Avoiding Foreign Usage Fees

1. Apply for a Nationwide credit card or debit card. If you are concerned about your credit score (Nationwide are quite a selective lender), you could just apply for a current account with Nationwide, and use their debit card when you go abroad. In a nutshell, the Nationwide offerings are the best credit cards available when travelling overseas. For more information, we suggest that you read our reviews of the Nationwide Classic card and Nationwide Cash Reward credit card.

2. Make the majority of your purchases in cash and travellers cheques. You usually get slightly better rates for purchasing with travellers cheques, and a much better level of security. We advise you to carry no more than £100 or equivalent in cash at any time, as very few travel insurance policies will cover you if this is lost or stolen.

The travellers' cheques option will vary according to which country you are visiting. For example, travellers' cheques are becoming much less widely used across Europe. On a recent trip to the Netherlands and Germany we found very few places that are prepared to accept them, including most hostels, shops and stations in Amsterdam.

However, travellers' cheques are much better accepted in the USA and if you are travelling to some less developed countries, or travelling to a range of different places, you may well be advised to carry US dollar denomination travellers' cheques anyway, as they can usually be exchanged at much better rates than local currency.

3. If you put the bulk of your foreign spending onto your credit card, then it is best to use the card in-store to make purchases rather than withdrawing cash from an ATM. The best credit cards for cash advance APR charge around 13%, such as the Smile Credit Card (12.1% when opened with a Smile current account), but the vast majority charge upwards of 20%.

As well as the cash advance APR, there is also the foreign 'loading' fees that sees a foreign ATM withdrawal cost you in the region of 2% (minimum £2) for most UK credit cards. However, Nationwide credit cards do not charge any kind of foreign usage fee premium. There is still the standard cash advance charge of 1%* (minimum £1), but that is all. This means that if you decide to withdraw money from an ATM (or withdraw cash from your credit card using a bank teller), then the best way to save money is to make occassional large withdrawals, as oppossed to frequent, but smaller, withdrawals.

4. Remember that there are plenty of places that will offer commission-free currency deals. Do not be tempted into taking the first offer you find, as there can still be substantial differences between the buy and sell rates (known as the 'spread'). If you are purchasing large volumes of foreign currency, it may well be worth using one of the online currency exchange services available, which generally offer much better exchange rates compared to high-street banks.

ationwide Credit Cards will increase to 1.25% (minimum £1.25); however even with this rise, the Nationwide offerings will still be the best credit cards for cash advance (unless other credit card companies change their cash advance rates).