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Using your credit card abroad – foreign exchange rates

Foreign exchange (forex) rates are announced at the end of news bulletins, but it's fair to say most people pay little attention.

But if you're travelling abroad, forex rates suddenly matter, because they show how many euros, dollars or other local currency you'll get for your pounds. But exchange rates are just the tip of the iceberg when it comes to value for money when you’re overseas. Your hard-earned cash can be worth much less if you don't play your cards right.

Virgin Money has a pretty cool way of managing your holiday spend or business expenses – prepaid foreign currency cards.

What is foreign exchange?

If you’re going abroad, you'll need the local currency to go shopping, eat at restaurants, pay for excursions and so on. Similarly, anyone visiting the UK will need pounds sterling.

Some travellers wait until what they see as the best moment to get their money exchanged, but for most of us it's a last-minute dash to the bureau de change for some readies before we head off to the terminal. Just as prices of goods and services go up and down, so does the value of one foreign currency in exchange for another. When you want to change your pounds to euros for a holiday in France, you're effectively buying euros at the going rate plus fees.

Values are determined by a huge network of bankers and dealers that's completely out of our control, and they are constantly changing through the working week (they stop changing at the weekend).

You can check the value of the pound against any other currency by looking at the financial pages of a news website. Services like let you put in an amount, say £250, and find out exactly what it's worth in another currency so you don’t have to do the maths (or, if it's US dollars, do the math).


When you exchange currencies, there will be a charge, either as a percentage of the amount, as a one-off fee, or both. So changing more money than you need will leave you out of pocket because you'll have to pay twice – once to get it changed and again to get it changed back to pounds (unless the exchanger has a deal where they’ll buy back your excess currency for free).

Using your credit card abroad costs more

When you shop abroad with your credit card, you're effectively performing a currency exchange every time you do it. That's because your UK credit card is denominated in pounds, and the local currency is something different. You could be charged in the region of 3% for every card transaction and extra fees for cash machine withdrawals, so it's not hard to see how over a two-week skiing holiday, the fees could really mount up.

But there's a better way!

Virgin Money has a great way to make sure you stay on top of your finances while you're abroad – our Prepaid Travel MasterCard. It isn’t a credit card because you're not borrowing money from Virgin Money – you top it up with pounds before and during your travel and the balance is automatically converted into the currency you have chosen.

We have cards in two currencies: euros and US dollars. It’s important to note that you should get the one that's appropriate to the place you're visiting. You will be able to spend the money in other zones, but there will be charges.

When you use the Virgin Money Prepaid Travel MasterCard there are no charges for topping up or spending within the zone whose currency you've loaded the card with. But there are charges for withdrawals from cash machines. For a full breakdown of the terms and conditions, visit