I saved £700 on my travels with a game-changing tool – it helps me keep tabs on my spending while I’m abroad
AVOIDING sneaky holiday fees while abroad is essential if you want to relax and seasoned traveller Kat Brooks has a top tip to avoid foreign transaction fees.
The 29-year-old from South London is very money-conscious and is always keen to ensure her budget stretches as far as possible while she is away.
Last year, she spent three months backpacking through ten countries with her boyfriend Jayye Page. She is now overseas again – this time working in Cape Town in South Africa.
Kat, a senior marketing manager, told The Sun: “Unless you’re very careful, cards routinely add transaction fees when you use them abroad.”
These ‘non-sterling exchange’ fees can often be around 3%, meaning, for example, that £100 worth of euros or dollars cost you £103.
At the same time, you can also face fees – often up to a fiver – for withdrawing your own cash from an ATM.
But there are ways to avoid getting stung. Firstly, using a debit card that avoids fees and has a free withdrawal.
Kat uses Monzo as her main bank account. That means she gets fee-free withdrawals of up to £400 for 30 days in the European Economic Area (EEA) and £200 for 30 days outside the EEA.
“My boyfriend and I had the most amazing time backpacking through Latin America – including Brazil, Peru, Colombia, Costa Rica, Nicaragua, Belize and Mexico,” said the savvy globetrotter.
“But without a Monzo account, it would have worked out very expensive every time I used my card or needed to withdraw cash. Over the three months we were away, I reckon I saved £700 in foreign transaction fees.”
The bank has a variety of different accounts, so it’s worth doing your research before you switch banks to find one which suits you best.
In the run-up to the trip, Kat made some sacrifices in order to squirrel money into a dedicated ‘travel fund.’
“I worked really hard to save up money for my time away,” she said.
“Thanks to this – and cutting back on all sorts of things such as buying clothes and homeware – I was able to move around £500 into savings each month. Over a period of 18 months, I was able to amass £9,000.”
Kat’s aim was to make the £9,000 she’d built up in her travel fund last for three months.
“This meant I had around £90 a day to spend on accommodation, food, travel and other costs overseas – so I had to budget very carefully,” she said.
“To make life easier, my boyfriend and I opened a Monzo joint account. While we had individual travel pots, having this account meant it was really easy to split any shared costs.”
Another of the big benefits of a Monzo account for Kat was the fact she could easily keep track of her spending on her phone during her time away.
She said: “This was a huge help for me, as it’s almost impossible to keep tabs on what’s going out of your account while you’re travelling and have limited access to the internet.”
While Kat initially opened an account with Monzo specifically for its travel card, she now uses Monzo for her everyday banking needs.
“I’m a complete ‘data nerd,” she said.
“I fell in love with the bank’s data-driven approach to money management. I like features such as ‘Monzo trends,’ which helps me easily keep tabs on where my money is going by separating out different ‘categories.’
“Having this structure means I can identify where I might be overspending, helping me keep my finances on track.”
Another of the features which Kat likes is ‘Monzo.me,’ which enables her to easily send and receive money with contacts on her phone.
In addition to these features, Monzo has a host of tools to encourage people to save.
This includes ‘saving pots’ which means a customer can create separate places for their savings within the app, rather than have all their funds in one place. There is also a clever tool which can automatically round up transactions to the nearest pound, before transferring the difference into a savings pot.
Monzo is currently paying 4.1% if you slot money away in its linked instant-access savings account.
For Kat, the fact she had set up a joint account with her boyfriend while backpacking made life a lot easier when they decided to move in together when they returned to the UK.
“This means we can use our Monzo joint account to pay bills and other costs which we share, such as groceries and meals out,” said Kat. “This has helped to make managing the finances as a cohabiting couple a whole lot easier.”
Right now, Kat is currently abroad again. This time she’s spending three months in South Africa for work. This trip has been paid for by her employer.
The young jet setter said: “Monzo has been a travel lifesaver both while backpacking and also while I’m on secondment. Once again, it gives me a real-time exchange rate, meaning I save on foreign transaction fees.”
To date, Kat has been in South Africa for around eight weeks.
“I think I’ve already saved around £200 on foreign fees on this trip thanks to my Monzo account,” she said.
“And, as I can access ‘Monzo trends’ on my phone while I’m abroad, I’m also getting a detailed breakdown of my spending and balance over time. This is helping me to keep my finances in check in this ‘home-away-from-home’.”
Options for holiday spending if you don't want to exchange currency
THERE are several specialist cards that can give you a great exchange rate.
These cards include travel credit cards and pre-paid cards which can let you pay abroad without fees or at a set exchange rate.
Travel credit cards: Travel credit cards allow you to spend money abroad without being hit by any fees or hidden charges.
But, they may still charge you for taking cash out.
We recommend the Halifax’s Clarity Card as it won’t charge you for using it abroad, nor are there any fees for withdrawing cash.
But you will be charged interest if you don’t repay your balance in full at a rate of 19.9 per cent.
And you will be charged interest on cash withdrawals until your balance is paid off too, at a rate of between 19.9 and 27.95 per cent depending on your credit score.
In other words, just because you are using plastic abroad doesn’t mean you don’t have to pay these credit cards off like you normally would.
Always pay off your balance before the end of the month with these cards to make sure that any money you saved isn’t wiped away by paying interest.
For more on travel credit cards you can read our guide here.
Pre-paid cards: An alternative to carrying cash around is to get a pre-paid card.
These cards allow you to put a set amount of cash on the card at a fixed exchange rate.
So if the rate is good at the moment, you can put money on your card and it will stay that rate when you are on holiday.
Just keep in mind that these cards can sometimes have hidden costs and charges so be sure to read the small print.
How to save on card fees while on holiday
If you’re travelling abroad this summer, you need to make sure you pack the right card alongside your sun cream to avoid getting burned by bank fees.
Alastair Douglas from TotallyMoney said: “Some will charge you a percentage of what you purchase, while others will charge you up to a fiver to withdraw cash – and you might even get charged both.”
If you’re not careful, and make lots of small transactions each day while on holiday, the cost can soon mount up.
Being smart with your plastic when travelling outside the UK is especially important given the current strain on family finances.
Andrew Hagger, personal finance expert from Moneycomms.co.uk, added: “Consumers will have less wiggle room in their holiday spending this year thanks to the cost-of-living squeeze, so avoiding unnecessary overseas card fees is a big deal now.”
Here are some of the ‘top pick’ cards to consider before heading overseas.
Debit card top picks
Chase: no fees for spending, or ATM withdrawals (max £500 per day and max £1,500 per month overseas).
Starling: no fees for spending or on cash withdrawals — to a maximum of £300 per day.
Monzo: The hot coral card comes with no exchange rate markup, but you can only withdraw £200 free per 30 days (when outside the EEA) and anything over that comes with a 3% charge.
Read more with our article: Full list of banks and building societies that DON’T charge you to use debit cards abroad | The Sun
Credit card top picks
Barclaycard Rewards: unlike most credit cards, this doesn’t charge any fees or interest charges on purchases or overseas withdrawals – as long as you pay your credit card statement in full by the due date.
As a small bonus, you’ll get 0.25% cashback on spending.
Halifax Clarity: a long-time travel favourite with no exchange rate markup for purchases or ATM transactions.
However, you do pay interest on withdrawals, with a £100 working out at around £2.30 interest over 30 days.
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