Cheapest way to spend overseas discussion

MSE_Martin

This discussion relates to the Save 6% by using the Cheapest way to spend Overseas article.

Click on reply to ask a question or discuss.

johnllew

Your article states Liverpool Victoria (incl Saga) pays 3.25% on credit balances. According to their website, they pay:

Interest paid on Credit Balances (Gross p.a.)

- Up to £500 Bank of England Base Rate less 0.75%
- Over £500 Bank of England Base Rate less 0.25%

As the current base rate is 4.75%, this suggests they pay 4.00% gross (3.20% net)to £500 and 4.50% (3.60% net) thereafter.

hangfire

I have been told by a tour operator that if I am buy a lot of US travellers cheques then I can buy and sell them at the same rate, i.e. the rate the banks use and not the tourist rate which has different levels for buying and selling. Since in the US they can be spent like money without paying any commission, is this not a good way to buy things in the US. I have free protection if I loose the travellers cheques. I now exactly what the exchange rate is, as I would have already paid the rate and if I have any travellers cheques left after my holiday I won’t get penalised when I change the back to pounds. If the exchange rate went the right way I could make money on it to.

chewyjoint

I emailed Visa some time ago to ask if they published their exchange rates. This is the reply they sent;

"Thank you for your message. To determine the exchange rate for all Visa transactions, Visa uses a wholesale market rate or a government mandated rate in effect one day before our system's processing date. Added to this 'base' exchange rate, Visa assesses the Member financial institution a 1% conversion fee. The bank may or may not pass this cost along to the cardholder. This would be indicated in the cardholder's credit card agreement or disclosure statement.

In addition, a Member bank may request that our system calculate an additional percentage to cover any costs they incur as a result of converting a foreign transaction. This fully loaded figure is the exchange rate sent to the Member bank that is ultimately charged to the cardholder.

For general industry currency rates, they can go to https://www.xe.com. For specific information regarding how the exchange rate is applied to accounts, cardholders can contact the financial institution that issued their Visa card."

So as far as I can see if you use one of the cards with no loading suh as Liverpool Victoria or Nationwide then you should get the rate published at https://www.xe.com

Darkgedi

I use a Nationwide credit card and thought I was quite sharp but got caught out on Tuesday in Spain. I didn't lookclosely enough at the voucher. The restaurant/spanish card issuer had converted the euro bill into £ and were billing me in £ at a rate that is about 5% worse than nationwide would. The slip said I had been offered a choice and accepted the rate (neither was 'true' though of course I had signed it). A real con. Does anyone have experience of this, and in particular refusing it: by the time you can read the warning they have already swiped your card.

pin

I've had the same problem in Spain (at a hotel). It is well reported and called "Dynamic Currency Conversion". Visa and Mastercard say you are supposed to get the option of paying in local currency or paying in your home currency via DCC. They say the retailer is supposed to give you this option, however in reality many places will just give you your home currency (therefore the retailer making more money).

I've complained to my credit card company about this (Nationwide), they say they can't do much about it though, as the payments are processed by Visa, and it is really up to Visa. They have passed my complaint onto Visa, but have not heard anything from them.

abydx

Having read Martins excellent article on using your plastic abroad I just wanted some clarification on a few points that I am hoping someone can help me with.

I have applied for the Nationwide cashback VISA credit card. If I load my card up with cash before I go abroad will it be cheaper for me to withdraw money from an atm compared to exchanging cash at a bureau de change/local bank? I think I will get charged £1.50 regardless of the fact that I will be in credit?

Also, although the Nationwide card is a VISA would I be better off with a Mastercard?

Finally, instead of the Nationwide credit card should I just open a current account with a debit card and use that instead? it seems like the cheaper option - but will they use the same method of calculating exchange rates as VISA/Mastercard? or would they use Nationwide's exchange rate?

chiny

For the Eurozone, I opened a bank account with a Spanish bank (CAM) and asked for a credit card. I feed the account with Euros at a good rate from one of the specialist ForEx dealers like Currencies Direct.

The actual analysis of costs is probably worthy of Martin himself but the upside for me includes a known-in-advance decent exchange rate. Downside includes fee for CD sending money and the fact that the CAM charges 12 euros annually for its credit card.

This way I can also use Euro ATMs with no fee worries. CAM offer internet access, send my statements to my UK address and have given superb service.

--
Chiny

speedtwin

Its All Very Well Chosing A Card With The Lowest % To Use Abroad Charge But I Dont See Any Info On What Exchange Rate They Use. Are They All The Same And If Not Any Savings Made Might Be Lost. You Need All The Info .

Galstonian

I'm not sure why you think Everything Merits Capitalisation but, the rate used for a Visa card is set by Visa and for a Mastercard it is set by Mastercard. The rate used is, I believe, 1% off the published forex rates on the day before the transaction is posted (not the tourist rates as used by bureau de change, travellers cheques or when buying currency). It is extremely unlikely that you will get a better deal than a zero loaded credit card for foreign purchases.

pinkfluffybabe

I used my Egg card abroad last year and seemed to get a very generous rate of exchange. I didn't know about loading til I read this article so obviously I would have been charged that too.

I tend to take Sterling Travellers' cheques with me for my spending money which I can get at no commission from my bank. I usually use my Visa for perfumes etc at the airport or in the resort.

I might take a look at one of these cards nearer the time. I like the idea of putting money on the Liverpool Victoria one to use.

A very useful article, thanks Martin.

Christine