HOLI-BOBS
Martin Lewis issues urgent warning to holidaymakers over button you should never push on cash machine
It is becoming more commonplace to get stung at ATMs
HOLIDAYMAKERS heading overseas this year have been urged by Martin Lewis to watch out for a common trap when taking out cash abroad or paying for goods.
The money-saving expert warned that travellers can end up being stung and lose cash simply by making the wrong choice at a foreign ATM or at tills.
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Cash machines overseas usually offer users the option of paying in pounds or the local currency.
The idea of paying in pounds can seem like the obvious option as it’s more familiar and the currency usually linked to the card.
However, choosing this option can see you pay more for the cash coming out the wall or the good you’re paying for.
This is because the overseas bank will do the conversion to pounds and the rates are unfavourable.
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If you choose to pay in the local currency your card will instead do the conversion which is usually much more favourable.
So you should always opt for paying in the local currency when asked and not select the option for paying in sterling.
The money-saving expert also said it has become more commonplace for overseas ATMS to charge you – however there can be big difference in the fees.
Martin revealed that he did a cash machine experiment while abroad and found a huge range in withdrawal fees with charges ranging from €2 to €7.
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He added: “While the €7 fee machines did sometimes offer better exchange rates, that's irrelevant, as you should SAY NO to the foreign bank doing the conversion - you want your UK card to do it (especially if you've a specialist card).
"Foreign ATMs don't like that.
“They'll push and try to scare you to let them convert for you, with an 'are you sure?', or 'are you really sure?' if you select the option they don't want (as they make less money).
“Yet still say no to currency conversion. Do that and the only thing that matters is the fee, so go for the cheapest one of those."
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THE BEST CARDS FOR USING ABROAD
Debit cards
Chase Bank is fee-free for spending and cash withdrawals abroad and gives you one per cent cashback on all your spending, paying up to £15 a month for the first year.
Starling also charges no fees for spending or ATM withdrawals.
Monzo has no exchange rate markup but you can only withdraw £200 free at ATM over a period of 30 days, unless you have Monzo premium or plus accounts.
Santander card holders may be able to use Santander ATMs withouit being charged a fee abroad but check the details of your card.
Credit cards
The Barclaycard Rewards card doesn’t charge fees on spending or ATM withdrawals abroad.
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There’s also no interest on any cash withdrawn, as long as you pay it back when your next bill is due — but ATM providers could still add on a fee.
The Halifax Clarity card has no charges on overseas spending or withdrawing cash, but you will get charged interest on cash withdrawn from the moment you take money out, so pay it off straight away.
Are there other options to for spending abroad?
There are several specialist cards that can give you a great exchange rate.
These cards include travel credit cards and pre-paid cards which can let you pay abroad without fees or at a set exchange rate.
Senior Consumer Reporter Olivia Marshall explains all the options.
Travel credit cards: Travel credit cards allow you to spend money abroad without being hit by any fees or hidden charges.
But, they may still charge you for taking cash out.
We recommend the as it won't charge you for using it abroad, nor are there any fees for withdrawing cash.
But you will be charged interest if you don't repay your balance in full at a rate of 19.9 per cent.
And you will be charged interest on cash withdrawals until your balance is paid off too, at a rate of between 19.9 and 27.95 per cent depending on your credit score.
In other words, just because you are using plastic abroad doesn't mean you don't have to pay these credit cards off like you normally would.
Always pay off your balance before the end of the month with these cards to make sure that any money you saved isn't wiped away by paying interest.
For more on travel credit cards you can read our guide here.
Pre-paid cards: An alternative to carrying cash around is to get a pre-paid card.
These cards allow you to put a set amount of cash on the card at a fixed exchange rate.
So if the rate is good at the moment, you can put money on your card and it will stay that rate when you are on holiday.
Just keep in mind that these cards can sometimes have hidden costs and charges so be sure to read the small print.
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