The (card) cost of going abroad

Using your card abroad could cost you a small fortune, according to Lisa Taylor, analyst at Moneyfacts.co.uk - the money search engine.

She argues that with travellers cheques becoming less popular more of us are opting for the convenience of using our plastic when we jet off on our holidays. However, many travellers are unaware of the level of costs associated with using debit and credit cards whilst abroad.

"We take it for granted that using our debit cards is free of charge whilst on home soil, so it's not surprising that some consumers are shocked when they see how the charges stack up after using their card on holiday.

"With terms such as 'retail conversion charge', and 'foreign usage charge', it can be confusing for travellers to know exactly what types of fees they will be liable for, and how much it's likely to add to the cost of their trip," says Taylor.

So what charges can you expect to pay?

Credit cards

1- Foreign Usage Fee: Typically this will be a charge of 2.75%. It will be charged on both purchases and cash withdrawals. So, for every £100 you spend, an extra £2.75 will be charged.

2- Cash withdrawal charges: These are the same as you would pay in the UK, and will be charged in addition to any foreign usage fee. There is an upfront withdrawal charge, typically around 2.5% (with a minimum charge amount); and as well as this you'll be charged interest from the date of the transaction, even if you repay your next statement in full.

Debit Cards

1- Withdrawing cash: If you use your debit card in an ATM you may face two charges: A cash conversion charge, typically 2.75% and also cash transaction charge, generally 1.5%. So, for every £100 you withdraw it could cost an extra £4.25.

2- Retail Spending: Again you could be faced with two charges for spending with your debit card in a shop. The first is a retail conversion charge, typically 2.75%, the second and less common is a retail transaction charge which can be £1.50 per transaction in some cases.

"While credit and debit cards can be a convenient way to manage your holiday spending, they can also put a dent in your holiday budget if you're not careful. The average holidaymaker spent over £10 on commission fees in 2006 - and this is without taking into account the exchange rates used for converting the transactions," Taylor notes.

25 July 2007 © Moneyextra.com

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