Santander 123 Current Account Abroad Assignment

Card, cash or cheque? The best way to spend overseas

  • Analysis from Defaqto has revealed 40% (95) of credit cards charge as much as 2.99% for international transactions, and 16% of debit cards (20) demand the same fee.
  • Holidaymakers also need to watch out for purchase fees and cash machine withdrawal charges
  • Pre-paid cards, cash and traveller’s cheques offer other ways to pay on holiday – but these can come with drawbacks too.

Many people will be heading abroad this summer, having planned a holiday months ago. However, far less time is likely to have been spent considering how they will pay for things once they’re on holiday. Leaving it to the last minute or simply relying on debit or credit cards could result in a number of unexpected costs and ultimately a far more expensive trip. The latest insight from financial information business, Defaqto, reveals how to avoid overspending overseas and the potential pitfalls to be aware of.

Credit Cards

Taking a credit card on holiday can be comforting in case you need additional funds, and it provides you with consumer protection relating to anything you buy costing between £100 and £30,000. However, credit card users could face a number of charges whilst abroad, so it’s important to research the different features among the 235 credit cards on the market. Those charges can include:

  • International transaction fee – Using your credit card abroad comes with a charge as a percentage of what you spend.  The average fee charged is 2.89% both within and outside of Europe, but ranges from 1.40% to 2.99%, with 40% (95) of credit cards charging the highest amount of 2.99%. 
  • Charges for cash machine withdrawals – 90% of credit cards also charge if you use them to take money out of a cash machine. The average charge is £3.42 for withdrawing the equivalent of £100 in local currency. Not only that but some cards will charge interest from the date of withdrawal.

Only 23 (10%) of credit cards do not charge for transactions within Europe or further afield, and many of these cards are the more difficult to obtain “premier” type cards.  Some of the main providers of these cards include Barclaycard, Halifax, Lloyds Bank, Metro Bank, Nationwide, Natwest/RBS, Post Office Money, Santander and Virgin Money.

Debit cards

Rather than using a credit card you can use a debit card where the money comes straight from your current account.  Exchange rates are based on a daily Foreign Exchange rate set by your bank.

Current account providers have different charges that can be applied: a foreign transaction fee and a debit card non-sterling usage fee if you use your debit card for a purchase, and a cash withdrawal fee for using an ATM abroad.

  • Foreign transaction fee – This fee tends to be slightly more favourable with debit cards than credit cards. The average charge fee, where charged, is 2.69% in both Europe and worldwide. Charges range from 1.00% to 2.99%, but only 17% (15) of debit cards demand the highest amount
  • Debit card non-sterling usage fee - 36% (32) of debit cards charge between 0.5% and 2.75% on purchases using a debit card made abroad; however, there are 56 debit cards (64%) which do not charge a non-sterling transaction fee. 

There are currently 88 current accounts to choose from, and most of these accounts charge one or other of these two fees, but 25% (22 accounts) charge both fees.

  • Combined fees – Taking into account the foreign transaction fee and the non-sterling usage fee there are only two accounts (Cumberland Building Society and Metro Bank) which do not charge additional fees for using debit cards in Europe, and only Cumberland doesn’t charge for using further afield.  The lowest combined fee is 1.75% in Europe and 2% elsewhere, with an average combined fee of 2.9%. The highest fee is 4%, and 24% (21) of debit cards charge over 3%.
  • Cash machine withdrawalfee – Using a debit card to withdraw cash abroad also attracts a fee, with 9 debit cards (10%) taking as much as £3.50 or more for a £100 withdrawal in a foreign country. However, 14 debit cards (16%) do not charge for taking out money from a cash machine in Europe and just one of these (Metro Bank) charges for withdrawals in the rest of the world. Unlike a credit card, there’ll be no interest charged on top, as the cash is taken straight from your current account.

Taking the non-sterling transaction fee and the ATM charge into account, only three accounts do not charge extra for cash machine withdrawals in Europe (Cumberland, Metro and Nationwide FlexPlus), and of these only Metro Bank charges for withdrawals in the rest of the world.

Pre-paid cards

Pre-paid cards provide another way to spend abroad. These are loaded with money in advance, and you can only ever spend the balance on the card, so there’s no risk of running up debt whilst away. You can continue to add to the balance as you go, and other people can top it up for you, providing extra security and comfort. There are 123 pre-paid cards currently available, but it is definitely advisable to look into the terms and conditions of each, as you can face extra fees.

  • Transactions charges - 105 (85%) cards do not charge for transactions made in the currency of the card. 30 (24%) cards do not charge for transactions made in a currency other than that of the card.

Otherwise fees can range from 1.4% to 3% for each time the card is used for currency of the card, up to 5.75% for other currency.

Some cards may also charge a flat fee for each transaction. Flat fees range between £0.25p and £1.50.

  • Cash Machine withdrawal fee - 27 (22%) cards do not charge for withdrawing cash from an ATM in the currency of the card.

10 (8%) cards do not charge for withdrawing cash from an ATM in a currency other than that of the card.

Otherwise fees can range from 1.5% to 3% for each time the card is used at an ATM, or up to 5.75% for other currency than the card.

Flat fees range between £0.50p and £3.

Check and be careful of any Application fees, Top-up fees, Transaction fees, Inactivity fees and  Monthly fees.Also keep in mind that many cards cannot be used for car hire, and customers might also have difficulties at petrol stations, where payments often cannot be pre-authorised.

Prepaid Travel Cards often have a choice of currencies you can put on the card. If possible try to use the currency of the country you are in when using cash machines and making purchases.

Is cash king?

The other option is taking cash. This is arguably the most convenient way to pay as it is easy to purchase most major foreign currencies within the UK, and you’ll know exactly how much you are spending. However, it definitely pays to get this in advance of travelling to avoid being stung by sky high airport exchange rates. There is always a risk when carrying large sums of money, so you should always have a travel insurance policy which covers lost or stolen cash too.

Traveller’s cheques are a safer way to carry larger sums of money around, and 61% (54) of the 88 current accounts currently offer commission free travellers’ cheques. However, in some places they are seen as outdated and it may be difficult to cash them in – especially in remote locations or at weekends. Therefore it’s necessary to do research in advance of travelling to ensure you’ll be able to use them, or have a backup method of spending in case you run into difficulty.

Brian Brown, Head of Insight at Defaqto, comments: “For anyone going away this summer, it’s well worth looking into your holiday money in advance to escape unnecessary fees, charges and poor exchange rates. There are a number of options available – from credit, debit and pre-paid cards, to cash and travellers’ cheques – and each has several benefits. However, there are also a number of factors to be wary of, so take time to weigh up the pros and cons to avoid overspending overseas.”

Defaqto Star Ratings help consumers make better informed financial decisions, by showing the quality and comprehensiveness of features and benefits of products. Defaqto’s experts independently research, collect and assess nearly 41,000 financial products, and rate them on a scale of 1 to 5 based on the quality and comprehensiveness of the features and benefits they provide. This means people can see at a glance how products compare. 

Notes to editors

1 - All data taken from the Defaqto Matrix database. Product details correct as of 14.07.2017.

Contact information

Defaqto:  Jo Hudson, PR & Communications Manager, 07387 091 006


Supporting data:

Number of credit cards which charge for their transactions inside and outside of Europe:

Number of debit cards which have a foreign exchange fee on transactions inside and outside of Europe:

As shown above 12 (14%) accounts do not charge for any non-sterling transactions in Europe, and just one of these accounts charges in the rest of the world (Metro Bank).


Percentage of debit cards with ATM costs inside and outside of Europe:

About Defaqto:

Defaqto is a financial information business, helping financial institutions and consumers make better informed decisions.

Our independent fund and product information helps banks, insurers and fund managers with designing and promoting their propositions. We analyse around 41,000 financial products in the UK. These products change on a daily basis, and our customers need help with keeping track of this.

We have been doing this for over 20 years, and we have over 60 analysts spending 400 hours a day monitoring the market. They ensure that the information we provide is accurate and up to date. Our experts have done all the hard work so that financial institutions and consumers can make better informed decisions.

Each product is assigned a Star or Diamond Rating on a scale of 1 -5. For general insurance, banking, protection and wealth a Star Rating indicates the quality and comprehensiveness of the product. For fund and fund families a Diamond Rating marks the performance and competitiveness of funds and fund families in key areas such as cost, scale, accessibility and manager longevity. The ratings are published annually on 1 February each year. Any products, funds or fund families which are launched or changed during the following twelve months are compared against the criteria, and given the appropriate rating.

Access further information about Defaqto at

About Defaqto Star Ratings

For Star Ratings almost 31,000 products are examined across nearly 80 areas from travel to home insurance, from critical illness to life assurance and from drawdown to auto-enrolment.

A database of all the features of these products lies at the heart of the analysis.

Throughout the year, a team of 60 experts, the largest of its kind in the UK, spend 400 hours a day independently researching the market, collecting and examining information on almost 41,000 financial products. Looking at product changes, trends and examining any compliance or regulatory impact, these experts record any variances, thereby ensuring the accuracy of the data. Consumer research on what is important for consumers when considering financial products supports this data along with the own individual analysts’ industry experience.

Out of this data, research and insight, the most important features and benefits are extracted and used as a benchmark annually when rating products, funds and fund families. From the selected features and benefits a minimum core criteria is identified and must be offered as a base level for products to have a higher Star Rating.

What follows is a series of reports that are used in open, unbiased discussions, on a fixed annual basis, with the industry. After these discussions, the Defaqto experts finalise the criteria and start the process of scoring every product, fund and fund family against these criteria. By totalling the scores, each product is assigned a Star on a scale from 1 – 5.

The ratings are published annually on 1 February each year. Any products which are launched or changed during the following twelve months are compared against the criteria, and given the appropriate rating.

The process and the company behind Star Ratings is independent and unbiased ensuring the ratings really are a service that both the industry and the consumer can trust.

Calculator input guide

Enter all of your savings pots by putting in the amount and rate, using the sliders or text input boxes.

You can click or tap "advanced options" for two additional savings pots. You don’t need to enter values into all of the savings pots for the calculator to work: if you only have one or two, just enter those.

Clicking the fixed-rate option will provide a drop down menu, allowing you to select term lengths of between one and five years – the calculator defaults to one year.  

The reinvest interest option can be applied to both fixed-rate and non fixed-rate savings pots. For a fixed rate bond, the calculator will compound the interest annually until maturity.

For a non fixed-rate option with the reinvest option selected,  the calculator will presume the rate stays the same and will compound the interest every year for the full five year projection.

The “not accessible?” option only applies to fixed-rate bonds of more than year.

This is important because it determines whether the interest earned on your bond is deducted from your allowance every year, or only once at maturity.

You should tick this if, according to the terms of your account, access to your capital and interest is completely denied until maturity.

The calculator will then treat the interest as if it is paid only once in the year of maturity.

Read more here for a full explanation of this. 

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