credit card UK companies charge higher interest rates on cash advances taken abroad.
How to Have More Money on Your Holiday The recommended solution is to choose your holiday credit card wisely.
In fact, some finances experts recommend having two credit cards - one that you use at home and one exclusively for travel abroad.
Here are the most important things to remember when deciding on the best credit card to take on holiday with you: 1.
When choosing a credit card for foreign travel, compare credit card features and fees for each card you're considering.
2.
Choose a credit card that offers cash rewards for spending if you have the choice between two cards with similar fee structures.
3.
Be aware of the currency exchange rate - and the fact that it varies depending on merchant.
There are few regulations on the commission that can be charged for converting currency, so it's up to you, the traveler, to shop around for the best currency conversion deals.
4.
Consider buying before you go.
The currency conversion rate is almost certain to be lower, and you'll get more Euros for your pounds than you would at the airport or overseas.
5.
Another option that's often suggested is to use a pay-in-advance credit card.
Because you load it in advance, there are no finance charges, though you'll pay an upfront fee for loading the card and may still pay foreign exchange fees on the money.
You'll find a wide selection of prepaid credit and debit cards at some great comparison websites along with all the information you need to compare credit card fees when choosing the best credit card for your holiday.
Between the merchants and the credit card companies, your overseas purchases could cost you as much as 5% more if you use the wrong credit card.
The culprit? All the little - and not so little - fees and charges for transaction fees, loading charges and currency exchange fees that credit card companies and banks add onto your purchases when you use their plastic abroad.
Those fees will add up to nearly £607M this year, according to uSwitch.
com.
It is possible to avoid contributing to that amount, though, if you take the time to compare credit card agreements before you go abroad and choose the best credit card to take with you.
It's not always easy to find the right credit card UK finance experts say, because many of those fees and charges are 'hidden' behind not so transparent terminology.
Here are some of the things to look for when choosing which credit card UK travelers should tuck into their wallet when they go abroad.
Loading fees are charged by the issuer of your credit card when you use it to purchase something or withdraw cash overseas.
It could be labeled a 'exchange rate administration fee' or a 'exchange rate adjustment charge', and may be as high as 2.
75%.
That fee is nominally a currency exchange fee, charged for exchanging the purchase from the local currency to your own.
If 2.
75% doesn't sound like much, look at it this way - if you purchase £1000 worth of goods on your credit card, it will cost you an extra £27.
50 just for that one fee.
Transaction fees are typically charged on cash withdrawals overseas using your credit or debit card.
That's likely to hit your pocket for another 1.
5-2% of the amount of money that you withdraw from your account.
Currency conversion charges are often rolled into the loading fee described above even if you opt to use dynamic currency conversion and pay for your goods in the local currency rather than your own.
Many merchants abroad offer dynamic currency conversion for credit card UK customers, since they're allowed to take a commission on the conversion rate.
If you're then charged again by your credit card company, you're taking a double hit on the currency conversion commission.
When using a credit card UK travelers abroad may also find that they pay far more for cash advances from their credit card company.
If you advance yourself £1,000 on your credit card, you may end up paying: £27.
50 loading fee £25.
00 (2.
5% of total) foreign ATM fee £15.
00 (1.
5% of total) transaction fee £12.
40 (Interest charges) Note that many credit card UK companies charge higher interest rates on cash advances taken abroad.
How to Have More Money on Your Holiday The recommended solution is to choose your holiday credit card wisely.
In fact, some finances experts recommend having two credit cards - one that you use at home and one exclusively for travel abroad.
Here are the most important things to remember when deciding on the best credit card to take on holiday with you: 1.
When choosing a credit card for foreign travel, compare credit card features and fees for each card you're considering.
2.
Choose a credit card that offers cash rewards for spending if you have the choice between two cards with similar fee structures.
3.
Be aware of the currency exchange rate - and the fact that it varies depending on merchant.
There are few regulations on the commission that can be charged for converting currency, so it's up to you, the traveler, to shop around for the best currency conversion deals.
4.
Consider buying before you go.
The currency conversion rate is almost certain to be lower, and you'll get more Euros for your pounds than you would at the airport or overseas.
5.
Another option that's often suggested is to use a pay-in-advance credit card.
Because you load it in advance, there are no finance charges, though you'll pay an upfront fee for loading the card and may still pay foreign exchange fees on the money.
You'll find a wide selection of prepaid credit and debit cards at some great comparison websites along with all the information you need to compare credit card fees when choosing the best credit card for your holiday.
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