Holidaymakers urged to consider accounts and cards that could help avoid fees

Holidaymakers heading overseas this summer are being urged to consider current account and credit card options that could help them to save money on fees and charges.

Some current accounts will charge customers to use cards abroad – but several providers have removed such fees and will not charge for using a cash machine abroad or charge debit card fees overseas, financial ratings company Defaqto said.

For people who travel abroad frequently, it could be particularly useful to open a new account or even switch banks before their next trip.

Using a suitable card abroad could also make it easier for holidaymakers to avoid having to withdraw and carry large amounts of cash.

“Challenger” brands are among those competing on fees.

Current accounts highlighted by Defaqto which may potentially help people save on fees abroad include those offered by Chase, First Direct, Starling Bank, Kroo and Virgin Money.

Many of these accounts also come with other perks that people may want to weigh up, for example, First Direct’s 1st Account has a £250 interest-free overdraft, while Chase offers cashback on purchases and several accounts also pay interest on deposits.

Defaqto’s analysis of the market also found several “added value” accounts that do not charge fees abroad. With this type of account, people pay a monthly fee in return for added benefits.

Katie Brain, a banking expert at Defaqto said: “If you’re happy to pay a monthly charge for a bank account in exchange for things like travel insurance then you could look into added value current accounts which don’t charge fees overseas. Two-thirds of all added value accounts in the UK offer no fees abroad now.”

Defaqto said that Lloyds and Bank of Scotland are among the banks offering these types of accounts.

When weighing up added value accounts, Ms Brain suggested that in general: “It’s important to review the levels of cover offered and consider whether you will use all of the benefits included. If not, then these may not be the best option for you.”

Looking at credit cards which do not charge for use abroad, Defaqto highlighted offers from Tesco Bank, Nationwide Building Society and Virgin Money. Some cards also include zero interest on purchases for a set period.

Ms Brain added: “A credit card with a 0% purchase offer can be a good option when travelling abroad because you can spread out your holiday spending over the 0% period.”

In general, holidaymakers may also want to bear in mind that they could potentially be charged fees that are out of their account provider’s control, for example, charges levied by an ATM operator, which would likely be shown on the screen at the time.

Here are some tips from Defaqto when using a card abroad:

1. Check to see if your card can be frozen when abroad so if you lose it, the card cannot be used.

2. If possible, have a separate card, second current account or credit card, in case your main card is lost or stolen.

3. Consider having one Visa and one Mastercard in case one of the systems goes down.