Cash or credit card abroad

janet8458

I have read Martins piece on using credit cards abroad which advises using one of the better credit cards when ever possible for transactions, however
If I want to take some cash abroad am I better trying to estimate how much I will need and get it here risking having some left and get a bad rate to sell back when I return home, or getting it on my Nationwide credit card as and when I need it from an ATM abroad.
Bearing in mind that; I want to bring as little foreign currency back as possible (because I will not use it again); I believe I will get a better exchange rate through the credit card; I would be drawing small amounts possibly £30 - £50 at a time.

gt94sss2

You are better off using a Nationwide debit cardfor withdrawing cash at ATMs abroad if you have one and the Nationwide credit card (or another good card for overseas use) for buying things(i.e. paying at the till)

If you are considering changing money before you leave, how competitive an exchange rate is will depend on where you are going.. and you might be better off exchanging cash once you arrive..

Regards
Sunil

janet8458

Thank for the reply
I only have a Nationwide Credit Card (which I am going to use over the till) not a debit card, so would you say I am still better withdrawing cash from an ATM abroad with it or getting cash here before I go?
Regards Janet

gt94sss2

Imposible to say, as I don't know where you are going, for how long and how much you plan to spend! - and even then its not an exact science as exchange rates move daily.

The best you can do is:

a) remember if you use your credit card to withdraw cash, Nationwide will treat it as a cash advance and charge you interest.

b) If you look at this Nationwide page, it links to the Visa wholesale calculator will give you an idea of what the exchange rate is like when using your credit card.

c) You can then compare that rate with the Travel Money Maximiser to see what sort of exchange rate you could get in the UK if you changed your money in advance.

Then after taking any fees into account, decide which is likely to be better for you..

Regards
Sunil

CLAPTON

surely you have a debit card of some sort?

janet8458

I have a LloydsTSb debit card. Is it cheaper to use this to get cash from an ATM in Bulgaria rather than my Nationwide credit card?

dzug1

You will certainly get a better exchange rate using the credit card.

However you will lose out on the cash advance fee (2.5% min £3 - which is no good for £30 to £50 a time - comes to 6% on £50, 10% on £30) and interest (2.075% per month) which could well mean that cash is cheaper. It depends on how much you take out at once and how quickly you pay it back.

Edit - this is to your general question, not the Bulgaria one. The answer to that is well the same really. It depends. You get a worse exchange rate with the LTSB card but lower fees. And no interest.

There isn't a general answer to your question other than that it depends.

choc_mouse

Personally, I make it a rule to never withdraw cash from a credit card simply because this attracts a high interest rate from the moment you get your fingers on the cash.

The answer depends a lot on your travel style. You'll need to do some research and budgeting yourself, e.g. how much do you expect to spend per day? Are you backpacking or going luxury? etc then you can figure how much cash you ought to take with you.

I had a quick read on Lonely Planet's guide to Bulgaria: http://www.lonelyplanet.com/bulgaria/practical-information/money-costs. It seems credit cards aren't that reliable but I suspect that if you stay in only the main tourist areas, you'll be able to get by as long as you had some cash for backup.

Best to plan what you can pay by credit card (e.g. tickets, big hotels), what you will need cash for (food, shopping and tips) and then work out which way is cheapest for you to get the cash:
a) before you go, or
b) once you're there using your LTSB credit card. Better to reduce the number of withdrawals as there is a 1.5% fee on all transactions, with a minimum charge of £2 (max of £4.50).

In the long run, if you do a lot of travelling then it is certainly better looking for a fee-free debit card, such as the one from Nationwide. Also always try to have a backup method (e.g. your credit card, cash or traveller's cheques) in case your main card gets declined! I was unfortunate enough to have two of my cards declined and no cash in one day when I was in the middle of nowhere!

choc_mouse

I should also add that unless you plan on spending a huge amount of foreign currency (say £1000's), the exchange rate usually doesn't make a big difference (unless markets are particularly volatile), especially with holiday spends in only the hundred's of pounds.

In foreign exchange you win some, you lose some - all part of the game For a short holiday, I wouldn't worry about the rate too much. Of course you'll find better rates if you shop around and probably the best rate if you used a credit card designed for travelling.

Biggles

choc_mouse wrote: »

I should also add that unless you plan on spending a huge amount of foreign currency (say £1000's), the exchange rate usually doesn't make a big difference.

To be honest, the exchange rate makes more difference than the cash advance fee.

In the case of your LTSB debit card, the exchange rate loading is £2.99%, as against zero for the Nationwide (credit or debit) card. That's more than any cash advance fee.

For the future, you would do well to apply for a Nationwide Flexaccount and get a debit card for foreign travel.

choc_mouse

Biggles wrote: »

To be honest, the exchange rate makes more difference than the cash advance fee.

The exchange rate is a different thing altogether in my opinion - VISA processes your transaction based on the prevailing global market rates at the exact minute the transaction is submitted.

The fees and interest rates that are added on top of the transaction (passed on by the banks) is what most of us get a choice in when we choose a card/account.

However, I did some (v.rough) calculations and Biggles is correct. If you pay off your credit card balance (e.g. cash advance) in full, it works out cheaper than withdrawing cash on the debit card.

Nationwide CC (27.9% pa) - assume paid off in full after 1 month. [Correction: see post #13 - this is missing the cash advance handling fee]
Withdrawing £100 - costs £2.325 (100*27.9%/12)
Withdrawing £500 - costs £11.625
Withdrawing £1000 - costs £23.25

Compared to LTSB debit card (2.99% foreign exchange fee + 1.5% cash withdrawal fee [£2.00 min - £4.50 max])
Withdrawing £100 - costs £2.99 + £2 = £4.99
Withdrawing £500 - costs £14.95 + £4.50 = £19.45
Withdrawing £1000 - costs £29.90 + £4.50 = £34.40

I'm actually very surprised by how expensive LTSB's debit card is to use abroad!! I've always relied on Nationwide's free card use so I've never done the maths.

There you go, withdrawing cash on Nationwide's credit card could be cheaper because there is no transaction fee and assuming you pay it off quickly. I would still prefer not to withdraw cash via either method offered unless it was an emergency but if I was stuck in the same situation and needed cash, I would choose the Nationwide credit card as opposed to the LTSB debit card.

(Sorry if I confused matters ) The key is good planning and budgeting!