How much will a specialist travel spending card save you?

Is it really worth using a card from the likes of Tandem or Monzo?

I’ve written before about why getting a specialist travel debit or credit card is the best way to pay overseas, but you might be thinking it’s more hassle than it’s worth.

But with the pound at its lowest level against the dollar in 28 months, and falling against the Euro, it’s more important than ever to reduce the cost of spending overseas when you go away. A good example of the impact is that when I first did this research for Shop Smart Save Money in June, it now costs you £6 more to get €100. That’s 6% more in just two months!

So to show you just how much money you’d actually save I’ve compared some of the different ways to spend on holiday to show just how much money you can save, based on a €1,000 spend.

The cost of €1,000

Before we can get into the different rates, we obviously need to know what we’re comparing it against – and that is the interbank rate. This is the official market rate, the one you’ll see on graphs and in the news when they talk about rates.  At the time of this research, €1,000 would cost £915.

It’s important to also say rates change all day, every day. So it’s incredibly unlikely you’ll get these exact amounts when you change your money. But the principles and the size of the savings are true. 

To make things a little easier I’ll also round up or down the total extra cost you’ll pay for each form of currency exchange.

Getting cash at the airport

Let’s start with what a lot of people do, and that’s getting their money at the airport. Big mistake. You will almost always get the worst rates airside once you’re through security. For example, when I put this together, 1000 euros at Travelex Manchester Airport would cost you an estimated £1,044.57 (based on the TravelMoneyMax tool). That’s less than one Euro to the pound. Awful.

Cost of €1,000 = £1,046

Extra cost = £130

Using your standard debit card

Another popular way – and possibly the most convenient is just to use your everyday debit card in shops, restaurants and bars. But most of these are going to add a fee every time you use your card abroad.

For example, with a standard Natwest account, you’ll get charged 2.75% load fee every time plus an extra 2% if you use an ATM. Santander has the same load fee, and then £1.99 on each ATM withdrawal or £1.25 on each purchase. While TSB has a larger 2.99% fee, then 1.5% extra on cash withdrawals and £1on every spend with your card.

So what does that mean in practice?  Assuming 50% spend on card transactions and 50% is cash withdrawals, and an average €50 transaction would add roughly if you’re using the Santander card., and 1,000 Euros would cost £955.95. Better, but not great.

Cost of €1,000 = £956

Extra cost = £41

Ordering cash in advance

So let’s go back to cash. Rather than a last-minute exchange at the airport, you can order in advance. With Travelex, you get a better rate, and that one thousand euros will cost £940.11.96. That’s still collecting it at the same Manchester Airport.

But you can do better by shopping around. When I looked the best of the high street providers was John Lewis and you’d pay £927.90, closely followed by Debenhams at £929.37. 

In big cities and London in particular, it’s possible to beat this as there are dozens of competing bureau de changes – just check those rates online on sites like Travelmoneymax from MSE. The best rate at the time of my research was £923.79 with ICE.

Cost of €1,000 = £928 (Debenhams)

Extra cost = £13

Using a specialist debit card

But you’ll get a perfect exchange rate with no charges is to get a specialist credit or debit card. There are few of these fee-free cards. For a debit card, the best is Starling Bank. There is no charge, not just for spending but also no charge on cash withdrawals. The cost for 1,000 euros with one of these is the Mastercard exchange rate, which will be pretty much the same as the Interbank rate, so around £915.

Cost of €1,000 = £915

Extra cost = £0

Using a specialist credit card with cashback

Or, if you’re confident you can clear the balance in full every month then you can save a little bit more with Tandem’s credit card. Again there are no fees and you’ll also get 0.5% back on every £1 you spend. But you will get charged interest on any cash withdrawals until you clear the balance. This is probably worth around 25p on our example. But you can avoid this completely by transferring the cash over immediately, which is what I do. So that’s a cost of £910.

Cost of €1,000 = £910

Extra saving = £4.58

How much you save with a specialist travel card

Versus the most expensive option, exchanging at the airport, using a Tandem credit card will save you a huge £135! That’s massive and works out as a 13% saving. And using a Debit card can be pricey too, adding around £40 to the cost.

But, of course, lots of people know to avoid the airport. And they might be using a few different ways to spend, a mix perhaps of high street swaps and spending on their normal debit card. That significantly reduces how much you’ll save with a specialist card. And in that case, you might not think getting a new card is worth it – especially if you’ve already prepaid for accommodation or aren’t likely to spend anywhere close to a grand while you’re away.

Even so, I’d argue it’s still worth getting one of these cards, or the smart Curve card, to cut out the extra fees. Here’s my pick of the best cards right now.

LISTEN: Everything you need to know about your holiday money

WATCH: On an episode of Shop Smart Save Money earlier this year I looked at all the different ways to spend overseas.