Making purchases using your debit card when you are on holiday may seem the like easiest and definitely the most secure way to pay, but surprisingly it can end up being one of the most expensive as well.

Why is it so expensive?

First of all most debit cards charge a % amount on top of the exchange rate called a ‘load’ this is usually something in the region of 2.75% of the purchase. So for every £100 you spend the bank will make £2.75.
But what makes using your debit card so expensive is some banks charge you EACH time you make a purchase regardless of the cost on top of the exchange rate ‘load’. This can be anything from 75p up too £1.50. So if you make 20 purchases on your debit card over the course of your holiday you could be looking at fees of £30!

How can I avoid these charges?

• Not all debit cards charge fees to use their card abroad, if yours does then consider setting up an account at a different bank that won’t charge you.
• Use a credit card instead. Credit cards don’t charge you for making purchases just for withdrawing money from cash machines. A credit card will generally work out the most cost effective way to pay for purchases abroad.
• If you don’t have a credit card then consider withdrawing money from a cash machine using your debit card instead. You will still be charged to withdraw your money but if you withdraw a large enough amount the charge will be negligible. BUT always remember to keep your money in a safe, never carry a large amount of cash around with you.

Who are the worst offending debit cards?

Halifax Debit Card – charges you £1.50 each time you make a purchase and has an exchange load of 2.75%
Lloyds Debit Card – charges you £1 per purchase and has an exchange load of 2.99%
RBS Debit Card – charges you £1.25 per purchase and has an exchange load of 2.25%
*Correct at time of writing.