The honest answer is that there isn’t one best way to pay abroad. There’s a combination, and once you’ve got it sorted you stop thinking about it.
We’ve travelled across Europe as a family plenty of times now, and we’ve settled into carrying four things: a multi-currency card we use for almost everything, some cash, a credit card, and a normal debit card tucked away as a backup.
That might sound like overkill for a week away. It isn’t, and I’ll explain why each one earns its place.
The card we use for nearly everything
Most of our spending abroad goes on an HSBC Global Money card. It’s the thing that’s made the biggest difference to how we handle money on holiday.
The way it works for us is straightforward. We move euros, or whatever currency we need, into the HSBC account, then across to the Global Money card. After that we just pay in the local currency and there’s nothing extra sitting on top of the transaction.
What I like about it is the control. You can see what the rate is when you convert, rather than discovering after the fact what your bank decided to charge you. And because you’re already holding the currency, there’s no conversion happening at the till.
At the time of writing it lets you hold around 18 currencies, and HSBC don’t charge their own fees on spending abroad or on cash withdrawals. Worth knowing that an ATM operator can still add a charge of its own, since that’s nothing to do with your bank.
These accounts do change their terms from time to time, so check what’s current before relying on it. The broader point stands either way: having a card that lets you hold the local currency before you travel takes most of the guesswork out of spending abroad.
Why we still take cash
Cards cover the vast majority of what we spend, but cash still matters, and we take some every trip.
The places you need it are exactly the places you don’t want to be caught out. Small village shops, a market stall, parking meters, the odd café that’s card-free, tips. In rural Portugal and inland Spain especially, we’ve been glad of it more than once.
For a week away we usually take around 100 euros between us, and that’s plenty. What matters more than the amount is having small change, so we make sure we’ve got 50 cent, one euro and two euro coins, mostly for toilets.
In fairness, we’ve found far more free toilets across Europe than you’d expect coming from England, where you seem to pay for everything. But every now and then one catches you out, and one up in the mountains in the middle of Rhodes, near Butterfly Valley, even had a cashier sat there in person taking the money.
Being stuck at that barrier with two kids and nothing smaller than a twenty is a very specific kind of stress.
We don’t exchange it at the airport, either. Airport bureaux know they’ve got you, and the rate shows it. Ordering currency in advance, or withdrawing a sensible amount from a bank ATM once you arrive, works out better.
One habit worth picking up: use ATMs attached to actual banks rather than the standalone ones in tourist areas. The standalone machines in resorts and airports tend to have the worst rates and the highest charges.
Should you pay in sterling or the local currency?
Always the local currency. This is the single easiest way to lose money abroad and it catches out people who’ve done everything else right.
At some point a card machine or a cash machine will ask whether you want to be charged in pounds or in euros, and being offered pounds feels helpful. It isn’t. That’s dynamic currency conversion, and when you choose sterling you’re letting the machine or the shop set the exchange rate rather than your own bank.
The rate they use is almost never better than the one you’d have got. It’s a bit like the airport bureau, in that the convenience is real and you’re paying handsomely for it.
So if you’re asked, whether that’s at a till, a petrol pump or an ATM, pick euros, or whatever the local currency happens to be. Same answer in every country we’ve been to.
It’s another reason the multi-currency card earns its keep. We can simply withdraw from ours in the local currency, since we’re already holding euros or whatever we need on it, so there’s no conversion happening at the machine at all.
The credit card, and why it matters more than you’d think
The credit card is the one most people underestimate, and it’s the one I’d least want to travel without.
If you’re hiring a car, you’ll almost certainly need one. The desk places a hold on the card to cover the excess in case of damage, and it usually has to be a credit card in the driver’s name rather than a debit card. Turn up without one and you may not get the keys, which is a grim way to start a holiday.
That hold is also exactly the moment the desk will try to sell you their own cover, which is why it pays to understand the difference between collision damage waiver and excess insurance before you get there. We sort ours in advance every time. There’s more on how we handle the whole process in our family tips for car hire in Europe.
What we don’t do is use it for everyday spending while we’re away. Ours are Tesco credit cards, which charge a 2.75% foreign exchange fee on every non-sterling transaction.
Put like that it doesn’t sound much, and £2.75 on every £100 isn’t going to ruin your holiday. But across a fortnight of meals out, fuel, days out and shopping it quietly adds up, and it’s money you’re handing over for nothing.
That’s really why the multi-currency card does the heavy lifting. No transaction fee at all, and the only thing you’re accepting is HSBC’s exchange rate rather than a percentage on top of every purchase. Worth checking what your own credit card charges abroad, because the rates vary a lot between providers.
Beyond car hire, a credit card gives you a layer of protection on bigger bookings that a debit card doesn’t. If something goes wrong with a hotel or a trip you’ve paid for, you’ve got a route to getting your money back. Worth checking what your own card offers before you travel rather than assuming.
The backup debit card
The fourth thing we carry is a normal debit card, and it mostly sits in the bottom of a bag doing nothing.
That’s the point. Cards get blocked, lost, swallowed by machines, or flagged by fraud systems at the worst possible moment. Having a completely separate card on a different account means one problem doesn’t leave you stranded.
We keep the backup somewhere different from the cards we’re using day to day. If a bag goes missing, losing everything at once is the scenario you’re trying to avoid.
It’s the same logic as having a plan for a lost or stolen device while travelling. Nobody expects it, and it costs nothing to be ready for it.
Mobile payments
Apple Pay and Google Pay work in far more places than they used to, and across most of western Europe you can get through a week tapping your phone.
They’re genuinely convenient and the security is good, since every payment needs your face or fingerprint. If your phone goes missing you can lock it remotely, which you can’t do with a card in a stolen wallet.
The catch is that your phone is now your wallet. A flat battery in a car park with no cash on you is a problem entirely of your own making, and I’ve come close enough to that to keep a physical card on me regardless.
Worth checking your data situation too, since some payment apps want a connection. Our guide to avoiding roaming charges on family holidays abroad covers what we do about that.
What about travellers’ cheques?
Honestly, skip them.
They were genuinely useful once, and plenty of older travel advice still lists them as a sensible backup. The reality now is that very few places accept them, and finding somewhere to cash one can eat half a day of your holiday.
If you want the security of something replaceable, a prepaid or multi-currency card does the same job far better. It’s one of those bits of travel advice that’s quietly gone out of date while nobody was looking.
A few things we’ve learned along the way
Some of this we got right early, and some of it we worked out the hard way.
- Don’t assume you still need to tell your bank you’re travelling. I used to, years ago, but I haven’t bothered for a decade or more and it’s never caused us a problem. Plenty of people still do, so go with whatever you’re comfortable with
- Always pay in the local currency when a card machine gives you the choice
- Split your cards and cash between people and bags rather than keeping everything together
- Take a photo of your card details and emergency bank numbers, stored somewhere you can reach without your wallet
The other thing is knowing roughly what you’re going to spend before you go. We keep spending diaries for most of our trips, like our 13 day Europe family road trip costs and a week in Portugal with the kids, partly for anyone planning something similar and partly so we can remember ourselves!
So what’s the best way to pay abroad?
The best way to spend money abroad, for us at least, is a multi-currency card doing the heavy lifting, a bit of cash for the places that need it, a credit card for car hire and bigger bookings, and a spare debit card we hope to never touch.
Your mix might look different depending on where you’re going and who you bank with. Somewhere with patchy card acceptance needs more cash than a city break in Western Europe does.
What I would say is don’t travel on one payment method, whatever it is. Every system fails occasionally, and they tend to fail when you’re tired, somewhere unfamiliar, and least able to deal with it.
Sort it before you fly and you’ll spend the week thinking about where you’re going rather than how you’re paying for it. There are more ideas in our guide to saving money on family travel if you’re working out a budget.
