How to avoid foreign exchange fees when travelling abroad

1. Get to know what you’re being charged

OK. First things first. You need to get to grips with what you’re actually being charged by the bank you have your current account with.

Most people have no clue what they’re being charged every time they use their card abroad. So the first step is to find out what your bank's foreign exchange fees are. 

The good news is that if you’re travelling to one of the 19 other countries that use the euro, there’ll be no additional fees or charges for using your card abroad. So whatever your bank charges you for using your card to withdraw cash or pay by card in Ireland, is what you’ll be charged abroad.    

However if you’re off to the UK, the States, Australia or any country that doesn’t use the euro then additional fees will apply. And they can be pretty hefty if you’re not careful.

Comparison of non-euro debit card fees

*AIB doesn't charge a minimum fee for contactless transactions

**Free up to €1,000 a month, then 0.5%

***First €200 a month free (max 5 withdrawals)

Comparison of non-euro credit card fees

2. Use N26 or Revolut

Using N26 or Revolut is the simplest way to avoid foreign exchange fees and if you use either of these banks then you won’t need to take on board any of the other advice in this article.

Both N26 and Revolut have shaken up the banking sector since their launch a few years back. They both offer a host of novel services, which you can read about in more depth here. But a key benefit of these banks is their lack of foreign exchange fees.

As you can see from the tables above, all the traditional banks will charge you a 1.75% to 3% foreign exchange or ‘processing fee’ for purchases made with your debit card outside the Eurozone, which can really add up.

But N26 will charge you nothing while Revolut will charge you nothing on all major currencies up to a limit of €1,000 a month - after that there’s a small 0.5% fee.

What’s more, when converting your spend back into euro, N26 applies the Mastercard exchange rate at all times while Revolut applies the Interbank exchange rate with a 0.5% mark-up at weekends on major currencies and a 1% mark-up on less common currencies. Both these rates are likely to be better than the rate you’d get with one of the main banks.

If you’re withdrawing cash abroad, N26 will charge you a 1.7% flat fee while Revolut allows you to withdraw the equivalent of €200 a month at no charge, after which a €1 or 2% fee is added. Both these fees are way more competitive than the 3-4% fee on average you’d be charged with the traditional Irish banks.  

3. Avoid smaller transactions with your debit card   

As you can see from the above tables, some of the traditional banks charge a minimum fee for debit card purchases. As a result, you should avoid using your debit card to make lots of small transactions as your fees will balloon.

For example, spending the equivalent of €100 (about £85 or $115) on your card in one go will cost you €1.75 with AIB and PTSB. However if you made 10 purchases for the equivalent of €10, you could end up paying €4.50 in fees with AIB if you paid by chip and pin each time and €4.60 with Permanent TSB.

Similarly, withdrawing €100 in cash in one go will cost you €3.50 with AIB, Bank of Ireland, Permanent TSB and the Credit Union. However taking out the equivalent of €20 in five withdrawals will cost you €10.00 with AIB, and a hefty €15 with the Credit Union and €15.85 with Bank of Ireland, and Permanent TSB.  

So for very small transactions, use local currency cash if you have it or pay with your credit card. However, if paying by credit card be careful with larger purchases…

4. Avoid larger transactions with your credit card

Although some of the minimum fees on debit cards can make them a poor choice for smaller payments, all the charges are capped at around €11 or €12 per transaction (the exception is An Post Money where the fee is uncapped - so be warned!)

This differs from credit cards where an uncapped flat fee of 1.75% to 2.75% is added.

This means the charges on a credit card for very large purchases will be far greater than on your debit card. The exception is An Post.

*Free up to €1,000 a month. Then 0.5% fee is added.

5. Pay by card instead of withdrawing cash

The fees for ATM withdrawals are higher than for point of sale i.e. chip and pin or contactless transactions. So pay with your card where possible instead of constantly going to an ATM to withdraw local currency. However, as advised above, avoid using a debit card to pay for lots of small transactions (unless you're using Revolut or N26 of course).    

6. Be wary of foreign ATMs

In some countries high ATM fees or ATM service charges are extremely common. This is particularly true of ATMs in pubs, nightclubs and forecourts. 

In the States for example, many ATMs will charge you a fee of $3 or $5 for withdrawing cash, on top of the minimum foreign exchange fee of around €3 that your own bank will apply, meaning a $50 withdrawal could end up costing you almost €7.50 in charges. If not more. 

High ATM service charges are common in many Eurozone countries too so be careful.

7. Always pay in the local currency

It’s quite common when you go to pay for something in a non-Eurozone country to be offered the choice to pay in euro instead of the local currency.

The idea is that you can ‘lock in’ a guaranteed price for your purchase at the till and not have to worry about the exchange rate.

The problem is that the euro price you’re locking in will usually be worse than the price you’d be charged in a day or so when your bank processes the transaction.

So always decline the offer to pay in euro and pay in the local currency instead.   

8. Load your credit card  

Some banks will let you avoid their usual credit card cash advance fee if your account is in credit.  

For AIB Click and ‘be’ cardholders this doesn't apply. But for all other AIB credit card types, this fee will not apply if your account is in credit for the full amount of the transaction when it is debited to your account.

For other cardholders, check with your bank before heading abroad. 

9. Don’t get foreign exchange at the airport   

It goes without saying that the exchange rates on offer at the airport will be far worse than what you’ll get at the Post Office or your bank. So plan a bit in advance and don’t get ripped off in the airport lounge.

However if you're a customer of Permanent TSB remember that it no longer buys or sells foreign exchange currency at its branches.

10. Consider the An Post Currency Card

The An Post currency card is a contactless, prepaid Mastercard which allows you to top up the card commission-free in 16 currencies (including the euro). You can load the card with money online or at your local post office and An Post promises that it's cheaper than paying for something with your credit card while abroad. The exchange rates you get are locked in on the date you top up your card, not the day you make the spend, which is a novel feature.   

However be warned - as with all prepaid cards you'll be liable for Government stamp duty of up to €5 a year. You'll also be charged an 'inactivity fee' of £2/$3.50 if you don't use the funds on the card for over a year. And if you use the card to withdraw cash you'll be charged £1.50/$2.50/€2 per withdrawal.  

There is also a charge of 1.25% on euro currency purchases and top-ups. 

If you're a customer of Revolut or N26 this card isn't really for you as both these banks offer their own highly competitive foreign exchange fees as we've already mentioned. However if you haven't signed up for either of these accounts then the currency card is a worthy alternative to spending on your debit or credit card.     

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While you’re here, don’t forget to review your other household bills and compare deals for services such as energy, broadband, banking, and insurance products.

Read more

As well as wanting to avoid foreign exchange fees, you'll also want to avoid roaming fees. Here's our guide on how to avoid roaming fees when travelling outside the EU. 

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