Can you buy euros with a credit card?
If you’re planning to head to Europe for business or pleasure in the next few months, you’d be wise to start thinking about your travel money now. With Brexit on the horizon, the pound is looking increasingly unstable. This means you’re going to get fewer euros for your pounds if you exchange them now than you would have a few years ago. This can be a shock to your finances if you aren’t prepared. If you purchase before you travel, you have a chance to shop around for the best euro exchange rate.
Savvy travellers know that it’s always best to change your currency ahead of time and travel with the money you need, either in cash or as traveller’s cheques. This helps you to avoid the sky-high commission you’ll pay when changing money at the airport or using cash machines overseas. A common mistake that many travellers make is that they put their travel currency on a credit card, but this can be a costly error. Here’s why…
Many people reach for their credit card when buying foreign currency because they believe it to be safer. In reality, you’re paying a premium for this service. As many credit card owners will know, if they withdraw money from a cash machine using their credit card, they will be charged something known as a cash advance fee.
This is usually a percentage of the amount withdrawn and can vary between banks. Barclaycard charges just 2.99% while Virgin Money charges 5%. What many people don’t know is that the same fees apply when purchasing foreign currency on a credit card. Even if you don’t physically withdraw the money from a cash machine, you’ll still be charged a cash advance fee on your euros.
Another issue with purchasing euros on a credit card is that interest will be charged from the moment you purchase your currency. Even if you pay off the credit card in full every month, you’ll still pay the interest. It could be months before your trip and you’ll already be paying for your currency. In an ideal world, you should only use your credit card to withdraw money in an absolute emergency or you’ll end up paying over the odds.
Options for Travel Money
Now that we’ve ruled out purchasing your travel money on a credit card, what options are left for the savvy traveller?
One option is to use your debit card to either purchase currency or traveller’s cheques. This will allow you to shop around for the best deal before your trip. However, many people are understandably wary about travelling with large amounts of cash. And traveller’s cheques can be very inconvenient if you need your money in an emergency.
One option is to use a prepaid travel card which will allow you to top up your card before you travel and then use it like you would any other credit card. You can choose between cards that let you lock in an exchange rate before you travel or those who let you take advantage of the current exchange rates. The latter option could be risky, but if there is some good news about Brexit in the next few months and this helps to bolster the strength of the pound, your money could go a lot further.
It’s important to pay attention to the fine print when signing up for a prepaid travel card, as some can even charge you for not using them, which is a pitfall best avoided. You should also be aware that you can’t use this kind of card to rent a car and some petrol stations and toll booths in Europe won’t accept them. However, if you’re looking for a fuss-free way to spend money overseas, a prepaid travel card could be the solution.