Payment methods abroad

Being savvier with travel money could save the UK £1.4 billion

Remember the days when everyone got their foreign currency before they travelled? With contactless card technology quickly spreading around the world, it now requires minimum effort to hop on a plane and start effortlessly spending. However, this may be costing you more than you think. According to our research, UK residents spent £1.9 billion on travel money fees in 2017. If all of us who went on holiday used prepaid currency cards, that figure would be £552 million instead, saving us £1.4 billion as a nation.

£1.9 billion

spent in total on travel money fees in 2017.

Average fees per trip abroad for different payment methods

How we pay abroad Percentage of usage
Debit/credit card (including card machines, contactless and money from ATM withdrawals) 46%
A prepaid currency card 16%
Exchange bureau 59%
Many credit and debit cards charge fees for using your card, as well as commission on the money you are withdrawing or spending abroad. This makes this method of spending abroad pretty expensive. Our research found that it costs almost five times more to use your debit or credit card abroad compared to a prepaid currency card. Getting all your money from an exchange bureau is slightly better, but still costly, at three times the price of a prepaid card.

% of people who use each method

Unfortunately, the most cost-effective payment method for overseas travels is also the least popular, with only 16% of Brits using a prepaid currency card on their trips. Almost half dabble in the most expensive option, credit and debit cards. Exchange bureaus are the most popular, with 59% of people having used them.Percentage of usage of prepaid currency cards for different generations.

Prepaid currecy cards for generations Millennials Gen X Baby Boomers
Debit/credit cards 43% 48% 48%
Prepaid cards 19% 17% 12%
Exchange bureaus 51% 56% 67%
While Millennials are often slated for being bad with money, our survey found them to be the savviest age group when it comes to travel money, with 19% of them getting a prepaid card before their travels, compared to 17% of Gen X and 12% of Baby Boomers.Travelling abroad soon? Read our guide to prepaid cards to learn more about how to use this payment method.

“With many banks imposing charges AND commission fees when you use your card abroad, the costs can quickly add up. You may well be aware that withdrawing money from a foreign ATM can result in charges but even a small purchase using contactless can see you being hit with disproportionate fees on some cards.

“Prepaid currency cards, and a few new debit or credit cards like Starling and Revolut, are a good alternative to consider. As our research shows, they generally cost a lot less than traditional cards or exchange bureaux, allowing you to spend more on your actual holiday. If you don’t want to switch your credit card or leave your current bank, you could consider getting one of these cards just for your trips abroad.”

– Jon Ostler, UK CEO at finder.com

Methodology

The average fees per trip for each currency conversion method were calculated by:
  • Taking the average spend per trip, according to the ONS
  • Recalculating it to exclude transaction fees
  • Multiplying this by that method’s average exchange rate to get the amount received in the foreign currency. The average exchange GBP to EUR exchange rate for five popular providers of each method was used.
  • Converting this back into pounds using the mid-market rate
  • Finding the difference between the figures found in (4) and (1).

The overall average fee per trip was then found by multiplying each method’s average fee, by the proportion of people who use that method, according to our own survey results.This was then multiplied by the total number of trips taken in 2017 according to the ONS to get the total amount spent in fees.

Click here for more research. For all media enquiries, please contact:
Matt Mckenna
UK Communications Manager
T: +44 20 8191 8806
matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

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