Apologies for using the above acronym,' Keep It Simple Stupid'. I blame my 30 years in financial services for its use but that is what I will attempt to do.
In making any final decision you will need to read the smallprint which is often confusing; banks love smallprint, particularly in their terms and conditions.
I am always on the lookout for a good deal, particularly, since gone are the days of the friendly bank manager and personal service and the fact that loyalty counts for little these days.
Excuse my cynicism, but this is a result of working so long in this industry. Also with internet banking it is relatively easy to set up and close accounts. Experience also shows that since it is you that is inputting the information, you are more likely to get this right than if you went into a branch.
1) Do not use debit cards abroad, they typically charge 2.75 to 3% transaction charge
2) There is no such thing as commission free currency, they are simply giving you a poorer exchange rate
3) Do not buy currency at the airport or port (unless preordered) or on the boat, the exchange rates are rubbish.
4) If withdrawing from an ATM, check there are no charges by the ATM provider.
5) If you have any spare money at the end of your trip, spend it, the exchange rates to change back are poor, banks are not ,
charities, beware of providers who offer free currency change back facilities.
6) Online exchange rates are generally better and allow for pick up, if only ordering small amounts & you want to avoid the
7) Always pay in the local currency. If the retailer offers to charge you in sterling then refuse, the exchange rates are
8) Take more than one card with you, preferably one Visa and one Mastercard and tell your card provider where & when
you are going.
Make sure you provide a mobile contact point.
9) Finally pay for as much as you can with your credit card, more about this below, but check to see if there is a charge.
I have not been able to find any that do not impose charges when used abroad so that leads us onto:
These will typically charge 2.75 to 3% per transaction but they do use wholesale foreign exchange rates which will be better than that available on the high street.
The good news, however, is that there are a few providers which do not impose charges for foreign use.
In my opinion the best of these are offered by the Nationwide Building Society and the Halifax and the latter has the added advantage that it does not impose any ATM charges.
It has two offerings its Credit Card and its Select Credit Card which has a more competitive interest rate but is only available to its current account holders. It is a Visa card. There are no charges when the card is used for purchases.
Additionally Nationwide Flex Account (current a/c) customers benefit from free European Travel Insurance (conditions apply) if it is their main acccount or they pay in a minimum of £750 per month.
It is possible to upgrade this cover,chargeable, to worldwide by telephoning Nationwide Travel Services.
The European cover is available up to age 75, which is unusual for 'free' cover.
Is a Mastercard and has no charges for purchases and has the added advantage over the Nationwide in that there are no transaction charges either, if you use it in an ATM, though you will have to pay interest.
The Halifax will also pay you £5 a month if you spend £300 on the card.
If you have your main current account with them, or pay in a minimum of £750 a month and have a minimum of two monthly direct debits, you will get an additional £5 each month.
I rarely take cash with me, the first thing I do when I arrive is to find an ATM, check it does not impose a charge. I nearly got caught out by this at Auckland airport New Zealand.
Then withdraw cash using my Halifax Clarity Card.
The charge for this works out at approximately 1%, which represents the interest that is charged as soon as you withdraw the money
until you repay it in full. For this to work you must repay your credit card balance as soon as you receive your statement.
This charge tends to be more than offset by the fact that Mastercard gets better foreign exchange rates than you could get on the high street.
Also they will give you £5 a month if you spend £300 on your credit card.
If you think that the smallprint is complex on credit cards then wait until you look into these. Charges for taking the card out,charges for taking your money out, charges if you do not use your card and you can see why I am not sold on these cards.
These work on the principle that you preload the card with a set amount of sterling which you then convert into foreign currency
at an ATM. You do not want to use these for purchases,the charges are on par with debit cards.
Their main selling point appears to be that of security i.e you are not carrying large amounts of cash on you.Then there are the stories
of travellers in South America being marched off to ATM's to withdraw money by certain unpleasant people. My daughter had the
solution when travelling in South America and when going into Venezuela, she hid her currency in her sock. Noone would go their.
What they do not tell you is that they are not covered by the FSA so you could say load your card with £1000, the card issuer goes bankrupt and you have lost £1000.
The best of these seems to be the Caxton Card as the charges are the most reasonable but you have to have the right card, one for the Eurozone, (bearing in mind that not all European countries are in the Eurozone) one for dollars and a Global card for the rest and with the latter the charges are higher. My head hurts.
I use my Halifax Clarity Card to buy as many goods and services as possible, with my Nationwide Credit Card as back up, thus limiting the amount of cash I need to use.
I withdraw cash using my Halifax Clarity Card and make sure that I pay off the balance in full.
If you can not do this then use the Halifax for cash and Nationwide for purchases.
Keep your debit cards at the back of your wallet to avoid using them by mistake, particularly if they are of the same colour.
Pros No foreign currency charges
Attractive 11.9% purchase rate
Cons Whopping 19.6% charge for cash transactions
Transaction charge on cash transactions*
Have to be over 50
Will not rush out and get one of these, ok good point that has zero interest rate on foreign purchases but use for any foreign
exchange transactions is prohibitive.
*Looks like there is also a transaction charge for taking out cash but what this I have not a clue. The terms and conditions
refer to " a Tariff of Charges" which will be sent when you buy. Odd, I would have thought you should know what you are buying beforehand. Again is this an example of lack of transparency, I could not find this tariff.
Halifax Clarity Card remains best buy.
Review July 2013
I am not a great fan of packaged bank accounts for two reasons.
Firstly the benefits offered are either illusory or you can purchase them cheaper elsewhere. Secondly once you enter the world of fee paying accounts, then banks have a nasty habit of increasing the fees.
Fee free cash withdrawals from ATM’s abroad (sadly this does not apply to debit card purchases)
Worldwide Travel Insurance* and unlike many packaged insurances where the age limit is 65, the age limit for Nationwide is 75 & it is possible to purchase an extension.
The other big plus on their travel insurance is that though the trip limit is 31 days, it is unlike many competitor products, possible to buy an extension, which we recently did for our Scandinavian trip, by making a simple telephone call.
Car Breakdown insurance which also includes European cover and up to 2 cars if a joint account. Now if they only covered motorhomes then we would be onto a winner, well one can always dream.
Other goodies include mobile phone cover, extended warranties, identity theft protection and a 3% gross interest on balances up to £2500.
This will cost you £10 a month & for the travel benefits is worth a second look.
*The travel insurance option is available on its Flex Account where there is no fee.
The other plus so far is that we find that Nationwide answer their phones promptly, no endless waits on premium lines.