Bank account without foreign transaction charges

[CAMRAMan]

I'm off to Sweden for a few days in June. Sweden's pretty much a cashless economy these days, I'm told. I don't fancy paying transaction charges for every single small purchase, so is there an account or prepaid card I can get that avoids these charges?

[alfapete]

I have a Caxton card which does this and it was the best deal when I took it up about 2 years ago. Things may have moved on: try moneysupermarket or equivalent.

[Feanor]

I've been with RBS since the beginning of time, and I fairly recently took out a new CC with them that has no foreign transaction fees.

It seems no different to my previous card, but it was issued under different terms and conditions.
They were not able to shift my existing card to the revised T&Cs, I had to take out a new card.

[chrisbainbridge]

I use Revolut.

[Rod Marton]

I have an account with Starling which doesn't have foreign transaction charges.

[Pickled Onion]

There are two parts to an FX transaction: commission/fee and spread. Many CC will now offer "zero fee" but the spread will be large. It's like when you see a Bureau de Change offering "no commission" but the rate you get is crap. I recently made two identical purchases in USD, one I accidentally used my CC, the other not. The cost of the spread on the CC was greater than the transaction fee.

The challenger banks generally have good offerings. I use Revolut (not an actual bank), but others are also good, Starling, Monzo spring to mind. Revolut works like a pre-paid card, you load some cash from your actual bank using your phone, then spend it in whatever currency with the physical or virtual card. The spread is tiny for common currencies and very good for uncommon ones. You can also draw cash up to a certain amount a month on the same terms. One proviso, you'll pay a bit more at weekends as they hedge for the Monday rate. It's not a lot, but you can open an account in another currency and transfer between accounts on a weekday if it bothers you.

[Adam]

Open a Wise account, very good rates and once you load it up, has very good conversion rates.  Lets you hold multiple currencies, and swap between them, with a physical card and you can also generate an online only card.  Each currency pot has its own bank account.

[ian]

Cards that do a direct forex transaction will usually use favourable rates (to them, not you). It's a toss-up whether the difference is better or worse than paying an old-school commission. At the end of the day (literally) there's a cost to international clearing and the banks are to altruism what Scrooge is to philanthropy.

[MikeFromLFE]

For challenger banks they all seem to be much of a muchness - Chase Bank is a similar offering but also currently gives 1% cashback on all spending including foreign currency spend.

Kroo Bank is another challenger bank which has 'zero fees' for overseas use, but has a reasonable interest rate for positive balances.

Another account is the HSBC Global Card which allows you to hold various currencies virtually, but requires a huge number of hoops to open (mentioned in case you already have an eligible HSBC account).

[rr]

I use a chase card, good rates including no cash machine fees, it is a debit card with no overdraft so you have to ensure there is enough money in the account and it can sometimes be a little slow to process.
I also have a Halifax clarity credit card as a backup and for when you need a credit card (car hire etc).

[Jaded]

I got a Halifax Clarity Card after being stung by a pre-load card whose name I forget.

[yoav]

I use Monzo. It’s not my main bank so I just transfer money into it from my main account as I go along, which I can do from anywhere.

[robgul]

I have a Caxton card which does this and it was the best deal when I took it up about 2 years ago. Things may have moved on: try moneysupermarket or equivalent.

+1 for Caxton travel cash card - I've had one for about 5 years to use for anything abroad - easy to convert from currency to currency and (as at yesterday when I loaded quite a bit of cash in NZ$ and Euro) pretty good rates - and for a modest fee they offer a buy back at the same rate guarantee . . . if rates have worsened that's useful)

Don't use a credit card abroad - in most cases you'll be slaughtered by fees and poor rates.

[grams]

Cards that do a direct forex transaction will usually use favourable rates (to them, not you).

Monzo and several of the others mentioned claim their rates are the standard wholesale rates with no garnishing.

[Hot Flatus]

I have a Barclaycard visa for travel purposes

[Ham]

Cards that do a direct forex transaction will usually use favourable rates (to them, not you). It's a toss-up whether the difference is better or worse than paying an old-school commission. At the end of the day (literally) there's a cost to international clearing and the banks are to altruism what Scrooge is to philanthropy.

This. Historically, Halifax clarity has been one of the better ones, but I now use HSBC Global which has a virtually perfect exchange rate. That is, for eg, for my recent France trip I got 1.14/€ when the rate was 1.145/€, I can live with that. The account comes free with my current account, not sure about its general availability or cost.

[Hot Flatus]

The transaction charge only becomes lower than the unfavourable currency rate at a certain value of transaction.  If I use my HSBC card to buy an espresso in Italy, the transaction charge is more than the coffee. 

[jsabine]

Most banks these days claim to be using something closer to the mid-market rates - sometimes, if I remember, I compare transactions to the rates on xe.com, and have never been too outraged by any of Nationwide, Barclaycard, Starling, Clydesdale/Virgin.

I am *always* unimpressed by the figures offered by payment terminals that want to charge you in your home currency (always for your convenience, never for their profit), or by firms (Ryanair) that try to pull the same trick online but bury it in the small print.

[Mrs Pingu]

Another Caxton user here.

[Pickled Onion]

Cards that do a direct forex transaction will usually use favourable rates (to them, not you). It's a toss-up whether the difference is better or worse than paying an old-school commission. At the end of the day (literally) there's a cost to international clearing and the banks are to altruism what Scrooge is to philanthropy.

Yes of course there has to be some spread between buy and sell rates, but they are not like they used to be a few years ago. The spreads given by the cards mentioned above tend to be very small indeed.

For example Revolut right now are offering EUR at £0.85232/£0.85564 – that's a cost of 0.19% from mid. By comparison, the post office will sell euros "commission free" at £0.88582 - costing you 3.4% or over 17 times as much.

[ian]

Indeed, just making the point that they make the profit somewhere, either commission or rate. Of course, some are willing to take less than others.


Back during my Tidy-Haired Thought Leadership™ days I used to get cash from the kiosks in the airport, and those rates were extraordinarily rapacious, but they'd do a buy-back for unused cash which was handy because it made for easy expenses and I was never out of pocket for petty cash and I didn't end up with a drawer even more full of strange and exotic currencies that were doomed never to be used or exchanged. I rejoice in the fact I shall forever remain a multi-millionaire in Zimbabwe.

[Pickled Onion]

Indeed, just making the point that they make the profit somewhere, either commission or rate. Of course, some are willing to take less than others.

But they don't. They make the profit from the Visa fee. That 0.19% is less than 0.1 percentage points off the rate they pay, and there's no commission. That alone is not even going to cover costs.

Traditional CCs earn the visa fee *and* a foreign transaction fee *and* unfavourable rates.

[lissotriton]

Note for a credit card, if you get cash from an ATM or bureau de change, it will probably count as a cash advance. So it will start charging you interest immediately, even if you pay it off at the end of the month, or have a 0% offer.

[ian]

So they're hedging one fee against the rate. I think we're trending down the well of needless pedantry. Do the maths, enjoy your holiday, I don't think a couple of pounds either way is going to be life-changing.

[farfetched]

I've been using Revolut for years on  a free plan, it's enough for what I need which is occasional visits to the UK and for work Sweden/ Denmark.   If you want larger FX transactions then you need to take a paid plan, other than that don't make FX transactions outside business hours as the rate is less transparent.  I can't see where they make money, it's certainly not from me.