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About to head on holiday and want more to spend? Pick up one of the best debit and credit cards to help you avoid overseas fees

Published: 02:43 EST, 4 April 2013 | Updated: 10:51 EST, 15 July 2014

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A holiday is costly enough without the added horror of returning home to find your bank statement littered with extra fees and charges after using your card overseas.

But there are ways to avoid extra costs when withdrawing money or using your credit or debit card on holiday. Here we pick the best accounts which offer small or, even better, no fees - a worthwhile money-saver, particularly if you are a frequent-flyer.

And with the pound having risen to its highest level against both the euro and US dollar and many other currencies for some time, cutting back on charges for paying overseas will give your spending even more of a boost this summer.

Just make sure that you leave yourself time to apply before going away...

On holiday? Make sure you're not spending too much on fees

Current accounts

They may be free to use at home, but debit cards can be serious offenders when it comes to extra holiday costs.

Charges can quickly add up, with some providers charging £1.50 every time you use your card, loading exchange rates and adding extra fees for taking out cash.

NatWest, for example, charges an extra 2 per cent of the value of the transaction, with a minimum of £2 and a maximum of £5, as a Foreign Cash Fee if you take out cash and then adds an extra Non-Sterling Transaction fee of 2.75 per cent.

That means that if you take £100 worth of euros out of the cash machine, the bank will take £4.75 back off you in charges.

Even if you don't take out money and you buy something with your card it charges a 2.75 per cent Foreign Purchase Fee.

Barclays will charge you a 2.99 per cent Non-Sterling transaction fee for getting out cash and making purchases and adds another £1.50 charge for cash withdrawals unless the ATM is owned by Barclays, or one of the limited numbers of its partners in the Global Alliance.

Big charges mean that you should avoid taking out small amounts of cash often and try to take out larger amounts less regularly, although this brings its own risks in terms of theft.

Luckily, if you don't want to pay out to spend, there are a few options out there that can help you to avoid extra costs. We round-up the best bank accounts and credit cards below.

GET A FREE CURRENCY CARD AND WIN A TRIP TO MALTA WITH FAIRFX

Holiday time: Could you win a free trip to Malta with your family?

One of the best ways to help your holiday cash go further is to take advantage of the strengthening pound and buy holiday currency now.

A pre-paid currency card will allow you to do this, and help you avoid wasting your spending money on hefty bank transaction fees.

This is Money has teamed up with FairFX to offer readers a FREE currency exchange card, AND a chance to win a family trip to Malta.

Readers will need to load £200 to a FairFX pre-paid card to enter the competition but they could bag themselves a top prize of a seven night, four star trip for the family.

The competition runs until 5:30 July 31.

Norwich and Peterborough Building Society - best for spending

N&P's Gold Classic account offers a number of free services, helping you to save money when managing your finances.

Stress free: Pick the right card and you can avoid spending extra on holiday

No overseas charges

First and foremost, this account ticks all the boxes when it comes to fee-free foreign transactions.

Once again you will have to pay the exchange rate, but Norwich and Peterborough Building Society will not charge you for either using your card or withdrawing money from an ATM abroad.

Bear in mind that you must either have £5,000 in it or pay in £500 a month to avoid a £5 monthly charge for the account.

However, it is not just the free overseas spending that makes this account so appealing.

Other eye-catching deals include a £250 interest-free overdraft for six months when you switch, and free Sentinel Gold cover for your personal belongings.

Coverage includes up to £200 to replace a missing handbag, purse, wallet or briefcase if stolen and up to £11,750 emergency cash if you are stranded abroad.

You can claim up to £600 for replacement locks and keys and a 24 hour locksmith is on hand.

Credit, debit and store card issuers will also be contacted if your cards are lost or stolen - and you can claim up to £250 for personal money, if that is lost or stolen, too.

The final cherry on the cake is an offer which comes free with the account that allows you to trade shares at a discounted flat rate of £8.95 online or £14.95 over the phone.

Current account holders also have exclusive access to a range of savings accounts with preferential rates.

Online and telephone banking and text and email alerts will help you to manage your account and avoid going overdrawn. And, so long as you pay in £500, or maintain a balance of £5000, there is no monthly fee - otherwise you will be charged £5. Interest is not paid on your balance.

Watch out for

If you often find yourself overdrawn, you will need to take care. Agreed and unagreed overdrafts both incur interest at a rate of 17.9 per cent, as well as a monthly £5 fee. Unapproved overdrafts cost £19 a month, and paid and unpaid charges will clock up an additional £15 each. However, Norwich and Peterborough do allow a £10 fee-free buffer, just in case you go slightly over by mistake.

It does, however, offer a free £250 overdraft for the first six months when you switch and overdraft matching if you transfer your account to N&P.

If you use the dedicated N&P switching service to move your direct debits and standing orders across to your new Gold Classic account, then you will benefit from no charges and no interest on your overdraft for the first six months. Charges and interest will apply if the £250 limit is exceeded.

This Is Money verdict

This is a great account for anyone that regularly uses their card abroad. The possessions insurance is also a nice touch – with handy free services if you find yourself in a fix on holiday or at home.

Cumberland Building Society’s Plus Current Account also charges no foreign transaction fees - but it is only available to locals

You can find a list of all Cumberland branches here.

Travel Deals Of The Week

Metro Bank - good for Londoners and Europe

Metro Bank's current account is a relatively small newcomer, proud of its customer-centric approach to banking. Its current account is a straightforward, no-frills option.

No overseas charges in Europe

If you travel a lot, it could be a great money saver – although you will have to pay the going exchange rate, Metro Bank will not charge you for either using your card or withdrawing money from an ATM abroad.

Outside Europe:

Customers will now have to fork out for 1.9 per cent to make purchases and withdrawals in the rest of the world, as well as an additional £1 flat rate charge to take out the foreign currency from an ATM.

But, with the average fee between 2.75 and 2.99 per cent this is still fairly competitive, as is the flat rate charge which most banks set between £1.50 and £2.

What else?

Online and telephone banking and text and email alerts will help you to manage your account and avoid going overdrawn. There is no monthly fee and no interest paid on your balance.

Metro Bank will help you through the switching process – all you have to do is fill out a form and they will transfer your direct debits and salary to your new account.

If you’re not already a Metro Bank customer you will need to go into a branch to open an account. However, if you qualify for a current account, staff can print out a cheque book and debit card while you wait. You must be over 18 to apply.

More...

Watch out for

If you don’t live or work within the radius of the M25, this may put you off signing up because, at present, Metro only has a few branches - and most are in London and the South East.

Also, if you often find yourself overdrawn, you will need to take care. Agreed overdrafts and unagreed overdrafts both incur interest at a rate of 15 per cent, which will be calculated daily on your account and applied monthly. There is no maximum, so watch out as interest will add up.

Although you are not charged for being overdrawn, you will have to fork out £10 for paid and unpaid items.

Charges are capped at six a month - but bear in mind you may have to start paying interest on them if it tips you into the red.

This Is Money verdict

This is a great account for anyone that regularly uses their card in Europe and who occasionally strays outside it. Its main attraction is that it makes life easy - you don't need to think about going into a bank or taking all your cash out at once to avoid lots of charges in Europe.

However, if you do often find yourself overdrawn, fees and interest will quickly cancel out any savings you make on foreign transaction fees.

ANY OTHERS?

Nationwide also offers fairly low fees compared to other providers on both its free FlexAccount and its FlexPlus Account.

Both purchases and cash withdrawals incur a 2 per cent handling fee when using a FlexAccount debit card overseas and It costs just £1 to make a withdrawal.

The FlexPlus Account costs £10 a month, but it will not charge any handling fee or withdrawal charge for taking money out of a foreign ATM.

M&S Bank has launched a free Current Account which charges no fee for ATM withdrawals while abroad. Customers will still be charged a 2.75 per cent handling fee.

The Post Office also offers the same deal, a 2.75 per cent transaction charge on foreign usage but it charges £1.50 for making a withdrawal on its Control, Standard and Packaged Accounts.

More to spend: Saving money on spending and cash fees means you will have extra for your trip

Credit cards

Most cards add around 3 per cent cost to the exchange rates banks themselves get. You can avoid this by picking a specialist card, which helps you to access perfect exchange rates that challenge even the best bureaux de change. Make sure you repay in full to avoid interest.

Halifax - the best credit card for overseas spending

The Halifax Clarity credit card is currently the market-leading no-frills option for overseas spending.

No fees!

It charges no fees for spending abroad anywhere or any extra for withdrawing cash at home and abroad, which is usually a big no-no on a credit card. And there is no annual fee - so there are zero extra costs as long as you pay off your balance in full every month.

Additional cards on the same account are available and you can manage your account online.

PROTECT YOUR SPENDING

Another major bonus if you are spending on a credit card is the consumer protection you are entitled to, under Section 75 of the Consumer Credit Act 1974.

Put simply, if you use the credit card to buy something worth more than £100, here or abroad, the card issuer is equally liable if something goes wrong.

Watch out for

Interest is charged immediately at the card’s standard rate of 12.9 per cent.

Still, if travellers pay off their balance promptly and so don't incur any interest, the fee-free structure means this will work out cheaper than withdrawals with most debit cards.

You can't preload the card with a credit balance for spending.

You will be charged £12 if you pay your balance late, have a payment returned or go over your limit.

This is Money verdict

You get a near-spot on exchange rate and are charged no fees with this card, making it the cheapest way to spend abroad – as long as you pay your bill in full at the end of the month to avoid interest charges.

If you are going to pay off your holiday credit card bill over several months, a 0 per cent spending card will probably be better.

Saga - good for over 50s

Over-50s provider Saga offers a Platinum Credit Card which allows you to pay for goods and services abroad, without forking out for foreign currency fees on transactions. You can also benefit from discounts on Saga holidays if you pay using your Platinum card.

You will pay for taking out cash, however.

No overseas charges

Saga: Good holiday offers if you're over 50

As well as steering clear of overseas charges, when you use your Saga Platinum credit card on board any of Saga’s cruise ships, you will enjoy a 5 per cent discount, helping your money go further on holiday.

In addition, if you book a Saga holiday with your Saga Platinum credit card you will only pay a 1 per cent transaction fee, rather than the standard 2.5 per cent cost.

Read more about which holidays are available with Saga.

The Saga Platinum online service also allows you to keep track of all your spending, even when you’re on holiday. You’ll be able to check recent and past transactions and request a credit limit increase while abroad.

Platinum card holders will benefit from 0 per cent on purchases and balance transfers for the first nine months (with a 3 per cent balance transfer fee). Interest then jumps to a representative 11.9 per cent APR (variable) on purchases

You can enjoy up to 55 days of interest free credit on all withdrawals - at home and abroad. This will also apply to purchases after the 9 months introductory offer is over, which will help you to continue to spread the cost of your spending.

Watch out for

If the balance is always settled in full by the payment due date. After that, interest will be charged from the date the transaction is debited to your account.

There is a 2 per cent fee (minimum £2) for each cash advance, whether it is made abroad or in the UK.

Remember, although Saga will not charge you for your overseas spending, a local bank processing the cash withdrawal may apply a surcharge.

This is Money verdict

If you regularly holiday with Saga, or are planning to, this card is a no-brainer as there are lots of perks and discounts available.

However, if you want to use your card to withdraw cash during trips, fees will quickly add up - you may be better off going for Halifax's Clarity option.

Capital One - best for those without a squeaky-clean credit rating

Sadly those struggling with a less-than-perfect credit rating can find it difficult to be accepted for the most competitive credit cards including when it comes to overseas deals.

But Capital One is offering a decent deal on it's Classic Extra Credit Card which is designed for those who would struggle to be accepted elsewhere.

The card comes with a range of perks including fee-free foreign purchases. The card provider will also reward customers with £10 each year in their account for repaying on time and it pays 0.5 per cent cashback on customers' spending.

Watch out for

Because the card is aimed at those with a low credit score it does come with high interest rates on borrowing, set at 34.9 per cent.

Cardholders will also need to avoid withdrawing cash overseas as the provider charges a 3 per cent fee, set at a minimum of £3.

This is Money verdict:

Capital one's card is a good around deal for those who have be rejected elsewhere and are looking for a little more from their creditbuilder credit card. But with interest set at 34.9 per cent this card is only worth considering if cardholders are sure they will be able to clear the balance each month.

Capital One's guidelines as to who will be accepted state that you are unlikely to be accepted if you have been declared bankrupt or had any CCJs in the past year.

Nationwide - good for Nationwide customers

The Nationwide Select credit card has commission free purchases anywhere in the world, plus it pays 0.5 per cent cashback on all of your spending while you are in the UK.

You will pay for taking out cash, however.

The card also comes with a generous 26-month 0 per cent deal on balance transfer and no interest on purchases for 15 months.

It carries a fairly low standard interest rate of 15.9 per cent (APR) but you will be charge a 2.4 per cent fee to shift your debts to the card.

Watch out for

But it does charge a 2.5 per cent fee for cash withdrawals and you'll be charged 27.9 per cent representative APR interest on that money even if you repay in full. That means that while it is good for spending it is not good for taking money out of cash machines.

It is only available to Nationwide customers.

This is Money verdict:

This is a good multi-purpose card so it is a shame that it is only available to Nationwide customers who hold a current account with the building society.

If you are unhappy with your bank, it's worth a look if you are thinking about opening a new account anyway.

Nationwide's Flex Account features on This is Money's five of the best current accounts. But don't go straight for it if you haven't shopped around first for the best deal - there are plenty of good offers available at the moment for new customers.

If you do decide to switch, read our guide for step-by-step advice on how to change to a better bank account.

ANY OTHERS?

The Post Office credit card comes with no purchase fees on when shopping abroad or when buying in a foreign currency from home, online or over the phone.

There are also no cash fee for using the card to buy travel cash at the Post Office. Withdrawing money from an ATM overseas will incur a 3 per cent fee, set at a minimum of £3.

The Aqua Reward card charges no transaction fee either, but it comes with a 3 per cent charge for taking cash out while abroad.

As with the Capital One Classic Extra offering above, this is designed for those with a less-than-perfect credit score, therefore standard interest is charged at a hefty 34.9 per cent.

But it pays 0.5 per cent cashback on purchases as long as card users do not exceed their credit limit and make repayments on time.

Current Accounts Of The Week