Defeating the money changers

By Slow Dad - July 29, 2017

Summer vacation? A little research can make paying foreign exchange charges and interest on overseas cash withdrawals optional. Here's how.
Anyone who has followed FIRE blogs for any length of time will have observed some recurring trends.

A common thread amongst FIRE folk is a love of travel, or in the case of the short sighted frugalists the anticipation of a love of travel once they have hit their magic number. Hopefully that number is big enough that once they step off the treadmill, they can hopefully trade some of that frugality for some living.

Those with a more balanced outlook recognise the need to pace themselves, enjoy the journey, and the importance of regularly taking a well-earned break. Those holidays don’t have to cost the Earth, if camping or hiking or caravanning are you thing then they may well work out cheaper than staying at home!

A little research can make paying foreign exchange charges and interest on overseas cash withdrawals optional

Crossing the finishing line

Every now and again one of us makes it over the finishing line, reaching retirement.

They do the victory dance.

The crowd goes wild.

The blogosphere genuinely applauds a hard won achievement.

And then invariably the blogger goes on holiday, taking a well earned victory lap around the globe.

Their previously personal finance orientated blog becomes an impromptu travel blog. Semi-inspirational stock images and compound interest charts are traded for happy snaps in beautifully exotic locations.

I like your old stuff better than your new stuff

To begin with there will be a few self-congratulatory articles about how awesome it is to not have to wake up to an alarm, not have to endure a commute, not have to work in a cubicle being told what to do by a pointy headed boss.

The audience quickly tires of these, nobody likes a gloating winner.

Understandably their posts stop being about savings rates and drawdown strategies. Who cares about that stuff now, they’ve retired?!

Posts get shorter and less frequent, a bit like the summer guest post season only more permanent. The blogger is busy living the high life, no time for a well researched post today.

All change please

Before long the blogger has an identity crisis. What is my blog all about now? My original audience was interested in personal finance. I’ve conquered personal finance. What next?

Do I shut the blog down?

Do I go dark, leave it running but cease posting, like EarlyRetirementExtreme and KeepingTheCauldron?

Do I sell it, like TheMilitaryGuide and GetRichSlowly did?

Do I go quiet, posting occasionally when I have something worthwhile to say (or something to sell), like MrMoneyMoustache and Jim Collins?

Do I evolve it into a travelogue with the occasional personal finance article, the style of transformation ThinkSaveRetire and Millennial Revolution appear to be undergoing?

Do I turn myself into a keynote speaker or talking head, like MadFientist and AffordAnything have done?

Or do they keep on churning out interesting post-retirement finance posts like Mr Tako and Financial Samurai?

I don’t have the answers, the right option will differ blogger to blogger.

While you figure it out, avoid being ripped off while travelling

What I do know is on their travels, financially savvy bloggers want to avoid getting screwed on overseas transaction and foreign exchange fees.

When you purchase something in a foreign currency using your standard debit or credit card, the chances are you’re getting stung a whole bunch of different ways.

Many financial institutions will charge a percentage fee for completing a transaction in another currency. They argue this is to cover their costs of performing currency conversions and the like. This has the effect of making everything you purchase around 3% higher than the advertised price. Greedy bastards!

This is on top of the actual exchange rate the financial institution uses to perform the conversion, which often isn’t the most competitive available exchange rate. Just ask anyone who has changed money at Heathrow airport!

Another way financial institutions take advantage of unwitting punters is with cash withdrawals. A cash withdrawal on a credit card is often considered a cash advance, incurring huge loan shark style interest charges from the moment it occurs. By the time your statement cycle ends those charges can be large enough to really ruin your day.

Foreign exchange fees can really ruin your day.

The good news, bank charges while travelling are optional

The good news is that all these charges are optional, much like paying taxes, they can be avoided with a little bit of research and advance planning.

One of the most useful products I’ve encountered recently is a fee free “Platinum” travel credit card being offered by Barclays. From the time of writing until early 2022 this card offered fee free cash withdrawals in foreign currencies. It actually gets better, as for the duration of the statement cycle in which those cash withdrawals occur they are treated as purchases rather than cash advances. This means they don’t incur any interest charges, providing you pay the bill off in full at the end of the statement cycle.

A similar product is offered by Halifax, who offer a fee free “Clarity” credit card that doesn’t charge any fees for purchases made in a foreign currency. This one does charge interest from the moment you make a cash withdrawal however.

Before you race off to apply for a credit card, do your own research to make sure they are they are the right tool for your job. If they tick the boxes then apply via a cashback portal like TopCashBack or Quidco to earn yourself up to £20 affiliate commission for applying for a product you were going to take up anyway.

So what?

Either way these type of products can save you a bunch of money while travelling, providing you always pay off the balance in full at the end of the statement cycle.

For purchases made in your domestic currency I’d suggest using a cashback or reward earning card instead, but as always do your own research.

Inevitably this post will become dated as new products launch and older products cease to be offered. For an actively maintained list of the available travel card options check out MoneySavingExpert’s travel card page.

Enjoy your summer holidays!

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  1. Mate, I thought your quiet patch might been indicating a wind-down, but you've relaunched. Nice. I especially like the "Time well spent" section. Some real nuggets in there.

    Cheers, Cameron.

    1. Thanks Cameron.

      Summer is here, I could be writing blog posts... or playing on the beach in the south of France enjoying the sunshine. Where would you rather be? :-)

      I did finally get around to using my crayons to make the site a bit prettier, Rhino had constructively critiqued the old site as "good content but man, the design is bad! So bad as to make it almost unreadable."