That means a £100 meal, hotel bill or shopping spree could actually cost you £103 once hidden exchange fees are added.
In a clip shared by This Morning on TikTok, the founder of MoneySavingExpert explained how most high street banks quietly charge what’s known as a “non-sterling exchange rate fee” whenever you spend overseas.
Martin said: “Your bank gets a near perfect exchange rate on the day – the same as the city market rates. But when you spend on your card abroad, normally the card company adds a non-sterling exchange rate fee of between 2.75% and 3%.”
“So your £100 worth of euros costs you £103.”
But he says there’s an easy way to dodge the charges completely – by switching to a specialist travel card before you go away.
According to Martin, these cards offer the same near-perfect exchange rates banks receive themselves, but without adding the extra fee on top.
One of the top options he highlighted was the Barclaycard Rewards credit card, which currently offers cashback on spending both in the UK and abroad.
“You get perfect exchange rate and cashback,” he explained.
However, Martin also issued an important warning to holidaymakers considering a credit card.
He said people should only use one if they are confident they can pay the balance off in full every month, otherwise interest charges could quickly wipe out any savings.
For travellers who do not want a credit card, Martin recommended the Chase debit card instead.
He described it as one of the easiest travel-friendly cards to get because it only requires a soft credit check and does not require switching your main bank account. The card also offers fee-free spending abroad and no ATM withdrawal charges overseas.
Another option he highlighted was First Direct, which currently offers a travel-friendly debit card and a cash incentive for customers willing to switch banks.
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Travel experts at Lapland Famille also warned holidaymakers to avoid one common mistake when paying abroad – choosing to pay in pounds instead of the local currency.
They explained that paying in local currency is usually much cheaper and helps avoid extra conversion fees added by retailers and card machines.
With millions preparing for summer holidays, Martin’s warning could save travellers hundreds of pounds – simply by changing the card in their wallet before they fly.
Do you have a different card for your holidays? Tell us in the comments below…
