Handling your money on holiday? From debit cards to travellers cheques, take a minute to soak up the pros and cons before you set off.

For stressed-out students, holidays abroad are just what the doctor ordered. But when you’ve saved up on your student loan and are ready to relax to the max you don’t want to worry about getting ripped off. Many of us aren’t aware of our options and spend in the wrong way out of habit. From debit cards to travellers cheques, take a minute to soak up the pros and cons before you set off.

Cash from an ATM

This is a popular option because it’s convenient. There’s no need to think ahead and ATMs are everywhere. Besides, it can’t cost that much, right? The problem is it really can. Your bank will add fees for loading your debit card and using the ATM, plus there’s a flat £1.50 “non-sterling cash fee”. It’s enough to make you sweat before you’ve even seen the sunshine. And it gets worse. Many of us use our debit card mistakenly believing it has to be cheaper than withdrawing cash on a credit card. Think again. The right kind of credit card is actually your friend when you’re abroad. More on this below.

Oh, before we more on, Money Saving Expert has named and shamed the following “debit cards from hell”. Do not use these fee fiends abroad.

  • Bank of Scotland
  • Halifax
  • IF
  • Lloyds
  • Santander
  • TSB
  • Natwest/RBS.

Our conclusion: Avoid or get burnt.

Cash from a UK bureau

This is a great option if you monitor rates and pounce when the time is right. Plus you can fix your budget and easily track your spending. The main downside is you need somewhere safe to stash the cash. Make sure you have travel insurance that will cover the amount if it’s lost or stolen. Pay with a debit card or cash though; credit card payments are treated like foreign cash withdrawals, and we now know how painful those can be.

Our conclusion: A good choice for travellers with well-concealed bum bags.

Cash from a local bureau

This is a gamble. Rates vary every day and there’s no way of telling if the bureau you stumble across on your first day is actually offering you a good deal. Better to compare UK bureaus back home using an online comparison site.

Our conclusion: We’d never recommend gambling.

Prepaid cards

Many of these won’t charge you for overseas transactions. Plus, a big bonus for students is there’s no need to worry about your credit history when applying for a prepaid card, as you’re not actually applying for credit. Simply load it with cash before you leave and use like a debit card. You can set your budget and enjoy the security of knowing the rate is what you buy at. With some you can also get money out at the ATM when you’re there too. Take a look at Revolut for starters.

Should you be unlucky enough to have your card stolen, there’s a limit on how much you could lose. Just make sure you’re aware of any application fee or charges for inactivity before you sign up. One other watch-out: not everywhere accepts prepaid cards, for example, car hire companies.

Our conclusion: We’re big fans. Just do a little research first.

Airport exchange

This is a terrible option for getting hold of foreign cash. It’s another mistake many of us make just before we jump on a plane. These guys know they are your last port of call and will offer you abysmal rates.

Our conclusion: No no no no no. Just no.

Travel credit card

If you have a decent credit score and can repay in full, this is a must-have for your travel wallet. These credit cards won’t add a sterling exchange fee, and offer competitive exchange rates and the protection of Section 75 (purchases over £100 that go awry are covered). A great option for paying by card or withdrawing cash from an ATM. The only downside is cash withdrawals could harm your credit rating. It’s just one of many things a lender will take into consideration, but suggests you don’t have enough cash available and are willing to use credit to get some fast.

Our conclusion: Good credit rating? Then get one.

Travellers cheques

These are old fashioned but still a useful way to keep your money secure. The drawbacks are you’ll pay commission in the UK and have an exchange rate applied when you use them. And because you pay a flat fee for converting each cheque, you’ll want them to represent a large enough amount to make it worthwhile.

Our conclusion: Your mum used them for a reason. But you can do better.

And finally…

Euros or pounds?

As a general rule, always choose the local currency. Otherwise the shop or restaurant’s bank will do the conversion at a less than competitive rate.

Check your current plastic

Money Saving Expert has a very handy How Good Is Your Current Plastic checker. Find out what your bank and credit card provider are charging travellers.

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