Using a debit card overseas

Paying the bill using a debit card abroad

Thinking of using a debit card abroad?

When it comes to using a debit card overseas it’s all about being aware of the fees you might have to pay. Too many assume that because they’re not using a credit card, they won’t be charged, which is far from reality.

Much like using a credit card you’ll be charged a ‘load’, whether you’re taking money from an ATM or making a purchase at the shops. So if you frequently use your card for either cash withdrawals or for in-store purchases you could get walloped every time you make a transaction. It all boils down to the fees. Essentially there are two kinds of fees, and both of them apply to ATM cash withdrawals.

Conversion charge or ‘load’ fee

The actual exchange rate applied when you use your debit card will be very good, but this doesn’t mean a lot when banks add their ‘load’ fee. A typical load could be 2.5% (minimum approx £3) of the total amount of the money withdrawn from a cash machine or when used for purchases.

Cash withdrawal fee

Most debit card providers will charge you a fee for withdrawing cash from an ATM. Again it’s around 2.5%, with the minimum fee usually between £2 or £3.

For purchases you obviously won’t pay a cash withdrawal fee, but some debit card providers will cheekily throw on an extra pound or two (a penalty fee) each time you use your debit card for purchases overseas. RBS, Santander, Halifax, Lloyds TSB and Natwest are the worst for it. Halifax currently penalises you £1.50 per transaction.

Plan how you’ll use your debit card

As highlighted earlier, all these fees add up, especially if you frequently use your debit card. To avoid paying a small fortune in fees, it’s a good idea to plan ahead and use your card less often, whether it’s for withdrawing money, or for purchases. Regardless of what you use your debit card for, you could be looking at fees of approximately £4 or £5 for every £100 you spend.

Dynamic currency conversion

Just when you thought it was safe to go back in the water, there’s something else to watch out for. If you’re ever asked if you prefer to pay in pounds, politely reply with a “no thank you” and state that you want to pay in the local currency. Known as ‘dynamic currency conversion’, some retailers will try and offer this service and offer to convert the bill into pounds for you in the hope that you’ll think it’ll be easier to digest. All it does is allow them the freedom to apply their own exchange rate, which 9 times out of 8 will be worse than your debit card. Always ask to settle the bill in the local currency.

Tell your bank where you’re going

If you don’t tell them where you’ll be, and when you’ll be there, you could find that your debit card gets blocked when you use it abroad. This is normally followed up by a telephone call from your bank, which can be inconvenient if you’re on the other side of the world and you’re woken up at 5AM by your bank. It’s to stop fraud and for your own peace of mind, but could backfire if you don’t inform your card provider of your travel plans. Most banks have a facility online where you can inform them of your holiday plans.

Get clarification on debit card usage overseas

Before using a debit card overseas, check with your bank and get a sound understanding of the fees you’ll have to pay for every type of transaction. You’ll sometimes find current accounts offering fee free spending overseas with their debit cards, but as ever, always check the small print.

Here’s a list of charges for using UK debit cards overseas (as of August 2011). If you’re interested in finding out about other ways to spend abroad, check out our guide to using a prepaid card overseas or have a look at buying foreign currency online.

Have a happy holiday.

Provider Load fee Cash withdrawal fee
(load will also be charged)
Source: Money Saving Expert
Barclays 2.99% 2% min. £1.50 max £4.50 (except Barclays or ‘Global Alliance’ ATMs)
Co-Op 2.75% 2% min. £2
First Direct 2.75% 2% min. £1.75 max £5
Halifax 2.75% + £1.50 per purchase £1.50 per withdrawal
HSBC 2.75% 2% min. £1.75, max £5
Lloyds TSB 2.99% + £1 per purchase 1.5% min. £2 max £4.50
Metrobank (London branch applications only) NIL NIL
Nationwide 2% £1 per withdrawal
NatWest 2.75% + £1.25 per purchase 2% min. £2, max £5
Norwich & Peterborough (£5/mth fee if you don’t pay in £500 or make 5+ transactions) NIL NIL
RBS 2.75% + £1.25 per purchase 2% min. £2, max £5
Santander 2.75% + £1.25 per purchase 1.5% min. £1.99
Santander Zero (existing custs only) NIL NIL
Smile 2.75% 2% min. £2

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