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Personal Finance guide

How to avoid foreign exchange fees when travelling abroad

How to avoid foreign exchange fees when travelling abroad

With the Irish weather as unpredictable as it is, holidays are never too far from people’s minds. But if you’re planning a trip abroad, what are the best ways to avoid or at least reduce your foreign exchange fees?

1. Get to know what you’re being charged

OK. First things first. You need to get to grips with what you’re actually being charged.

Most people have no clue what they’re being charged every time they use their card abroad. So the first step is to find out what your bank's foreign exchange fees are. 

The good news is that if you’re travelling to one of the 18 other countries that uses the euro, there’ll be no additional fees or charges for using your card abroad. So whatever your bank charges you for using your card to withdraw cash or pay by contactless in Ireland, is what you’ll be charged abroad.    

However if you’re off to the UK, the States, Australia or any country that doesn’t use the euro then additional fees will apply. And they can be pretty hefty if you’re not careful.

Comparison of non-euro debit card fees

Bank

Point of Sale debit card charge

Cost of spending €100

ATM cash withdrawal fee

Cost of withdrawing €100

AIB

1.75% of Euro value, min €0.45*, max €11

€1.75

2.5% of Euro value plus commission of 1% (min €2 max €6) per transaction

€3.50

BOI

2.00% of Euro value, max €11

€2

3.5% of transaction value. Min €3.17, max €11.43 per transaction

€3.50

KBC

1.75% of Euro value, min €0.46, max €11.43

€1.75

3.5% of transaction value. Min €3.17, max €11.43 per transaction

€3.50

N26

No charge

€0.00

1.70% (no min)

€1.70

Permanent

TSB

1.75% of Euro value, min €0.46, max €11.43

€1.75

3.5% of transaction value. Min €3.17, max €11.43 per transaction

€3.50

An Post

3% - no cap

€3.00

€0.90 plus 3% of transaction value

€3.90

Revolut

No charge

€0.00

No charge

€0.00**

Ulster Bank

1% of transaction value (min €0.25, max €6) plus 1% currency conversion fee (min €0.25, max €6)

€2.00

2% (min charge €3, max €12), plus foreign exchange fee of 1.5%

€4.50

* AIB doesn't charge a minimum fee for contactless transactions

**First €200 free, then a 2% charge

Comparison of non-euro credit card fees

Bank

Point of Sale credit card charge

Cost of spending €100

AIB

Mastercard - 1.75%

Visa - 1.75% Europe region, 2.75% Rest of world  

€1.75 on Mastercard

€1.75 on Visa in Europe region

€2.75 on Visa ex Europe region

BOI

2.25%

€2.25

KBC

2.00%

€2.00

Permanent

TSB

1.75%

€1.75

An Post

2.65%

€2.65

Ulster Bank Classic

2.00%

€2.00

Ulster Bank Black*

0.00%

€0.00

*minimum income of €40,000 required to apply for this card

2. Use N26 or Revolut

Using N26 or Revolut is the simplest way to avoid foreign exchange fees and if you use either of these banks then you won’t need to take on board any of the other advice in this article.

Both N26 and Revolut have shaken up the banking sector since their launch a few years back. They both offer a host of novel services, which you can read about in more depth here. But a key benefit of these banks is their lack of foreign exchange fees.

As you can see from the tables above, all the traditional banks will charge you a 1.75% to 3% foreign exchange or ‘processing fee’ for purchases made with your debit card outside the Eurozone, which can really add up.

But N26 will charge you nothing while Revolut will charge you nothing on all major currencies up to a limit of €6,000 a month - after that there’s a small 0.5% fee.

What’s more, when converting your spend back into euro, N26 applies the Mastercard exchange rate at all times while Revolut applies the Interbank exchange rate with a 0.5% mark-up at weekends on major currencies and a 1% mark-up on less common currencies. Both these rates are likely to be better than the rate you’d get with one of the main banks.

If you’re withdrawing cash abroad, N26 will charge you a 1.7% flat fee while Revolut allows you withdraw the equivalent of €200 a month at no charge, after which a 2% fee is added. Both these fees are way more competitive than the 3-4% fee on average you’d be charged with the traditional Irish banks.  

3. Avoid smaller transactions with your debit card   

As you can see from the above tables, apart from N26 and Revolut, most of the banks charge a minimum fee for debit card purchases. As a result, you should avoid using your debit card to make lots of small transactions as your fees will balloon.

For example, spending the equivalent of €100 (about £85 or $115) on your card in one go will cost you €1.75 with AIB and €2 with Ulster Bank. However if you made 10 purchases for the equivalent of €10, you could end up paying €4.50 in fees with AIB if you paid by chip and pin each time and €5 with Ulster Bank.

Similarly, withdrawing €100 in cash in one go will cost you €3.50 with AIB, Bank of Ireland, KBC and Permanent TSB and €4.50 with Ulster Bank. However taking out the equivalent of €20 in five withdrawals will cost you €11.00 with AIB, €15.85 with AIB, Bank of Ireland, KBC and Permanent TSB and a whopping €16.50 with Ulster Bank.  

So for very small transactions, use local currency or pay with your credit card. However, if paying by credit card be careful with larger purchases…

4. Avoid larger transactions with your credit card

Although the minimum fee on debit cards makes them a poor choice for smaller payments, all the charges are capped at around €12 per transaction (the exception is An Post where the fee is uncapped - so be warned!)

This differs from credit cards where an uncapped flat fee of 1.75% to 2.75% is added.

This means the charges on a credit card for very large purchases will be far greater than on your debit card.

The only exception to this at present is the Ulster Bank Black Mastercard, which charges no foreign exchange fees, the only credit card on the market at present to do so.  

Bank

Cost of €850 (c. $1,000) purchase on debit card

Cost of €850 (c. $1,000) purchase on credit card

AIB

€11

€14.88 Mastercard

€14.88 Visa Europe region

€23.38 Visa outside Europe region  

BOI

€11

€19.13

KBC

€11.43

€17

N26

€0.00

N/A

Permanent

TSB

€11.43

€14.88

An Post

€25.50

€22.53

Revolut

€0.00

N/A

Ulster Bank

€12.00

€17 - Classic card

€0 - Black card  

5. Pay by card instead of withdrawing cash

The fees for ATM withdrawals are higher than for point of sale i.e. chip and pin or contactless transactions. So pay with your card where possible instead of constantly going to an ATM to withdraw local currency. However, as advised above, avoid using a debit card to pay for lots of small transactions.   

6. Be wary of foreign ATMs

In some countries ATM fees (as well as any other fees which your own bank might apply) are extremely common. This is particularly true of ATMs in pubs and nightclubs.  

In the States for example, many ATMs will charge you an extra fee of $3 or $5 for withdrawing cash, meaning a $50 withdrawal could end up costing you almost €7.50 in charges.    

This rule applies to Eurozone countries too so be careful.

7. Always pay in the local currency

It’s quite common when you go to pay for something in a non-Eurozone country to be offered the choice to pay in euro instead of the local currency.

The idea is that you can ‘lock in’ a guaranteed price for your purchase at the till and not have to worry about the exchange rate.

The problem is that the euro price you’re locking in will usually be worse than the price you’d be charged in a day or so when your bank processes the transaction.

So always decline the offer to pay in euro and pay in the local currency instead.   

8. Load your credit card  

Some banks will let you avoid their usual credit card cash advance fee if your account is in credit.  

For AIB Click and ‘be’ cardholders this doesn't apply. But for all other AIB credit card types, this fee will not apply if your account is in credit for the full amount of the transaction when it is debited to your account.

For other cardholders, check with your bank before heading abroad. 

9. Don’t get foreign exchange at the airport   

It goes without saying that the exchange rates on offer at the airport will be far worse than what you’ll get at the Post Office or your bank. So plan a bit in advance and don’t get ripped off in the airport lounge.   

10. Consider the An Post Currency Card

The An Post currency card is a contactless, prepaid Mastercard which allows you to top up the card commission-free in 10 currencies. You can load the card with money online or at your local post office and An Post promises that it's cheaper than paying for something with your credit card while abroad. The exchange rates you get are locked in on the date you top up your card, not the day you make the spend, which is a novel feature.   

However be warned - as with all prepaid cards you'll be liable for Government stamp duty of up to €5 a year. You'll also be charged an 'inactivity fee' of £2/$3.50 if you don't use the funds on the card for over a year. And if you use the card to withdraw cash you'll be charged £1.50/$2.50 per withdrawal. Yikes!  

And if you're a customer of Revolut or N26 this card definitely isn't for you as both these banks offer their own highly competitive foreign exchange fees as we've already mentioned. However if you haven't signed up for either of these accounts then the currency card is a worthy alternative to spending on your debit or credit card for chip and pin and contactless transactions.     



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