Martin Lewis has revealed a simple way for holidaymakers to cut a hidden 3% charge on every overseas purchase. The MoneySavingExpert founder warns that most high street banks add a 'non-sterling exchange rate fee' when you spend abroad, meaning a £100 purchase effectively costs £103.
How the hidden fee works
In a TikTok clip shared on This Morning, Lewis explained: 'Your bank gets a near perfect exchange rate on the day – the same as what's called the spot rate, the city market rates. When you spend on your card abroad though, normally the card company adds what's called a non-Sterling exchange rate fee of between 2.75 or 3%. So your hundred pounds worth of euros cost you £103.'
The solution: specialist cards
Lewis says switching to a specialist card eliminates this markup. 'With the specialist cards, they don't have that. So you get the same near perfect exchange rates that the banks or the card firms do.'
Top card recommendations
He judges cards on the cashback they offer. The Barclaycard Rewards credit card currently gives 0.25% cashback on UK and foreign spending. 'So you get perfect exchange rate and cashback,' he said. However, he warned: 'Only do this if you'll pay it off in full at the end of every month, or there is interest. That will credit score you to get it.'
For those preferring a debit card or avoiding a hard credit check, Lewis suggests two alternatives. The Chase card 'is the easiest one to get', requiring only a soft credit check and offering near-perfect exchange rates, no ATM withdrawal fees, and some cashback on UK spending. Alternatively, switching to First Direct gives a near-perfect exchange rate debit card plus a £175 switching incentive.
Additional expert advice
A spokesperson for travel experts Lapland Famille added: 'When spending abroad, choosing the right payment method makes a real difference. Specialist cards often work out far cheaper than standard bank cards. And if you're ever asked to pay in pounds or the local currency, always choose the local currency – paying in cash locally is another good way to avoid hidden conversion fees.'
With no need to switch your main bank account for the easiest option, Martin's advice shows that cutting the cost of spending abroad may be simpler than many travellers think – as long as you pick the right card before you go.
