MARTIN Lewis has warned holidaymakers about a simple rule that they should follow abroad when spending money.
The money expert returned to screens in a summer special of the Martin Lewis Money Show last tonight and revealed how those on holiday can avoid extra charges.
The idea of paying in pounds can seem like the obvious option as it’s we know its value and the currency usually linked to the card.
However, choosing this option can see you pay more when tapping your card on the foreign machine.
This is because the overseas bank will do the conversion to pounds and the rates are more unfavourable.
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If you choose to pay in the local currency your card will instead do the conversion which is usually much more favourable.
And if you are using a specialist travel card you will get a "near perfect" exchange, while those not using the card will likely face 3 per cent fees.
So you should always opt for paying in the local currency when asked and not select the option for paying in sterling.
Lewis said: “When you are paying in plastic overseas, you always pay in the foreign currency - you do not pay in pounds.
"Here’s why: if you pay in pounds, it’s the overseas ATM or shop that does the conversion and every time I’ve tested this - and I’ve done this many times - it’s a pants exchange rate.
“If you pay [in the foreign currency] it is your card that does the conversion. If you’re on a specialist card, you get a near-perfect exchange rate. If you’re not a specialist card, it’s going to cost you 3 per cent but that’s still usually better than the overseas machine.”
On tonight's show Lewis also talked about where the best place to get cash out would be and take overseas if you needed to do that.
He said the best place was to compare rates online and then make an order. The worst place he said was the airport, where you would pay the highest fees.
He said: "If you just want cash for travelling abroad… go on to a comparison tool and get yourself the best rates. So for $1,000, you’re going to be paying less than £800 for the best rates, £810 or more on the high street.
"Do it at the airport and it could cost you up to £950. If you’ve left it so late that you have to do it at the airport, call them up and prebook your money - you’ll get a better rate."
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THE BEST CARDS FOR USING ABROAD
Debit cards
Chase Bank is fee-free for spending and cash withdrawals abroad and gives you one per cent cashback on all your spending, paying up to £15 a month for the first year.
Starling also charges no fees for spending or ATM withdrawals.
Monzo has no exchange rate markup but you can only withdraw £200 free at ATM over a period of 30 days, unless you have Monzo premium or plus accounts.
Santander card holders may be able to use Santander ATMs withouit being charged a fee abroad but check the details of your card.
Credit cards
The Barclaycard Rewards card doesn’t charge fees on spending or ATM withdrawals abroad.
There’s also no interest on any cash withdrawn, as long as you pay it back when your next bill is due — but ATM providers could still add on a fee.
The Halifax Clarity card has no charges on overseas spending or withdrawing cash, but you will get charged interest on cash withdrawn from the moment you take money out, so pay it off straight away.
