This article is for general information only. It is not financial advice and does not recommend a specific lender or product.

Going abroad costs money beyond the obvious. Take a two-week holiday where you spend £1,000 on your card: a standard UK debit card charging a 2, 3% foreign transaction fee plus £1.50 per ATM withdrawal could cost you £20, £30 in fees alone, before you factor in a poor exchange rate. A fee-free travel credit card on the same spend could cost nothing in transaction fees. That gap is worth thinking about before you leave, not after your first cashpoint receipt.

Here is a short, practical look at the main options and what each one means for your wallet.

What are the main ways to pay abroad?

Most UK travellers use a mix of these:

  • Debit card: convenient, but many standard UK debit cards charge a foreign transaction fee (often around 2, 3% per purchase) plus a fixed fee for ATM withdrawals abroad. For example, some high-street banks such as Barclays and NatWest charge a non-sterling transaction fee on standard current accounts. Check your bank's fee schedule before travelling.
  • Credit card: some credit cards are specifically designed for overseas use and charge no foreign transaction fees. Using a credit card abroad can also give you Section 75 protection on purchases over £100 under the Consumer Credit Act 1974. Check the interest rate carefully if you do not clear the balance in full each month.
  • Prepaid travel money card: you load a set amount before you go, locking in an exchange rate. Useful for budgeting, but check for top-up fees, inactivity fees, and whether you can use it at local ATMs.
  • Cash: still useful in markets, smaller shops, or countries where cards are less widely accepted. Ordering currency online or through your bank in advance typically gives a better rate than airport bureaux de change.

How much could fees actually cost on a £1,000 holiday spend?

To make the difference concrete, consider a traveller spending £1,000 abroad over two weeks:

  • Standard debit card at 2.75% foreign transaction fee plus £1.50 per ATM withdrawal (four withdrawals): approximately £27.50 in transaction fees plus £6.00 in ATM fees, totalling around £33.50.
  • Fee-free travel credit card (e.g. a card with no foreign transaction fee and no ATM fee abroad): £0 in transaction fees, though cash withdrawals on a credit card may still accrue interest from the date of withdrawal even if you clear the balance.
  • Airport bureau de change versus ordering online: the exchange rate margin at an airport kiosk can be 5, 6% worse than the interbank rate, meaning on a £1,000 exchange you could receive £50, £60 less in foreign currency compared with ordering in advance.

MoneyHelper's travel money guidance explains how to compare exchange rates and avoid the most expensive conversion options.

Why does this matter?

The difference between a fee-heavy card and a fee-free travel card can easily run to tens of pounds on a two-week trip. MoneyHelper notes that airport currency exchange desks often offer the least competitive rates; planning ahead and comparing options can make a real difference to what you actually spend.

If you are already managing a tight budget at home, carrying unexpected fees abroad can strain things further. Before you travel, it is worth checking your card's fee schedule and setting a daily spending limit so you do not return to a balance you were not expecting.

Who may be affected?

This is relevant for most UK residents travelling abroad, but particularly:

  • Anyone using a standard high-street bank debit card, which may carry foreign transaction fees
  • Travellers visiting countries that are less card-friendly and where cash is still expected
  • People on a fixed travel budget who need to track spending carefully
  • Anyone borrowing to fund a holiday (via a personal loan or credit card) who will be repaying after they return

Borrowing to fund a holiday? If you are using a personal loan or credit card to pay for a trip, the total cost of credit matters as much as the day-to-day transaction fees. A low foreign transaction fee is less useful if the card's purchase interest rate is high and you are only making minimum repayments when you get home. It is worth calculating the full repayment cost before you travel. See How loan interest rates work and Personal loans explained for what to check.

A useful first step before you go

Run your holiday spending through a budget planner before you book. It helps you see what the trip will actually cost once you include accommodation, food, travel money, and any borrowing repayments, not just the headline flight price.

The MoneyHelper budget planner is a free tool that covers income and outgoings in one place.

What to read next

Sources

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