Sunday 25 February 2018

Preserving your stash of holiday cash

Plan what you'll do for cash while overseas or you'll pay big fees

Cartoon July 5
Cartoon July 5

John Cradden

Bags all packed? Check. Passports all valid? Check. Booking reference numbers for flights, car hire, holiday home or hotel? Check. Sunblock? Check.

Cash? "Ah, sure I'll just bring my credit or debit card and use it to withdraw cash from an ATM while I'm over there."

Planning for your overseas holiday can be fun for the most part, but if you are complacent about how you transport your money, particularly if your destination is in a non-eurozone country, you might regret it.

That's because you could be stung for a variety of unexpected banking and credit card charges if you don't think ahead about how you can pay for things while you're over there.

The weakness of the euro should be weighing on your mind too if you're travelling to places like the UK or the US, as it will make your trip significantly more expensive.

Okay, I'm going to a eurozone country, so what are the charges for using my cards?

If you're travelling within the eurozone and you use your Visa or Mastercard debit or credit card to make a purchase, you should be charged exactly the same as you would if you were in Ireland.

The same should be true of using it to withdraw cash from an ATM, but the problem is local banks may impose their own charges for using their machines, which might be up to €3 per time, if using a card.

But I wouldn't get charged interest as long as I pay my next credit card bill in full, no?

Unfortunately, nearly all banks now charge credit card customers interest from the moment they withdraw cash. With Bank of Ireland, for instance, you'll be fleeced for interest at a rate of between 20pc and 21pc at least until the next repayment date on your credit card bill.

Only AIB and Permanent TSB don't hit customers for interest on cash withdrawals if they repay their credit card bills on time.

What if I pre-load my card before I go?

Yes, you can avoid the interest charges in these cases if you 'pre-load' your card with enough to cover the amount of cash you expect to withdraw. But you might be surprised to learn that you still won't avoid the typical cash advance fee of 1.5pc of whatever amount you take out of an ATM (or between €1.90 and €2.54 as a minimum charge depending on your card provider).

For instance, some users of AIB credit cards will still be charged a cash advance fee even if their account is in credit, so you should check with your bank or card provider if you're not sure.

How much would I be charged for using my cards outside the eurozone?

Outside the eurozone, using credit cards means extra fees for currency conversions of between 1.75pc to 2.25pc on top of any standard fees for transactions or cash withdrawals.

So if you used a Bank of Ireland 'Classic' credit card to withdraw £400 sterling while in Britain, you would end up paying a total of £15 (€21) - unless you pre-load your card, in which case it would be £9 (€13).

All these charges mean that if having access to cash is important to you, pre-loading your credit card and limiting the number of times you use it card for cash withdrawals while in a non-eurozone country is a sensible thing to do.

Debit cards are not immune to currency-conversion fees either; using your card to take out small amounts regularly will cost you as most banks will have minimum fees of as high as €3 per transaction.

I've sometimes used ATMs in England that offered me something called a 'dynamic currency conversion'. Is that cheaper?

Yes, some international ATMs offer 'dynamic currency conversion' whereby it asks if you want your transaction to be converted back to euros.

However, the chances are this won't save you much, if anything, over what your bank would charge you for converting your euro to whatever the relevant currency is, so the advice is to ignore it.

What about those pre-paid currency cards?

Yes, one way to sidetrack the fees and charges for using your debit or credit card in a non-eurozone destination is to get a currency card. An Post offers the PostFX card, a chip and pin card that you can fund with US, Canadian or Australian dollars or UK sterling and use anywhere that displays the Mastercard symbol.

It's a bit like a card version of the old travellers cheques, although you can only load it up to a maximum of £5,000, $9,000, AU$10,000 or $CA11,000.

The card is free and there are no charges for using it for purchases, but you'll pay a fixed fee every time you use it for an ATM withdrawal (£1.50 in Britain, $2.50 in the US, AU$3.50 in Australia and $CA 3.25 in Canada). Perhaps the tactic here would be to limit the number of withdrawals by taking out as much as you can in one go.

But when you come home, don't be tempted to spend any cash left on the card by paying for something in euro, because you'll be charged a hefty 5.75pc for the currency conversion back from US dollars or whatever the currency has been loaded onto the card. Just cash it in.

I don't mind carrying large amounts of cash, so could I shop around for the best possible FX rate for my euro?

Yes, this is certainly worth doing given the weakness of the euro, particularly amid the 'Grexit' crisis.

Irish FX specialists Fexco or ICE have 'click and collect' services whereby you can order currency online with no commission and collect at one of its locations around the country.

ICE operates from the Dublin, Knock and Shannon Airports, while Fexco's service is available from its own stores but also a number of credit unions around the country.

Your local An Post also waives commission for US dollars or sterling.

But don't assume that just because an institution advertises no commission that you'll automatically get more for your money, as the exchange rate may not be as competitive as others who do charge commission, such as the banks.

If you had €1,000 that you wanted to change into UK sterling or US dollars, as of last Wednesday (July 1), the best rate offered was from Fexco Click and Collect with £691.50 and US$1086.30. This was closely followed by AIB with £690.19 and US$1083.75, which includes commission of €6.35.

The next best rate was Ulster Bank with £688.20 and US$1079.70 (including 1pc commission), followed by An Post (no commission) with £686.50 and US$1078.10.

The worst rate was from Bank of Ireland, which offered £680 (for €996.74, rather than exactly €1,000) and US$1070 (for €998.65), closely followed by PTSB.

Some banks, such as AIB and Ulster Bank, offer free commission to pensioners and students, and if you're have an Ulster Bank Ufirst Gold account, you're not charged commission either.

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