Foreign affair: how to make your holiday spending money go further

If you’re travelling abroad this summer, you might find that your trip has become more expensive – perhaps in an unexpected way. Deciding how to transport the funds you wish to spend while you’re away has always been a tricky one, but it is now getting costlier.

Earlier this month, Bank of Ireland hiked its charges for cross-border handling fees on the grounds that these fees have been in place on credit cards since 1992, and debit cards since 2000, and that the increase "reflects the current cost of delivering these services".

While other current account operators confirmed to us this week they have no plans to increase their pricing structures, where one bank leads, others tend to follow over time.

So, if you want to spend more money on crêpes and sangria this summer, and less on bank transaction charges, what do you need to know before you travel?

Euro zone
If you're travelling to Spain or France or anywhere in the euro zone this year for that matter, you won't have to worry about those hefty currency conversion charges when using your credit card or ATM debit card mentioned above.

If you previously had a Laser card, you should find your new Visa or Mastercard debit card offers you better coverage when it comes to making purchases. But will any additional charges apply?

Firstly, when it comes to purchases, the usual charges apply. This means that a €100 purchase in the supermarket in France, for example, will incur no additional charge on your debit card over what you would pay for the same transaction in Ireland.

So you would be looking at a charge of 20 cent if you're an AIB customer, for example and don't qualify for free banking.

If you use your credit card, the only charge that will apply will be interest if you don’t repay the full amount within the interest-free period.

Similarly, if you use a debit card for a contactless payment – and availability will depend on where you try to use it overseas – the normal Irish charges apply for swiping a payment – ie 15 cent from August 18th with Bank of Ireland.

It’s worth noting the popular, and economical, cash-back option typically isn’t available outside of Ireland.

If you wish to travel with minimum funds in your pocket it can get a little bit trickier when it comes to ATM withdrawals.

While you should have no problems using your Visa or Mastercard debit or credit card at ATM machines across the euro zone, you might find you run up additional charges.

For example, withdrawing €100 from an ATM in Italy with a debit card should incur the same fees your bank charges you at home, although the ATM operator may impose an additional charge, which could be of the order of about €3 on the transaction. But withdrawing with a credit card may be even more expensive.

Take AIB’s Click Visa card. A cash advance will cost you 1.5 per cent of the transaction value, or a minimum of €1.90. So, a €500 withdrawal will cost you €7.50 – and, as mentioned above, additional local charges may also apply. Typically, you are able to lodge money to your credit card account to avoid paying such withdrawal charges, but in an era of rising bank charges, you might want to check this first.

Bank of Ireland, AIB, Permanent TSB and KBC Bank will waive transaction fees if your card is in credit, but Ulster Bank won't.

If you aren’t in credit, and you allow your debt to run beyond the interest-free period, expect a hefty interest charge – KBC charges 20 per cent on cash advances.

Another option to consider is a “money passport”, such as O2’s Money card. By pre-funding this before you travel, you can use it wherever you see the Visa sign, and you can top it up online while abroad. Pre-loading this card over the course of a couple of months before you travel can also be an effective way of saving for your holiday. It does cost, however: an initial €9.99 charge, plus up to €4.50 to re-load it and stamp duty of up to €5.

Do: Look for an ATM machine that doesn't impose its own additional fee.
Don't: Use your credit card to withdraw money unless it is in credit.

Outside euro zone
If you're travelling further afield, prepare to incur some costs either for using your cards abroad, or for foreign exchange transactions.

Consider Bank of Ireland’s new charges. Up to July 2nd, if you withdraw £500 in the UK with your credit card, it will cost you £7.50 in transaction charges if your card is not in credit – plus an additional £8.75 in currency conversion fees, so a whopping £16.25 (€19.90) in total. After that date, however, the cross-border part of the fee will rise to 2.25 per cent, or £11.25, for a total of £20. More reason than ever to pre-fund your credit card before you travel and avoid the initial transaction charges.

When it comes to debit cards, Bank of Ireland’s new pricing structure means you will now pay 2 per cent of the transaction value, up from 1.75 per cent, and to a maximum of €11.43. With Ulster Bank, you can expect to pay 2 per cent of the transaction value to withdraw funds using your debit card outside the euro zone, with a minimum charge of €3 and a maximum of €12, plus an exchange rate fee of 1.5 per cent. And if you use your credit card instead, you can expect to pay a charge of 3.5 per cent.

Making purchases outside the euro zone with either a debit or credit card will also set you back. Consider Permanent TSB’s pricing structure.

If you buy a set of golf clubs in the US with an ICE credit card for $1,000, cross-border fees will cost you $17.50 (€12.56). If you use your debit card instead, it will only cost you €11.43, as a minimum charge applies.

Remember the exchange rate applied to your transaction may also impact on how much it will eventually cost you. Another option then is to consider opting for a pre-paid currency card, which takes the worry out of exchange rate fluctuations.

An Post promises to "take the stress and worry out of carrying cash", with its PostFX card, which it launched last year. The card operates just like a Chip & Pin card, but you pre-fund it with your desired currency (sterling or US dollar) and your desired amount. The card can be used at any British or US retail outlet, tourist attraction, restaurant or ATM that displays the MasterCard Acceptance Mark.

The card is free and you can fund it with between $130 and $9,000, or £85 and £5,000. The big advantage of such a card is that:

a) you know the exchange rate already; and

b) it has a fixed cost, so no surprising bills when you come home. Using it to withdraw money will cost you $2.50 for each ATM transaction in the US, or £1.50 in the UK, while purchases incur no charge.

Other charges might apply, however. If you don’t use your card for 12 months, a charge of $3.50/£2 will be imposed; it has an annual stamp duty fee of €5; daily limits apply – $800 or £500; and if you run out of money while abroad, you won’t be able to fund it online.

If you don’t use all the money, cash it in when you come home. Avoid using it when you’re back home – a transaction in euro will incur an additional charge of 5.75 per cent, when the card is denominated in dollars. And, as with all foreign exchange transactions, you might find a more favourable exchange rate on offer elsewhere, although, as mentioned, An Post does not charge commission on such transactions.

Some international ATMs will offer you the option for "Dynamic Currency Conversion" when you take out money abroad. This means that your own bank won't charge for currency conversion as the charge to your account is applied in euro – however it won't necessarily save you money as you might lose out on the exchange rate offered.


Do: Consider getting an FX card to limit the charges you'll pay on ATM withdrawals/credit card purchases.
Don't: Use your Irish cards to withdraw money at an ATM unless you find yourself in a fix.

Travelling
with cash
If you'd rather have the funds on you, or at least a certain amount in local currency before you travel, you can opt to get some in advance.

If you’re over 60 – or you know someone who is – you might be able to get them to buy commission-free FX. AIB, for example, offers commission free foreign exchange transactions for their older customers, as does Ulster Bank, while neither charges commission to holders of student accounts. You can also buy commission-free dollars and sterling from your local post office, which offers the service, while ICE, which operates in Dublin, Shannon and Knock airports, allows you to reserve foreign currency before you travel through its “click and collect” service and also promises no commission. Rates will differ so try and shop around if you can, but as the table shows, commission may be the differentiating factor.

Do: Shop around for the best rate.
Don't: Forget the importance of commission – avoiding it might be enough for a round of drinks on holiday.

Make a call
Finally, if you are going abroad this summer, consider calling your bank or credit card provider before you travel to let them know.

A spokeswoman for one of the banks has noticed an increase in people having their cards stopped while they’re travelling as the bank may suspect the card has been stolen and is being used abroad.