Update note June 2016: This blog was written in 2013, though the logic still stands. The products have been updated and if you click the links it takes you through to the current write ups for each deal.
I invite you to take a peek inside my overseas wallet. This is no apocryphal journalistic device, I genuinely have a second wallet I pick up when I go abroad. Not to better match my overseas shoes (those don’t exist), but as a MoneySaving arsenal to ensure that when I’m away, I get more buck for my bang.
Open it up, and once the moths escape (sorry for the compulsory professional metaphor), it’s power=packed with weaponry to ensure maximum cash with minimum holiday effort.
Of course, you don’t actually need a physical second purse or wallet – it’s what’s in it that counts – though having one is a true way to nerdvana (do let me know via the comments if you have one, and if so, what’s in it?).
Time to open mine up…
Weapon 1: Plastic that gives unbeatable exchange rates everywhere
Everyone who regularly travels abroad should holster a specialist overseas credit card. This isn’t about borrowing, it’s simply an easy vehicle to get the best exchange rates in every country.
Spending abroad on most plastic should be avoided. While banks and building societies themselves get the nigh-on perfect Visa/Mastercard wholesale rate; they then add a 3% load to what they charge us. This means spend £100 of dollars, and it costs you £103. Worse still, all your statement shows is the exchange rate incorporating the load – hiding their stealth charge.
Yet there are a number of specialist load-free worldwide credit cards, where you get these bureau-beating rates in every country – whether you’re calling on ringgits in Malaysia, eating out on colons in Costa Rica, or doing whatever you like with your dong in Vietnam.
As they’re credit cards, do ensure you repay IN FULL every month, preferably by direct debit, to avoid being charged 18.9-34.9% representative APR, which defeats the gain of cheap spending abroad.
- Top just for using abroad: The overall top pick is the Halifax Clarity Card as it doesn’t have an ATM fee for withdrawing cash. Yet it’s a fairly naff card for UK use, so its perfect position’s waiting in your overseas wallet until it can smell the sambuca.
- Top for UK and abroad: While good for spending on, the Aqua reward card does have a 3% ATM cash withdrawal charge. Yet its real boon is a dual-use overseas/ home card (ruining my overseas wallet ring-fence somewhat) as it also pays UK cashback of 0.5% on spending too. It’s best for those with limited credit history.
- Other load-free cards: The Creation Everyday card and MBNA Everyday Plus card are new players to the overseas credit card market, and so there’s limited feedback on them. The other biggies are Saga, the Post Office, Nationwide Select (only for its existing customers) and Santander Zero (no longer available to new customers). If you’ve got one of these, then although ATM fees are a smidgeon higher than using the Clarity card, it’s not worth switching.
Two bank accounts offer load-free debit cards too – Metro and Norwich and Peterborough. Yet to change your entire bank just for this function, when you can just stick a credit card in your overseas wallet, seems like overkill to me.
NB. If you’re reading this after publication date, for updates on the best cards, see the Cheap Travel Cards guide.
Of course, to get a credit card you need to pass the credit score, and applying to find out leaves a mark on your credit file, whether you’re accepted or not. To help, our Eligibility Checker shows your odds of acceptance for each card, using ‘soft searches’ that don’t mark your file.
Finally, where possible, spend rather than withdraw cash on these specialist cards, not just to avoid ATM fees, but as you usually pay interest on cash withdrawals even if you clear the card in full. Though if you do that, it’s relatively trivial at £1 per £100, and even incorporating this still beats most bureaux de change.
Alternative weapon: The top prepaid card overseas
If you can’t get the top credit card or don’t trust yourself with one, prepay cards are effectively an electronic traveller’s cheque. Load it up with cash in advance and use it while away. If you lose it, no problem, pay a replacement fee and the cash is re-credited.
While some offer rates are almost as good as the best credit cards, it’s the rate on the day you load the cash up that counts, not the rate when you spend. So hold the card a long time, and if the exchange rate moves against you, you lose out (of course you could gain if it goes the other way).
WeSwap and Revolut offer the top rates, but these are fairly new cards, so have limited feedback on how good they are. For full, updated, alternatives see prepaid travel cards.
Weapon 2: A valid, free EHIC card
The European Health Insurance Card is a much misunderstood beast, not least due to redundant acronym syndrome by the many who call it an “EHIC card”.
EHICs entitle you to treatment by state hospitals and GPs in the EU, plus Iceland, Liechtenstein, Norway and Switzerland. Many wrongly assume this means free treatment. In fact you pay what the natives pay.
So if it’s free for them, it’s free for you, if they pay, you pay.
It’s not just useful for serious problems. Before making a speech at my Italian’s friend’s wedding, I lost my voice. To many guests’ great disappointment, my EHIC helped me get a prescription to alleviate it just in time.
There are a few things to watch for.
- Millions are invalid as they’re out of date. Check the expiry date at the bottom right of your card now. Many are travelling with worthless old cards (5.3 million expired by April 2016) so need to renew.
- Carry it with you. For it to be valid, you need to present the card. Don’t leave it in the hotel room (or worse, at home), keep it in your overseas purse or wallet.
- Children need their own card. Don’t assume your child is covered on yours.
- It’s always free, never pay. Never use Google to get or renew a card. You may end up on a shyster site trying to look official. These act as agents, pretending they can fast-track and charging £20, but it’s all nonsense. To get or renew go to www.ehic.org.uk or call 0300 330 1350.
- Some Spanish hospitals aren’t playing ball. The EU is investigating current reports of some unfair rejections of cards (see the Pain for Spain over unlawful EHIC refusals MSE News story.
While EHICs are useful, they’re not a substitute for travel insurance as you may still need to pay for treatment, or need to use a private hospital. Plus it doesn’t cover cancellation, repatriation to the UK, baggage or property issues and more.
Weapon 3: Your driving licence and international permit
My driving licence is fittingly itinerant, moving from my normal wallet when I go abroad. As well as the obvious car hire advantages, it’s also useful as ID, which is often demanded when paying by card.
So while I have your attention, please get your licence out for a second to check you’re not falling foul of the rules without realising it, which can lead to pricey consequences. If you’re stopped by the UK police and they check, you could be due a fine of £1,000 for:
- Incorrect address. Previously it was estimated that over 2.6 million had moved house and not updated it on their licence. Do it now, it’s free to change.
- Incorrect name. Previously, up to 3% of married women had their former, incorrect name on their licence. Again, this is free to change.
- Your licence dates every 10 years. While your permission to drive lasts until you’re 70, photo-licences are only valid 10 years. Millions are out of date and people are driving illegally.This is of course because appearances change over time (with the Botox generation, people can look younger as well as older). Check the 4b date on yours now. It’ll cost up to £20 to renew, but that’s cheaper than a fine. See the full Driving Licence Renewal Help guide.
If you’ve an old paper licence this isn’t an issue, yet the DVLA warns people do have problems presenting these outside the UK at times, so you may want to upgrade because of that.
For those planning to drive outside the European Union, it’s either recommended or compulsory in 140 countries to have an International Driving Permit as well as your UK licence. This short link – http://bit.ly/6GOg4S – shows the AA’s country-by-country guide to what’s needed. The cheapest way to get one is at the Post Office for £5.50.
Again beware Google. Shyster sites will charge you unnecessary extra fees for renewing driving licences. Plus ignore “International Driving Licence” ads, these aren’t official. You need your UK licence, plus an International Driving Permit.
Weapon 4: A few euros and dollars
My wallet’s also packed with unspent small euro and dollar notes. After all, why pay to change back £30 or £40 of foreign currency? Leave it sitting for next time.
If you do feel the need to have some cash with you, the worst sin is to leave it until the airport. Bureaux there know you’re a captive customer and give hideous rates. If you’ve already left it too late, at least pre-order for airport pick-up first, when rates are boosted.
Better still, if you’ve a few days before you go, try TravelMoneyMax, which compares the best rates from many online bureaux for collection and delivery.
Weapon 5: A photocopy of my passport
Just in case my passport goes missing, the key details can be very useful.
The one thing you won’t find in my wallet
There’s a hidden danger lurking in purses and wallets. If you carry a debit card from Halifax, Intelligent Finance, Lloyds TSB, NatWest or RBS, beware – they’re overseas DEBIT cards from hell.
Like most plastic they add a load, and like most debit and credit cards they charge an ATM fee. However these cards also add up to £1.50 on top each time you spend (NatWest/RBS have lowered its fee for larger amounts, but it’s still purgatory).
In other words, buy something in a shop for £5 worth of euros and with the load and this spending fine, it can cost £6.65. That soon adds up to a horrific sum.