Top 7 mistakes to avoid when spending money abroad

Annie Shaw / 23 June 2014 ( 07 January 2019 )

Money expert Annie Shaw shares some invaluable money-saving tips for you and your family when travelling abroad.

7. Waiting to buy your currency when you get to the airport

A surefire way to pay over the odds for your foreign exchange is to buy it en route to your flight. Instead, shop around for your currency before you travel and consider ordering it for home delivery (Saga travel money offers this service).

If you aren't organised enough to order in advance, some currency dealers with an airport branch will even take an order on the internet for collection in person as you head for the departure gate – and they will charge you less than if you just turned up at the airport and did the transaction on the spot.

6. Choosing the wrong pre-paid currency card

Pre-paid currency cards are often referred to as electronic travellers cheques. You load them up with the currency you need, such as dollars or euros, and then use the card like a credit card in shops or to withdraw cash from ATMs (cashpoints).

Card firms all have different methods of charging fees – for instance, one may offer free card top-ups but charge a fee each time you use the card.

One may offer two cards on one account, another firm may require you to open two accounts if you need two cards. One card may require top-ups in person while another will allow a third party to top the card up (useful for parents who want to ensure their gap-year children have enough funds).

Make sure you opt for a card that suits your usage pattern and don't pay more in charges than you need to.

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5. Opting to pay in sterling in overseas shops

If a retailer invites you to pay with your credit card in pounds and pence, you should politely decline and ask to pay in local currency.

When you pay in local money, the exchange rate will be set by the appropriate card payment system, such as Visa or MasterCard, using current competitive rates.

If you pay in sterling the shopkeeper or restaurateur sets his own rate and can charge you what he likes.

4. Buying travellers' cheques

There are some areas of the world where travellers' cheques may still be useful, but this old fashioned method of carrying money safely abroad has all but died the death in popular tourist resorts in Europe.

Not only are travellers' cheques one of the most costly methods of carrying holiday money but you will have difficulty encashing them in many tourist locations and may need to visit a bank branch in a major town.

3. Using a debit card instead of a credit card

Buying goods and services directly with a debit card will almost invariably give you a worse deal than buying with a credit card because of the way overseas card charges work.

If you can pay your credit card bill in full when you get home, use your credit card in preference.

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2. Not knowing what your credit card is charging you for overseas use

Each time you use your card abroad the card company will be charging you “non sterling transaction fees” sometimes called “exchange rate loading” – an extra fee on top of the actual rate of exchange between currencies.

Non sterling transaction fees can really add to the cost of your purchases, so if you have more than one credit card use the one with the lowest charge. Some don’t charge any fees, so do your research and apply for one in plenty of time before you go.

1. Failing to pool your small change on the last day

Make sure you collect up all your small change before you travel home. There's nothing more annoying - and wasteful - than arriving back in the UK with pockets full of useless coins.

If the sums are substantial, change the coins into notes for further exchange back to sterling. If you've only got a few pence-worth left over, add them to a tip for the hotel maid, the waiter during your last meal or the coach driver taking you to the airport.

If you've still got them when you arrive back in the UK drop them in one of the charity collection tubs dotted around the airport, so their value can at least be put to some good use.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.