Getting away without breaking the bank

Before flying off to the sun for a well-deserved holiday, think about the least expensive and the safest ways to pay, says Peter O’Dwyer.

SUN, sea, sand, and bank charges; it doesn’t exactly roll off the tongue. But horror stories about exorbitant foreign exchange rates or bank charges could turn your foreign holiday into a nightmare. Here we take a look at some tips to ensure unwanted bank charges aren’t waiting for you on your return.

1. Card is king, especially at tills.

If you are travelling in Europe this summer, the best option for keeping costs low is to pay by either debit or credit card at the point of sale. None of the main banks operating in Ireland charge for credit card transaction at the point of sale, while completing the same transaction with your debit card comes at a 20c price for customers of Bank of Ireland and AIB.

There’s a substantially greater risk of travellers racking up unwanted bank charges outside the eurozone, than within the common currency area, but the same rules apply where ever you are.

“KBC customers travelling in the eurozone enjoy free contactless transactions and point of sale transactions, so it offers a great way for customers to reduce their fees when abroad,” said a KBC spokesperson. “For non-Euro travel, you typically get a better exchange rate when using your debit or credit card. So, as well as saving you money, using your card abroad is more convenient and reduces the risk associated with carrying large sums of cash.”

Point-of-sale transactions in the UK, the US, Australia, or any other destination outside the eurozone unsurprisingly come at a greater cost than within the common currency area but is still preferable to depending on ATM withdrawals. Paying via debit card at the till in any of these countries will set you back an additional 1.75% to 2% of the cost of your purchase with most of leading Irish banks. These fees are subject to a minimum amount of approximately 45c and maximum of €11.45 in most cases too.

If it’s the oft-overused credit card you decide to pay with outside the eurozone, the fees range from 1.75% with Permanent TSB to 2.75% for AIB using Visa outside of Europe. KBC and Ulster Bank charge 2%, while Bank of Ireland’s cost has risen from 1.75% to 2.25%.

2. Pre-load your credit card to avoid withdrawal fees.

ATM withdrawals, by comparison, are a little trickier and, at times, expensive.

AIB, Bank of Ireland, and KBC charge between 20c and 35c per debit card withdrawal in the eurozone, while credit card withdrawals incur a charge of about 1.5% of the transaction value with most banks, or €1.50 for every withdrawal of €100 in other words. Bank of Ireland is the exception in this case, applying no charge, while withdrawal fees can be avoided with most others by lodging money to your credit card account before travelling.

“Load up your credit card with funds — like you would your current account — prior to travelling abroad and when you withdraw from an ATM, you will not pay any cash advance fees,” said a spokesperson for Bank of Ireland.

For the richer or worse prepared among us, ATM withdrawals outside the eurozone will come at a considerable cost; generally 3.5% of the transaction for debit card users. Credit card holders can expect costs ranging from 0% to 3.5% even before cash advance fees are factored in. AIB, like others, applies a cash advance fee of 1.5% if applicable but doesn’t charge otherwise, while Bank of Ireland has increased its charge from 1.75% to 2.25% from the beginning of this month and with KBC and Ulster Bank you’ll be shelling out the full 3.5% before cash advance fees. Permanent TSB are marginally cheaper at 3.25%.

3. Don’t just limit yourself to one payment type.

It’s always advisable to keep your options open when abroad, and bringing a range of payment types means you’re unlikely to be stuck at any stage of your journey and allows you the flexibility of using each payment type at the most opportune moment. Make sure to bring at least some local cash to settle smaller transactions such as taxis and order the currency well in advance, especially if its a more obscure currency the bank might not have.

4. You don’t have to tell the bank you’re going abroad but you might want to.

Knowing how best to avoid bank charges matters for little if, in the middle of your trip, your card no longer works all of a sudden. All the major banks monitor your accounts for suspicious activity raised by fraud prevention algorithms. Should the bank suspect someone else is using your card they will generally try to contact you before blocking your card but, should they be unable to reach you, your card could be locked until they do. So, while you don’t have to tell the bank of your travel plans, doing so will reduce your risk of being left in the unenviable position of having no cash while abroad.

5. Safety first.

The basics of minding your money abroad are the same as ever: Take care entering your pin; insist on being present when card payments are being processed in restaurants or bars to avoid cloning; make a note of your bank’s contact details and alert them if your card is lost or stolen; and don’t keep all your cards, money and passport together in case you lose them or have them stolen.

Signing up to Verified by Visa can give you additional peace of mind that even if your card is stolen it can’t be used online.

“Once your card is activated by Verified by Visa, you’ll have a login and password for the card,” said a PTSB spokesperson. “When you make an online purchase, it will prompt you to provide that password before you can checkout. That way, you can be sure you are the only one making a purchase with your Visa card.”

6. Conversion option is in retailers’ best interests, not yours.

If in a non-eurozone country, you may be offered the choice of settling a bill in euro rather than the local currency. This, generally, is not out of the goodness of the retailer’s heart but rather in the pursuit of knocking a few extra cents out of you as a thank you for your custom.

“Sometimes, you may be given the option of having your debit or credit card payment converted to euro at the point of sale by the retailer,” an AIB spokesperson said. “If you choose this option, the end cost to you will usually be higher than if you paid in the foreign currency. So, when using your card abroad, paying in the local currency will usually cost you less.”