COST YOUR CARDS

0 Comments | Sunday Mirror, Jul 9, 2006 | by ARTHUR EDWARDS

ARE you best paying by credit or debit cards when you're holidaying on the Costa? And how do you claim a refund if that Turkish rug unravels?

You probably already shop around for the cheapest flights, hotels or car hire - but are you as canny with your holiday cash? If you're not, it could be costing you dear.

These days, most of us rely mostly on plastic when we travel. But all too often we end up paying through the nose for the convenience.

Each year, we spend more than pounds 20billion on our cards abroad and pay pounds 500million in charges to the banks and building societies that issue them. And debit card issuers can charge us as much as pounds 5 a time to withdraw pounds 100 worth of euros out of a foreign ATM.

However, if you opt for the right card, you can avoid these charges. So follow our tips...

CREDIT CARDS

WHEN you use a credit card abroad, almost all card issuers sting you with what they call a "conversion", "handling" or "foreign usage loading" charge.

The charge is on top of the exchange rate, and is usually about 2.75 per cent of the value of the transaction.

Doesn't sound much? To put it simply, if you spend pounds 1,000 on your card while abroad that would mean being charged pounds 27.50.

But not all banks impose these fees.

Go online to www.moneyfacts.co.uk, the price-comparison website, to see at a glance which credit cards offer most favourable rates.

The best is Nationwide's Classic Visa (0800 302010, www.nationwide.co.uk) because it imposes no foreign usage charges whatsoever on any overseas transactions.

Several others, such as Saga and Liverpool Victoria, have no loading charges in the EU, but do impose them elsewhere.

Don't use any credit card to withdraw cash. Even if you settle your bill in full each month, you'll pay interest from the day of the withdrawal.

But do use your credit card to pay for big purchases. When you pay for something with a British-issued card, the credit card provider, as well as the seller, is responsible if something goes wrong or if the goods are faulty.

You'll get your money back provided the transaction was between pounds 100 and pounds 30,000.

DEBIT CARDS

THE cost of using debit cards to pay for things abroad can be even more expensive than using credit cards.

Along with the same 2.75 per cent loading, some card issuers levy an additional flat fee per transaction. For instance, it's 75p with NatWest, pounds 1 with Lloyds TSB, and pounds 1.50 with Halifax.

You may also be paying a tidy sum each time you use your debit card to make a cash withdrawal from a foreign ATM.

As well as that loading charge of usually 2.75 per cent, there's normally a further fee for each withdrawal. With NatWest, it's 2.25 per cent -so taking out pounds 100 worth of euros on a NatWest debit card will cost you pounds 4.90.

By contrast, when you use Nationwide's FlexAccount debit card overseas, there are no loading charges, no transaction fees, and no cash withdrawal fees.

To save money, try to avoid taking cash out of ATMs in very small quantities with your debit card because many card issuers impose a minimum fee every time you make a withdrawal.

PRE-PAY CARDS

THESE schemes are offered by the Post Office (www.postoffice.co.uk), American Express (www.americanexpress.co.uk) and Travelex (www.travelex.co.uk).

They let you pre-pay funds on to a plastic card, then use your card to withdraw money from ATMs. You can also pay for goods at participating shops and can top up the card with more money at later dates. If the card is lost or stolen, you'll get your money back. They offer the same security as travellers' cheques (which are becoming less popular). In fact, some companies are marketing their cards as an electronic version of the travellers' cheque.

But the cards can be costly to use. The Post Office's Travel Money Card costs pounds 10 and the Amex Travellers Cheque Card costs pounds 20. The Travelex card comes free but its ATM withdrawal fees are a steep pounds 2.50 each time.

TIPS TO SAVE CASH

CHECK your statement or look on the website to find out about hidden charges BEFORE you travel - you may find that one of your cards is less expensive than another.

DESPITE all the charges, you'll still almost certainly be better off using plastic rather than getting money from bureaux de change, whatever cards you have in your wallet.

PAY for souvenirs or services with a credit or debit card. By doing so, you'll incur lower charges than taking money out of an ATM and paying in cash.

WATCH out for "dynamic currency conversion" where shops and hotels convert Visa or Master Card bills into sterling instead of leaving them in their local currency. Exchange rates are usually lousy.

SIGN up to the Card Protection Plan (0870 608 1529, www.cpp.co.uk). With a single free phone call, you can cancel all your cards in your wallet and get new ones ordered. The service costs from pounds 20 a year.