The Three Minute Guide to Spending Money Abroad

bulram | March 6, 2013

Spending Money Abroad

It is around this time of the year that many are looking to book their summer holiday. While the initial cost of a holiday isn’t cheap, it is often the spending while you are out there that can do the damage to your finances.

First things first, you need to know how much you can afford to take, which will mean doing some basic analysis of your finances and budgeting. Having done this you now need to assess the various payment methods while abroad and make a decision on the one that would suit you best. Here are some of the options:

Spending Abroad Cards

These are specialist credit cards designed as a flexible option for those who are travelling abroad and are looking to spread the cost of their spending. They work on the basis that you are charged no fees for foreign spending. These cards may also come with an introductory interest free period.

Despite the fact that there may not be any fees on transactions, this doesn’t mean there won’t be fees on cash withdrawal – withdrawing cash on credit cards is not recommended whether you’re at home or abroad.

If you are unable to get your hands on a foreign usage card with a 0% interest introductory period then you’ll need to try and repay the full balance at the end of the month. This is because the APR attached to these cards is likely to be quite high so interest will accrue on the balance if the full amount is not repaid.

Exchange Cash

Foreign usage credit cards are growing in popularity however it seems that the most popular method is still to exchange cash into the chosen currency.

This in itself seems a very simple thing to do, however it’s not something that shouldn’t be rushed and research will be needed in order to get the most out of your money. The worst possible thing you can do is leave it until you get to the airport and then exchange your cash at one of the currency exchange desks there. This is because the airports know that those who have yet to exchange their currency haven’t got time to shop around for the best deal, which means they can afford to offer the worst rates.

In order to get the best deal you need to shop around and look for options that offer the most in return for your sterling. There are now various price comparison services dedicated to helping you get the most out of your sterling, so make sure you take advantage of them.

Prepaid Cards

Prepaid cards work as you’d expect them to. You load money onto your card and you are then allowed to spend up to the amount you have on the card. There is no credit scoring involved in the application process meaning they are suitable for those with bad credit or no credit history. The payment works in the same way as a debit card and are accepted almost everywhere – including overseas.

If you are applicable for a low rate credit card that offers extra features such as 0% interest periods and cashback on spending, then its best to go for these. However, as mentioned these are great for those who have been declined for credit elsewhere as they can be used to improve your credit history.

Prepaid cards work on the basis that you pay a monthly fee for usage; you then pay a fixed ?1.50 – ?2 fee on UK and overseas cash withdrawals and around a 3% fee on overseas transaction (varies with providers). The card itself is likely to cost you around ?10 to purchase up front.

Conclusion

Rather than choosing just one of the methods outlined above, many choose to take a credit card or prepaid card along with a little bit of travel money. They then use their card to pay for large purchases and their cash for smaller transactions such as eating in restaurants, getting taxis or buses.

This article has been written by Jason Scott on behalf of Guarantor Loans Online. For more money saving tips and tricks visit https://www.guarantorloansonline.co.uk.