Cheapest card to use on holiday

A new alternative, and one that you can probably obtain within the next two weeks before heading abroad, is the Travelex Supercard. This was so popular at launch they had to suspend sales, but it is now on offer again. You go on to the Travelex website and download the card app. You then link it to your existing debit or credit card, and in the meantime they post you the card. When you use it on holiday it effectively takes the money off your standard card, but does not apply the non-sterling transaction fee. All you pay is whatever the market exchange rate is that day. But there is one major caveat: do not use it in cash machines abroad as it will charge you 2.99%. Instead, keep it for spending in shops and restaurants only. And don’t bother using it in the UK, where nearly all transactions are charged £1 plus 1%.

If the Supercard is not your thing, then the alternatives are much as above: the Halifax Clarity, Post Office Platinum, and MBNA Everyday Plus credit cards all charge no fees on purchases abroad. But once again, these only make sense if you are rigorous about paying off the full amount at the end of the month.

Prepaid cards

These are the cards where you load money on to them before you go abroad, then spend until the balance on the card reaches zero. You can’t overspend, but you can top it up again using cash, a bank transfer or a bank card.

Many of them don’t charge when used to make purchases abroad, such as euro cards from FairFX and CaxtonFX, and you usually obtain an excellent exchange rate. The drawback is that they nearly all charge fees for ATM withdrawals, and there can be application fees and “inactivity” fees. Also, you tend to come back from holiday, leave it in a drawer somewhere and forget you still have an outstanding balance on the card.

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