Money abroad: I'm a card payment expert - here are 5 costly mistakes Brits should avoid when traveling

• Payment expert Richard Carter warns Brits about common but expensive mistakes when using cards abroad
• Hidden fees on debit and credit card transactions can quickly add up while traveling
• Choosing the wrong payment options can lead to unnecessary charges on purchases and cash withdrawals
• Some banks charge significantly higher fees than others for foreign transactions
• Planning ahead can help holidaymakers avoid unexpected costs and keep spending in check

A card payment expert is warning Brits about some common yet expensive mistakes they can make when using plastic abroad.

Richard Carter, CEO of the low-cost card payment app Lopay, has advised holidaymakers to plan ahead in order to avoid hidden and extra charges often applied to foreign transactions.

With years of experience helping small businesses reduce payment fees, Carter says that debit cards can charge £11.88 when withdrawing £250 abroad, while some credit cards may charge up to £14.95.

These fees can quickly add up when paying for everyday purchases, and even simple purchases can be costly. A typical debit card can charge £1.38 for a £50 spend, while a credit card can add a fee of £1.50.

Carter has shared five ways Brits can avoid extra fees when paying for meals or shopping overseas.

Always pay for things in the local currency - never convert to GBP

Whether using your credit or debit card, overseas customers are always asked whether they would like the transaction to be charged in local currency, or to be calculated in Pounds Sterling.

This will usually be an option on the card reader or at an ATM, but Carters says it is essential to always choose the local currency to avoid extra fees and save money. This is true whether you're shopping online or using a debit or credit card.

When you pay in the local currency you avoid being hit by the vendor or cash machine’s mark-up fee for converting the money. These additional charges are often around 3% but can be into the double digits.

Carter says: “This is the one rule I tell my family, friends or anyone who asks - don’t throw your money away just for the convenience of seeing the transaction appear in pounds and pence.

“Use a currency converter app on your phone if you’re unsure about how much the price will translate to in your more familiar currency.

“One thing that certainly won’t look familiar is the charge on your bank or credit card statement, once you’ve swallowed that hidden fee - and of course they all add up.”

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Get a fee-free debit or credit card

Alongside bringing some local currency with you, you’re best off finding a fee-free debit or credit card, that doesn’t charge to spend or withdraw cash.

Starling and Monzo banks both offer cards that carry no abroad charges. Household banks like Halifax, Lloyds and Barclays will charge you for using your card overseas.

Use a credit card over a debit card

Using a credit card abroad gives you protection under legislation from the Consumer Credit Act, known as Section 75. This hugely increases your chances of a refund, if the worst happens.

If goods are faulty, not delivered or a supplier goes bust, you will have the security of getting your money back. Section 75 doesn’t only apply to purchases made in the UK, but transactions made abroad too.

Section 75 does not apply to debit cards at home or abroad.

Avoid withdrawing cash from ATMs abroad

It's becoming more common for the actual cash machine to charge you when abroad. There's no way around this, but don't assume all ATMs charge the same, so do your research and choose accordingly.

Most debit and credit cards do also come with a cash withdrawal fee, which kicks in every time you use your card abroad.

This fee includes the currency conversion charge imposed by card firms like Mastercard, Visa or Amex and the administration fee imposed by the banks.

The average foreign transaction fee faced by debit card holders is 2.75%, while credit card holders can typically expect a charge of 2.95%.

Brits with an HSBC debit card can expect to face a 2% fee for withdrawals with a minimum charge of £1.75 and maximum charge of £5 for each transaction. They will also face a 2.75% currency conversion fee on top.

Someone with HSBC's Rewards Credit Card Mastercard will face a 2.99% transaction fee every time they use their card abroad.

If needs must and you need to withdraw cash - always complete the transaction ‘without conversion,’ if prompted by the ATM.

By selecting 'with conversion' or accepting the rate proposed by the terminal, the ATM provider can apply their own exchange rate, which is not the standard bank rate, and will make a profit on your transaction.

Cash is (sometimes) king

Many of us don’t bother bringing foreign currency with us on holiday, relying on credit or debit cards, or withdrawing cash via an ATM - which can be costly, as outlined previously.

Arranging currency via your local bank is actually one of the most expensive places to change money - so avoid it at all costs.

You should also steer clear of using a Money Exchange desk at the airport, the exchange rates at Bureaux de Change in airports is generally very poor.

You’re best off going to a travel money bureaux at supermarkets and retailers like Sainsburys, Tesco or Asda because they often offer the most competitive exchange rates.

Checking on currency converter sites like Money Supermarket, will give you the latest and best currency rates available. Your money can then be delivered to you or picked up before your trip.

Have you ever been caught out by hidden fees when using your card abroad? Or do you have your own money-saving travel tips to share? Let us know in the comments section.