The best bank accounts for travelling and what factors are important.
For most people, banking is a straight forward process. In our day-to-day lives, we rarely have to consider what we’ll actually pay when we use our card or if we’ll be charged to do so. But that all changes once we’re out of the country. With travel being easier than it’s ever been, and continental Europe right on our doorstep, it’s important that you have a bank account that keeps up with your travel plans.
The rise of challenger banks has made international payments simpler and more affordable. The days of paying foreign transaction fees and high exchange rates could soon be behind us. With this in mind, we look at the best bank accounts to use when you’re travelling.
It can be hard to budget for a holiday if you don’t know exactly how much you’ll be paying for goods and services while you’re abroad. Sure, you can just take plenty of cash with you, but that’s neither safe nor practical.
High street banks will often charge a premium for such services, whether in fees or exchange rates.
Instead, most people rely on their usual current account and debit card to make payments. This can be an expensive way of doing things. High street banks will often charge a premium for such services, whether in fees or exchange rates. It’s therefore cost-effective and safe to choose a bank account that supports your travel plans.
Take NatWest as an example. They charge a Foreign Cash Fee of 2% of the value of the transaction (minimum £2, maximum £5) when you withdraw from an ATM using your debit card. They also charge a Non-Sterling Transaction Fee of 2.75% of the value of the transaction. Additionally, they charge a Foreign Purchase Fee of 2.75% (minimum £1) on the value of purchases made outside the UK or in a foreign currency. Those costs can soon spiral if you’re abroad for a long time and relying on your debit card.
What to Look for In a Bank Account for Travelling
There are a few considerations you should make when choosing a bank account for your travels. We’ve highlighted these below:
Perhaps the biggest factor is whether or not there is a charge for purchases, withdrawals, and transactions, and whether it’s free to use your account in the EU and worldwide.
Whether the bank provides an overdraft facility or not. These can be lifesavers when the unexpected happens.
Whether the bank has or relies on a smartphone app and having data to use it. Also look for whether it has Apple & Google Pay integration.
How easy it is to open. You may already be travelling or need an account as quickly as possible.
Whether you can make international transfers and how much they cost.
Whether the account provides a debit/credit card.
Whether the bank is FSCS protected.
By thinking about these different factors, you can choose a bank account that meets your needs. Some may be more or less relevant to you, so it’s important you identify what it is you require from your bank when you’re on the road.
Should I Use Cash or Card When Travelling?
There’s no right or wrong answer here, as each has their merits. Cash can be incredibly useful as you can exchange it before you travel, allowing you to budget ahead. It’s also convenient if you’ll be in places where card isn’t commonly accepted. However, it’s awkward to carry around, can be confusing, and can be a security risk.
A debit card is secure and usually allows you to withdraw local currency from ATMs. It’s easy to carry around with you too.
With a card, it really depends on the type of card. A debit card is secure and usually allows you to withdraw local currency from ATMs. It’s easy to carry around with you too. However, it may not work in all destinations and can have associated fees depending on your bank. Similarly, credit cards can be useful for purchases, but can be expensive for fees and can be more easily defrauded.
Pre-paid travel cards and travellers cheques can also have their merits. Ultimately, you may want to use a combination of methods. Having cash and your card can cover all of your bases.
Top Tips for Spending When You Travel
It’s useful to be prepared for banking when you travel. We’ve outlined our top tips for spending money overseas:
Pay in the local currency
If you’re given the option between, say, paying in pounds and euros, choose the latter. Retailers often use their own unfavourable exchange rates, meaning that paying in pounds can work out more expensive.
If you use a credit card, pay it off
Don’t let your holiday debts spiral out of control if you pay with your credit card. Make sure you pay it off each month, otherwise it could end up costing you.
Use a lock-in rate if using prepaid cards
Some methods of payment allow you to lock-in your exchange rate for certain currencies ahead of time. This can save you from market fluctuations when you’re travelling, making it easier to budget.
Check before you go
If you’re going to be using your current bank’s credit or debit card, make sure to check the fees and exchange rate before you go. This may allow you to work out whether taking cash or relying on your card is cheaper.
The Best Bank Accounts for Travelling
Now that you’re familiar with what to look out for when choosing your travel bank account, it’s time to look at some of the best options available. We examine the pros and cons of some of the most competitive bank accounts for travelling:
Allows you to top-up and hold multiple currencies at once.
Fee-free spending abroad.
Withdraw up to £200 per month from ATMs abroad.
Mark up of 0.5% applied on major currencies and 1% on other currencies during weekends.
Fee after initial £200 withdrawal limit is reached is 2%.
Why we love it:
Revolut is one of our favourite digital-only banks at the moment. For travellers, there’s so much that’s appealing here. It gives you the flexibility and freedom to keep on top of your finances when you’re abroad. From the moment you start the sign-up process, the whole experience is effortless, transparent, and functional.
The fact you can load multiple currencies is one of the most stand-out features of Revolut. It gives you the chance to secure the best rate ahead of your travels. However, even if you’re paying in GBP, the interbank rate you get on purchases is about as good as it gets.
Aside from the 0.5%-1% additional fee that you’re charged over weekends and the 2% fee after you reached your ATM limit, Revolut is about as competitive as we’ve seen.
N26 gives all of the features that a full bank account gives, as well as a MasterCard debit card. Although it’s established in Europe, it only recently came to the UK thanks to its European banking licence, which guarantees bank deposits of up to €100,000 (£89,000). It’s free to set up and maintain, although there is a premium account with added benefits.
The N26 app is one of its main selling points, allowing you to organise and track your money. You’ll also get the MasterCard exchange rate on transactions, which is often better than many other financial institutions. When you’re travelling, you can make withdrawals for free in EU counties, and only incur a small fee for those outside.
Allows you to spend anywhere with real exchange rates.
Convert money into required currency and spend for free.
Free ATM withdrawals of £200 per month.
Free to set up and maintain.
You must add £20 to order your card.
Tech support isn’t always available.
Why we like it:
The Borderless Account from TransferWise gives you the opportunity to make purchases and withdrawals internationally without fuss. The MasterCard that comes with the account includes a £200 limit for free cash withdrawals in the local currency. Additionally, you can convert your funds into different currencies with low rates and then spend it without fees. Unlike some other providers, you do have to add £20 to your account before you can get a card.
Add a Eurozone account and easily switch between them.
Low international transfer fees.
To get the best features there’s a monthly fee.
Have to pay to get a contactless card.
Why we like it:
Monese offers three different types of account. The basic one is free to set up, although a £4.95 fee is charged for a contactless card. It also charges for foreign withdrawals and has a higher exchange rate. However, the Plus and Premium accounts have much greater appeal. The currency exchange fee is just 0.5%, and you get six free cash withdrawals per month. The fee for the card is also waived. It’s really easy to get set up with a Monese account, which can all be done through the app. You can also add an account specifically for Eurozone countries and switch between GBP and Euro at the touch of a button.
No fees to get started and £200 monthly free withdrawal limit.
Fee-free transactions in any country that accepts MasterCard.
Plenty of features for splitting bills, setting budgets.
3% withdrawal fee after the initial monthly £200.
No interest on in-credit balance.
Why we like it:
Monzo consistently scores high on customer satisfaction ratings, and with good reason. It’s incredibly easy to get started and get your new card sent out to you. Once it arrives, you can start using the app to manage your money at home and abroad. You get instant notifications when you make a transaction, giving you a breakdown of costs in the local currency as well as in GBP. You’ll get the same MasterCard exchange rate we’ve seen before, with no costs on top when making transactions.
The cash withdrawal allowance is £200 per month, which is quite generous. However, the 3% charge after that makes it quite expensive.
Starling Bank is another establishment that has FSCS protection and offers a full current account. You’ll even get a small amount of interest on your balance; 0.5% up to £2000 and 0.2% on £2000 – £85,000. It has many features similar to Monzo and N26, such as the ability to separate money and set savings goals, as well as split bills.
When you’re travelling, you can make transactions and withdrawals for free using the MasterCard exchange rate.