Revealed! The 3 best debit cards to use abroad

If you're one of millions of Brits set to jet off overseas later this year, it's worth ensuring you're taking the right card with you. If you don't, you could be stung with hefty charges EVERY time you use your card abroad.

In this article, we take a look at some specialist bank accounts that enable you to swerve these typical fees, helping your euros, dollars, dinars, or lira, go that little bit further.

Why is it important to take the right card with you overseas?

As countries relax their Covid-19 restrictions, UK citizens are seemingly eager to head overseas this year. According to research by American Express, roughly half of Brits said they'd travel abroad in 2022.

However, even if you get yourself a good deal on a hotel, find cheap travel insurance, and book flights well in advance, travel is often an expensive venture. Perhaps the easiest, most straightforward way to cut the cost of your trip is to ensure you take the right card with you abroad. That's because if you simply use your normal, bog-standard debit card while overseas, it's likely you'll be stung with an array of nasty charges.

Travel debit cards: Typical spending charges

Charges for using your card overseas can differ between providers. So, to take an example, let's explore the charges on a €50 overseas transaction on a (non-Platinum or Premier) Lloyds debit card.

Lloyds charges customers a 2.99% exchange load on all overseas transactions. There's also a fixed 50p charge every time customers spend on their card overseas. So, with one pound being worth 1.18 Euros, as of 11 July 2022, spending €50 on a Lloyds debit card would cost £44.29. That's £42.30 (the true exchange rate), plus a 50p transaction fee, and a 2.99% exchange load (£1.49).

Yet, on a card that doesn't charge for overseas spending, the cost would be in the region of £42.30. That's nearly a £2 saving. While this may not seem a lot, remember that we're only looking at a single €50 transaction. For spends greater than this, the difference will be magnified.

Travel debit cards: Typical withdrawal charges

If you like to withdraw cash on your debit card while abroad, you'll need to be aware of overseas ATM withdrawal charges. These are typically more expensive than fees that apply to overseas spending. For example, withdraw cash on a Lloyds debit card abroad and you'll pay a fixed £1.50 cash withdrawal fee, in addition to a 2.99% exchange load. So, for a €50 overseas cash withdrawal, a £2.99 fee will apply. (£42.30, plus a £1.50 transaction fee, and a 2.99% exchange load).

Importantly, some overseas ATM providers will charge an additional fee on top of this. Depending on the country, these are sometimes difficult to avoid regardless of the type of plastic you have.

Dynamic currency conversion warning

Whether you're spending or withdrawing cash overseas, you'll sometimes be offered the chance to pay in your home currency. This is known as 'Dynamic currency conversion' and is often best avoided.

While paying in pounds will allow you to avoid any overseas transaction fees charged by your debit (or credit) card, exchange rates offered by overseas retailers or cash machines are often dire. As a result, it's almost always better to pay in the local currency.

What are the best travel debit cards available right now?

Now we've touched on typical fees charged on bog-standard debit cards when used abroad, it's worth knowing that, right now, there are THREE banks that won't charge you when you use their debit card overseas. Here's the lowdown.

1. Chase Bank.

UK newcomer, Chase Bank offers an app-only bank account that comes with a debit card that won't charge you when you use it abroad. There are some withdrawal limits to be aware of however, though they're pretty reasonable - you can't take out more than £500 per day, or £1,500 per month, from an overseas cash machine. There's no limit on overseas spending.

As an added bonus, Chase also pays 1% cashback for one year on all spending made on its debit card - even on overseas purchases!

If you're thinking about opening this account, it's worth knowing that Chase only conducts a 'soft' credit check. This means that applying for its account won't impact your credit score in any way.

2. Starling Bank.

Another bank account that doesn't charge for overseas use is Starling Bank. Its app-only account allows fee-free spending, and cash withdrawals made overseas. You can make six withdrawals a day, or take out a maximum of £300 per day, which should be more than enough for most. There aren't any caps on overseas spending.

Like the Chase Bank account above, if you apply for this card, you'll only undergo a 'soft' credit check. You'll only face a 'hard' check if you apply for an overdraft.

3. Virgin Money.

Virgin Money's M Plus account is another that doesn't charge for overseas spending or cash withdrawals. It isn't app-only unlike the Chase and Starling accounts above, as you can open and manage it online. Overseas cash withdrawals are limited to £500 per day.

Aside from its usefulness abroad, the account also pays 2.02% on up to £1,000, which is a nice little bonus. However, if you've savings it's worth checking out our best savings guide for other options.

A small word of warning with this account: Unlike the Chase and Starling accounts, if you apply for this account you'll have to undergo a 'hard' credit search which will be recorded on your credit file. While this isn't anything to be overly concerned about, it's something to be aware of. See our article that explains the differences between a hard and soft credit search.

Travel debit cards vs Travel credit cards

If you'd rather not open a new bank account, there's nothing wrong with opting for top travel credit card instead. These cards work similar to travel debit cards, and can facilitate fee-free overseas sending and cash withdrawals. However, if you withdraw cash on a travel credit card, it's likely that you'll be charged cash withdrawal interest until the day you pay it off. For more on this, see our article that explains the dangers of withdrawing cash on a credit card.

It's also worth bearing in mind that when you apply for a credit card, you'll undergo a 'hard' credit search, which is recorded on your credit file. This isn't always the case with travel debit cards, where some only require a 'soft' search.

Also, as you are technically borrowing money whenever you use a credit card, if you do go for a travel credit card, it's worth setting up a direct debit to automatically repay what you owe every month. If you don't repay in time, you'll face hefty interest charges which will almost certainly wipe any gains you'll have made by dodging overseas fees.

So while there's no best option between travel debit and travel credit cards, it's worth understanding the differences between the two. For more information on getting a credit card for overseas use, take a look at our top travel credit card guide.