Holiday card charges could cost you this summer: Here's how to avoid them

If you want your holiday budget to stretch further this summer, using the right payment method abroad could save you a small fortune in unnecessary charges.

Published: July 12, 2026 at 9:00 AM

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According to Travelex's latest Travel Money Insights Report, around half of UK holidaymakers use a credit card while travelling and three in ten use a debit card. But many may not realise their bank charges foreign transaction fees every time they spend overseas.

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Travellers tend to use cards for larger transactions overseas because they are seen as safer, easier to use, and better for keeping track of spending than cash. However, many standard cards still charge foreign transaction fees of up to 2.99%, while some also apply additional transaction or cash withdrawal charges.

There are signs things are improving. The Co-operative Bank, for example, announced this week that it is scrapping its 2.75% fee on overseas spending across all its current accounts, meaning customers can now spend abroad without extra charges, just in time for the summer holidays.

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Chiara Cavaglieri, Which? banking expert, said: “You have challenger banks Starling and Monzo to thank for the spike in banks removing debit card fees for spending abroad.

“The likes of Co-operative Bank, First Direct, Lloyds and Virgin Money have followed in their footsteps by making sure customers aren't out of pocket when they use their debit cards outside of the UK.

“If yours hasn't made the same move, consider opening a new bank account to use on holiday – it may sound like a hassle, but it could save you hundreds of pounds.”

Top credit cards for holiday spending

If you prefer to pay using a credit card while you’re away because of the extra protection they offer, again there are plenty of fee-free options available.

If you don’t opt for one of these, according to MoneySuperMarket, if you were to spend £25 per transaction and make 50 transactions while you’re away (totalling £1,250), it could result in charges of £1.50 each time. That adds up to £75 in extra fees just for using your card.

The good news is that there are not only several credit cards that are fee-free when you use them overseas, but which also offer cashback on your spending. For example, the new Santander Rewards credit card offers 3% cashback worldwide for a year on most travel (not including flights), fuel and eating out. After that, you’ll get 0.25% cashback on all your spending.

There are no fees or interest on spending overseas, provided you pay off what you owe in full each month. However, interest plus a 3% fee (min £3) will be charged on overseas ATM withdrawals so you should avoid using this card to take out cash.

Side view of young woman using an ATM.

Don't get caught out by extra charges on withdrawals and transactions. Javier Zayas Photography/Getty Images

Similarly, the Lloyds Ultra Credit Card, offers 1% cashback on nearly all spending in the UK and abroad for the first year and then 0.25% after that. Make sure you clear your balance in full as soon as possible if using a travel credit card to avoid being hit by interest charges.

Whichever debit or credit card you plan to use while you’re away, if you’re asked whether you want to pay in the local currency or in sterling, always opt for the local currency. If you choose pounds, the retailer does the currency conversion, but rates can often be really bad, so you’ll end up paying more.

Kara Gammell, personal finance expert at MoneySuperMarket.com, said: “The last thing you want to worry about while on holiday is being ripped off when using your credit card to pay for things. By choosing the right type of card in advance, you can save yourself a packet as you won’t pay a fee for each purchase and some may even waive cash withdrawal fees. This means more of your money goes on your trip, rather than on fees.”

*This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.

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