The best ways to access your money while working in the UK
In this page we examine cost, security and convenience for working holiday makers like Australians, New Zealanders and Canadians
|Cash||Medium||Medium to High||Medium|
|Debit Cards - Overseas||Medium to High||High||Medium to High|
|Local Debit Cards||High||Low||High|
|Credit Cards Overseas||High||Medium to High||High|
|Pre-paid travel cards||High||Medium to High||High|
|Traveller's cheques||Low - Medium||Low||High|
If you are planning on working in the UK the easist way to avoid costly fees is to open a UK bank account.
Moving money to and from the UK can also be very costly but you can save significantly if you choose the right way to transfer money to the UK.
Also, don't miss our handy Money tips - below
It is always advisable to enter a country with at least a small amount of local currency on you. This will ensure that you are not stranded without foreign currency to cover small airport associated costs such as taxis, bus fares or trolley hire. Foreign currency can be exchanged at money exchange branches and bureau de change locations before you leave home or at the airport terminal. The down side is that you usually pay for the convenience in both the exchange rate and there is often a minimum charge.
Convenience costs and although using your debit card at overseas ATMs/cash point machines is definitely easier than organising foreign money exchange or traveller’s cheques; it is also much more expensive.
Bank fees charged for using foreign ATMs/cash point machines are much higher than at home and the exact amount often goes unnoticed until you return from your holiday or receive your next bank statement. Warnings now pop up on most UK cash point machines stating that additional transaction charges from the home financial institution will apply, but the exact amount is rarely shown.
In addition to your bank at home charging you, a charge is applied to transactions at foreign ATM/cash point machines. This charge is known as the ‘loading fee’, levied as a 2.75% commission on the total cost of your credit or debit card transaction. Providers refer to it as an ‘exchange rate administration fee’. When cash is withdrawn from foreign ATMs/cash point machines an additional charge is applied. This is levied by the card issuer and averages at 2% for credit cards and 1.5% for debit cards. Nationwide, Saga and Liverpool Victoria are among the providers that do not apply a loading fee, so if you are in the UK keep your eyes peeled for these cash point machines.
In addition, many overseas retailers now give customers the choice of paying in their home currency or the local currency. If you opt with the home currency, a dynamic currency conversion fee will be applied which is typically 4% of the total.
For those looking to set up a bank account in the UK to avoid exchange rate administration fees and foreign ATM / cash point machine transaction fees, learn how to open a UK bank account.
If you are simply travelling through a country, Credit Cards are often an excellent option.
There is no denying it, using a credit card when travelling is not only a convenient option but it also has some perks which appeal to any traveller;
- Relatively low cost
- Travel reward Credit Cards/points
- Cash advances (Warning: You usually do not get any interest free period)
Credit cards like Visa and Mastercard often only charge the interbank exchange rate plus a standard 1%. Some banks also charge an additional surcharge for on purchases made in a foreign currency. This charge may not exist, although it is a good idea to find out what the issuing bank or credit union of your card charges. (Some banks are charging as high as 4% !!)
In general a Credit Card in the right hands can be an excellent tool in your travels, particularly if you pay it off every month. Apart from costs, some cards have travel insurance, cash back, online fraud guarantees and travel rewards so choose wisely!
Now there is another option available for travellers who are sceptical about using their debit or credit card in foreign countries. Especially designed for travellers, specifically traveller’s under the age of 30, pre-paid travel cards are pre-loaded with funds before you leave home meaning there is no chance of over drawing money and therefore being stung with excessive interest fees. Apart from that, pre-paid travel cards operate in much the same way as a regular debit/credit card and can be used to purchase goods (with all the usual foreign transaction fees), from retailers and to withdraw money from ATMs/cash point machines. If you have funds left on your card at the end of your travels, you can choose to keep them on your card and top them up the next time you travel, or alternatively, withdraw the remaining cash from an ATM/cash point machine. The only negative is, like any bank or credit card, if your card is stolen or lost it can take days to replace. So it is a good idea to have a back up source.
A traveller’s cheque is a pre-printed, fixed amount cheque that requires a signature to pay for a good or service. In general, traveller’s cheques are an outdated and tiring form of money as traveller’s cheques are no longer as widely accepted by retailers and take some time to organize. However, traveller’s cheques do still have some benefits for the safety conscious.
Unlike cash, traveller’s cheques can usually be replaced by the issuing bank or financial institution if lost or stolen, and they never expire. They work on the basis that the purchaser is essentially giving an interest free loan to the issuer. This is how the issuer makes their profit, as these days most traveller’s cheques are commission free or charge a mere 1% commission on the total. It sounds appealing in light of the foreign credit and debit card transaction fees, but the hard truth is that traveller’s cheques are rarely accepted by retailers. Instead, holders of traveller’s cheques must visit a bank or bureau de change to exchange the cheque for local currency. This also requires the holder to carry an additional form of identification, such as a passport or driver’s licence, with them at all times for verification.
Before you leave home, make sure you have completed the following checklist…
- You are aware of the current conversion rate. Learn about exchange rates
- You have checked the amount left in your debit card or have checked what your credit card limit is.
- You have checked to see when your credit or debit card expires so that your cards remain valid the entire time you are away.
- You are aware of the hidden costs and foreign ATM/cash point machine fees charged by your bank or card issuer.
- You plan to pay off credit card cash withdrawals as soon as possible as there is usually no interest free periods and a higher rate of interest charged on these types of transactions.
- You are aware of the practice of dynamic currency conversion used by many retailers.
- You have at least two different sources of funds available at all times in case one of these fails on you.
- You have visited your credit card issuer’s website and followed the link to the ‘international ATM locator’ to check you will be able to withdraw funds from the country you are traveling to before you leave home. This is especially useful when traveling to remote or third world countries.
- You have made separate records of your card or traveller’s cheques and have left these details at home or in a very safe place in case your travel credit or debit cards are lost, damaged or stolen. The quickest way to do this is to photocopy the front and back of your cards to ensure you have all details, including the security numbers on the back of most credit cards. This will assist you in replacing your cards quickly.
- You have visited your bank branch to request a copy of your statements for the last three months and a reference letter confirming your banking history and status as a customer of their institution. This will assist you with setting up a bank account if you are relocating to another country and may be required when entering countries such as the UK on a working holiday visa to prove that you can financially support yourself.