Martin Lewis issues urgent warning over 5 easy mistakes holidaymakers make – how to avoid them
MARTIN Lewis has warned holidaymakers over five simple mistakes to stop losing money while travelling abroad.
The money guru returned to the Martin Lewis Money Show to reveal how tourists can avoid paying extra charges – and save money.
While travelling abroad, most tourists tend to pay in pounds as it seems to be the obvious choice.
However, choosing this option can make you pay more when tapping your card on a foreign machine.
This is because the overseas bank will do the conversion to pounds and the rates are more unfavourable.
If you choose to pay in the local currency your card will instead do the conversion which is usually much more favourable.
And if you are using a specialist travel card you will get a “near perfect” exchange, while those not using the card will likely face 3 per cent fees.
Martin warned that you should always opt for paying in the local currency when asked and not select the option for paying in sterling.
He said: “When you are paying in plastic overseas, you always pay in the foreign currency – you do not pay in pounds.
“Here’s why: if you pay in pounds, it’s the overseas ATM or shop that does the conversion and every time I’ve tested this – and I’ve done this many times – it’s a pants exchange rate.
The money expert also warned that airports are the worst place to take cash out while going on a foreign trip, simply because you pay the highest fees at airports.
He said the best place was to compare rates online and then make an order.
“If you just want cash for travelling abroad… go on to a comparison tool and get yourself the best rates. So for $1,000, you’re going to be paying less than £800 for the best rates, £810 or more on the high street.
“Do it at the airport and it could cost you up to £950. If you’ve left it so late that you have to do it at the airport, call them up and prebook your money – you’ll get a better rate.”
Martin’s third warning was about using a credit or debit card to get the best exchange rates.
Debit and credit cards usually offer exchange rates for the day you tap the card.
However, using prepaid foreign exchange cars, you could get the best exchange rates for the day you actually top it up.
Marti said: “With prepaid cards, you can opt to get the rates of the day you top the card.
“So if you thought the Euro rates were gonna drop, you could lock in today’s rate. And if you think the rates are going to go down further, you could put 50 per cent money today and 50 per cent on some other day to get the best exchange rates and spread the risk.”
Another warning from Martin was to stop taking out cash to give pocket money to minor children.
While it may sound like the easiest way to give your little ones some cash to spend around, you actually lose more money while withdrawing from a foreign ATM.
Martin advised on getting prepaid cards for those under 18.
You can load any amount you wish to give your child and they can spend it without losing money on cash.
He said: “Prepaid cards for minors have spending limits – you can set up how much you want them to spend and see what they are spending money on.
“And almost all of them give near-perfect exchange rates.”
The last warning from Martin was that visitors should change their currency before the trip – and not while they are abroad.
Thi is because it is better to change the currency while still i the country, simply because you have more options in terms of exchange agencies to choose fro and get the best rates.
He said: “What I would normally favour is to change to Euros before the trip. I would do it via a comparison site.”
Are there other options for spending abroad?
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.
Senior Consumer Reporter Olivia Marshall explains all the options.
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 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.