credit cards

Foreign Spending – Credit, Debit, Cash, Prepaid or Travellers Cheque

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If you’re going abroad, you’ll need to have some spending money to spend on those all important essentials. Most cards will charge you a percentage to use them abroad, whilst others charge a flat fee – and some even charge both! These are my top picks of the cards you’ll want in your wallet when you’re travelling overseas.

When you use a card overseas, you’ll be paying a Visa/Mastercard interbank exchange rate, rather than the tourist one. For a card with fees, you’ll probably pay a comparable rate to one at a bureau de change, but if you use one of the cards recommended in this article, you’ll get an unbeatable exchange rate.

It’s also important to note that you should never accept “Direct Currency Conversion” – this is when the foreign retailer or cash machine offers to charge you in pounds – this always has a fee, which is easily beaten by your card.

Halifax Clarity Rewards Card

This is my favourite card for foreign spending – and one that I use on a day-to-day basis for  merchants that don’t accept American Express. With this card, you get both no fees for foreign purchases, as well as £5 cashback when you spend £300 a month.

Note that you will need a Halifax Rewards Current account to apply for this – but this is a great deal too. Simply pay in £1,000 a month, and you’ll get £5. You don’t even need to keep the money in the account.

You’ll need to go into branch to open this credit card, but if you just want the 0% foreign spending with no cashback, you can apply online.

Metro Bank Debit Card – now for Europe only

You should never be taking money out on your credit card, even if there is no cash withdrawal fee – you’ll be charged interest from the day you take out the cash, even if you pay off your statement balance on time – there’s no float period on cash.

The Metro Bank Debit Card is the best card to use in Europe – it won’t charge you fees for making the cash withdrawal. Just make sure to top up your account before leaving the country.

You’ll need to get to one of their branches in London to get this account, but they’ll make it up for you on the spot in the branch – useful if you’re travelling abroad soon.

Alternatively, try the Norwich & Peterborough Gold (Classic) Current Account (although, please note the funding and activity requirements) – this also offers free card usage abroad, and you can apply online. I haven’t tried this account though.

Cash

You should probably carry a bit of cash with you before you go: if you’re using Euros, there’s a euro denominated cash machine at the NatWest headquarters in Bishopsgate, which you can use your Metro bank debit card with.

Otherwise, try TravelMoneyMax to see the best exchange rates – it’s often at the Thomas Exchange Global stand in the Liverpool Street arcade.

It pays to plan ahead – you’ll get the worst rate at the airport, and you’ll get a slightly better rate at many of the bureau de changes if you book online first.

Prepaid Cards

I don’t recommend Prepaid cards – they don’t really have any advantages over a 0% debit/credit card, and there’s often a bunch of additional fees as well.

Travellers Cheques

Travellers Cheques have an advantage over cash, since they can be replaced if lost, but it’s often difficult to cash them in at your destination. Additionally, there’s a worse exchange rate than cash at the bureau de change, because the fees have to be built in.

Credit Cards – ten reasons to switch from cash

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There’s the old adage that “cash is king”, but when it comes to paying for things, as a consumer, it’s much better to pay by credit cards. You’ve got to ensure you’re using them wisely by spending within your means, and make sure you set up a direct debit to pay off the full statement balance each month (and you ensure you’ve got the money in your bank account to pay off your direct debit!).

Here’s ten good reasons to pay by credit card:

1. You get rewards for paying by a cashback/rewards card

There’s a bunch of different reward offers around which give you a credit for simply using the card for your day-to-day transactions: if you’re a member of a frequent flyer/hotel loyalty program, it can be useful to boost your miles or points.

Alternatively, you can earn cashback, usually around 1-1.25%, depending on the card. Watch out for annual fees though, as these will eat into your cashback if you don’t spend enough to make it worthwhile.

2. You have protection if the merchant doesn’t deliver

With a credit card, you have protection in law under Section 75 of the Consumer Credit Act, which makes the credit card company jointly liable with the retailer for transactions over £100 if the company you buy from doesn’t deliver. In practice, this is done through a chargeback through your credit card provider – they will investigate your claim, and then retrieve the money from the merchant’s bank, who will then debit their account, along with a handling fee.

If you’re using a debit card, you should be able to do a chargeback, but this isn’t enshrined in law.

On the other hand, if you’ve paid by cash or cheque, you’ll have to take it up with the merchant and hope you get your money back.

3. You get a record of where you’re spending your money

Your online statement is a great way to work our where you spent your money – it’s unlikely that you’re keeping a record of where you are spending all those cash withdrawals, right?

4. You’ll build your credit rating

Paying off your credit card on time helps to build your credit rating – this shows lenders that you’re a good credit risk, and should help you get credit in the future.

5. You get a ‘float’ period

You get up to around two months interest free credit. This is the period in between spending on the card, receiving the bill, and the money coming out through the direct debit. You can earn interest on this money if you’re using a top current account, like the Santander 123 Current Account.

6. If you’re spending overseas using a 0% fee card, you’ll get an unbeatable exchange rate

See more information about this in my Foreign Spending blog post

 

There are currently a number of cards that allow you to do this – both credit and debit, such as the Halifax Clarity Credit Card, or a Metro Bank Debit Card.

The benefit of using these cards abroad is that you’ll benefit from the interbank exchange rate, rather than the tourist one which is always a couple of points in their favour. Just watch out for dynamic currency conversion – this is when the machine will ask if you want to pay in Pounds rather than the foreign currency: you should always reject this offer.

7. Contactless is faster than cash

It’s a lot easier to pay by contactless than it is to by cash – you don’t need to fumble with change. In London, it’s accepted at a load of retailers – mainly chains, but they’re starting to roll it out. Plus it’s now cheaper to use your contactless card on the bus than paying by cash if you forget your Oyster.

8. You can occasionally get exclusive rewards and offers

If you’ve looked at my blog recently, you’ll have seen the multitude of offers that have been available for American Express card holders – whilst this isn’t a guarantee that they’ll come back again, there’s usually an offer or two about.

9. If you’re defrauded, there won’t be a hold on your funds

In the unlikely event that you do get defrauded, it’s the credit card company’s funds – if you were using a debit card, there’s the possibility that you could be without cash.

10. If you lose your card, you can get a free replacement

If you lose your cash, it’s gone – lose your card, and you’ll get a free replacement: and some card companies will even courier you a temporary card if you’re abroad

Of course, there’s some places that are cash only, but with the introduction of credit card payment machines that fit into smartphones such as iZettle, Square, mPowa, SumUp and PayPal Here, in the future, we’ll be paying by cash a lot less (on a side note, I have a card reader, so if you owe me money, you can now pay by credit card!)

So, ditch your cash and debit card, and use your credit card for all your purchases.

Deal of the Week – HMV

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There’s currently a great deal at HMV, which you can get by combining the Amex Foursquare deal and the O2 Priority Moments app.

When you check in to HMV with Foursquare, you’ll get a £5 credit on your Amex account when you spend £20, and there’s currently a deal to get a £5 voucher for every £20 you spend.

Combine the two, and you’ll get £10 off your £20 purchase (admittedly, you’ll have to spend the £5 voucher later).

You’ll need to be on O2 to get the app, and you need to update to the latest version to see the deal (it’s listed under Xmas on Priority Moments if the advent calendar isn’t working properly!)

UK Amex Deals

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Edit: Updated with the latest Foursquare deals (01/12/2012)

There’s currently quite a few Amex deals around: I’ve tried to make a list of them here. Many of them are listed on Cardmember Offers, but there’s some that are missing:

Xbox:

  • Valid until 31/12/2012
  • You need to have an Xbox 360 connected to Live, register online with Amex, and enter your activation code into your Xbox, then add the offers using your console
  • One code per account
  • £10 free for registering
  • Spend £10, get £10 back at Cineworld
  • Spend £50, get £25 back at Topman
  • Spend £50, get £25 back at Carphone Warehouse
  • Spend £50, get £25 back at Dixons Travel
  • If you have Halo 4, get £25 for completing the game on Normal or above
  • If you have Halo 4, spend £50, get £25 back at Currys PC World when you play Spartan Ops
  • You can use each offer once per card

Foursquare: 

  • To use the foursquare offers, you need to register an account with foursquare, sync your foursquare account with Amex, check in at the location using a mobile app, and activate the offer by checking in and selecting the special, and tap “add to card”
  • The Shop Small offers are on the app, but you don’t need to add them if you’ve already activated them. You can view them on the mobile app, which is helpful though. The map will also include other offers – check before you purchase
  • You can use these in conjunction with any other offer, so long as the spend on your Amex is over the threshold – e.g. Gap 30% off promotion (expired on 19/11/2012)
  • Spend £25 at Harvey Nichols, get £25 back (until 31/12/2012)
  • Spend £10 at Starbucks, get £5 back (until 13/02/2013) – best idea is to load it onto your Starbucks card, so you can spend an exact amount and get your loyalty stars
  • Spend £10 at Gap, get £10 back (until 08/12/2013)
  • Spend £50 at Fenwick/Bentalls, get £10 back (until 24/12/2012)
  • Spend £20 at HMV, get £5 back (until 31/12/2012)
  • Spend £20 at Argos, get £5 back (until 31/12/2012)
  • Spend £50 at Tesco, get £10 back (until 31/12/2012)
  • Spend £50 at Urban Outfitters, get £25 back (until 31/12/2012)
  • Spend £50 at Liberty, get £25 back (until 31/12/2012)
  • Spend £50 at Nike, get £25 back (until 31/12/2012)
  • Spend £50 at House of Fraser, get £10 back (until 31/12/2012)
  • You can use each foursquare offer once per card
Christmas Campaign:
  • Double cashback/membership rewards at a number of retailers, including Sainsbury’s – register

West End (expired):

  • Spend £50 at selected shops on the VIP weekend (24th/25th November), get £25 back – register
  • You can only use this offer once per card
Shop Small (expired): 

  • Valid until 30/11/2012
  • Spend £5 at Shop Small merchants, get £5 back – register, then check the map
  • You can use these in conjunction with any other offer, so long as the spend on your Amex is over the threshold – e.g. Taste Card, Vouchers, etc.
  • It may or may not work at multiple branches of the same location: customer services has told me that it shouldn’t, but some people are saying that it does
  • The map isn’t great, but you can also get a list
  • You can also use the foursquare map, but it’ll also include other offers – check before you purchase
  • You should get a confirmation email within a few minutes of your transaction going through