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Transactions in foreign currencies

When using your card to make purchases or obtain cash in a foreign currency you will usually be charged a conversion fee or exchange fee. Card exchange rates (which are based on the current wholesale exchange rates) are generally better than the tourist rate. Generally, you’ll find it’s cheaper to use a credit card for foreign purchases and a debit card for foreign cash machine withdrawals.

You can make the most of favourable exchange rates by ensuring that you pay in the local currency when using your card. It is important to remember however that exchange-rate loading fees may also be added onto the exchange rate by your bank. In some situations this will be in the form of a flat fee, in others as a commission calculated as a percentage of the total transaction.

For example, if your card company’s exchange fee is 2% then you will be charged an additional £2.00 for every £100. This will either be reflected in the exchange rate used or appear as an additional entry on your statement along with the exchange rate used. There is often a flat rate purchase or cash fee on debit cards which typically ranges from between £1.00 and £1.50 per transaction, depending on who your card company is.

It is always worth getting in touch with your bank or card company and looking at their website to see exactly which of these fees are applicable to your cards, as well as the exchange rates charged for the local currency at your destination. Some card companies do not impose fees and charges on foreign transactions so it is worth shopping around.

As prepaid cards can be loaded in foreign currencies, you may avoid paying currency exchange fees. See section on Using prepaid cards overseas for more detail.

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