Use a credit card rather than a debit card while you're abroad ? but be careful which one you use
The cheapest way to spend money abroad, and to get cash from an ATM, is to use a credit rather than a debit card, says money guru Martin Lewis of MoneySavingExpert.com. But be extremely careful which credit card you use.
For regular travellers, the best cards are the Halifax Clarity (top pick); Post Office Platinum; Santander Zero; Saga Platinum (over-50s only); and Nationwide's Gold Card ? if issued before February 2011. Most others add 2.5%-3% to foreign exchange transactions. The cards above don't apply this "loading", meaning you get a "perfect" exchange rate ? beating even the best bureau de change.
All the cards on the list, bar Nationwide Gold, allow load-free transactions worldwide. Nationwide gives load-free transactions only in Europe ? a 1% fee applies elsewhere.
Lewis says there are a few caveats. You have to pay off the balance each month in full. Users of the Halifax Clarity and Santander Zero cards get free ATM transactions ? the others pay a small fee. You will pay interest on the cash advance, but this will usually be less than the costs of loading a debit card.
One reader contacted us to say she avoids paying interest by pre-loading her Post Office credit card with cash before she goes ? though Lewis says most card providers prohibit this. The Post Office says it outlawed the practice last October.
If you still like to take a wad of cash, check rates at travelmoney.moneysavingexpert.com. This will tell you which firms are doing the best deals, with links. The London Waterloo branch of ICE usually offers the best rates if you print off a voucher before you go.
Lastly, if you live abroad for even part of the year, consider switching your bank account as this could save you a small fortune in exchange charges. The Norwich & Peterborough building society offers fee-free purchases and no ATM charges for Gold Classic account customers using their debit card abroad. Nationwide used to offer the same deal but scrapped it in 2009, greatly upsetting many of its customers at the time.
Source: http://www.guardian.co.uk/money/2011/sep/23/best-credit-cards-abroad
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