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Foreign currency rip offs to look out for

Foreign currency rip offs to look out for
If you’re jetting off to foreign shores this year, it pays to plan your spending money in advance. Otherwise you risk getting caught out by a host of currency tricks and rip-offs, which could add hundreds of pounds to the cost of your holiday. Here are five of the most common

Rip-off airport exchange rates

Only ever buy currency at an airport as a last resort. Those booths may claim to be “commission-free” but can sting you on the exchange rate. Some take as much as 20 per cent of the money you exchange in hidden currency conversion costs. 
Tip: The most competitive rates are available if you order online in advance with home delivery.

Hidden debit card charges

Taking your debit card overseas is easy and simple, but costly. Most will slap on a foreign usage charge, typically 2.99% of everything you spend. So that's £2.99 per £100. 
Worse, some have a minimum charge, which can be as high as £1.50. These add up if you use your card to make lots of smaller payments in cafes and shops, or regular cash sums at an ATM.
The average debit card foreign usage fee for a €5 transaction is 53p, but some charge as much as £1.50, according to financial information service Defaqto. By comparison, the maximum credit card fee for a €5 transaction is was just 13p.
Tip: Save your debit card for larger transactions.
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Credit card cash withdrawal fees

Withdrawing cash on your credit card is never a good idea, whether you are overseas for at home in the UK. Most cards do not charge interest on purchases for the first 55 days or so but you start paying a hefty APR the moment you withdraw cash. This also applies during the introductory period of those 0% deals.
Tip: For emergencies only.

Prepaid travel cards

Prepaid foreign currency cards are increasingly popular. You cannot borrow money on them, only spend funds you have previously loaded, which can help you budget.
You can also pre-load them in advance, taking advantage of attractive currency rates.
However, a study by Defaqto found they have a host of fees, including set-up costs, loading fees and transaction charges.
Tip: Check out every single fee before signing up to see if they are really worth having.
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Dynamic currency conversion

This one catches many people on the hop. You’re ready to pay with your debit or credit card in a shop, bar or restaurant, and the sales staff ask if you would like to pay in pounds.
If you say yes you will be stung on the exchange rate, which will be far less favourable than the one your credit card issuer applies. MasterCard is now trying to clamp down on this practice.
Tip: Always pay in local currency.

So what's the best way to spend money overseas? 

Financial app Revolut combines low charges and zero currency conversion costs. 
Alternatively, take out a credit card with zero charges for overseas usage, offered by Creation, Santander, Halifax, Barclaycard, Post Office, Virgin Money and others.

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