NatWest issues warning to anyone who uses debit or credit card on holiday

The exchange rate for paying in pounds is normally worse than paying in local currency when you're abroad, due to the sum having to be converted by your bank

NatWest has issued a warning to anyone who uses their debit or credit card on holiday.

The bank has urged holidaymakers to always pay in pounds rather than in the local currency. This is because the exchange rate for paying in pounds is normally worse than paying in local currency, due to the sum having to be converted by your bank. NatWest research found the difference can be as much as 13.4% if you choose to pay in pounds.

Spain is the most popular destination, with one in five transactions taking place in the country. The bank found over one in ten transactions (14%) could be more expensive due to paying in pounds rather than euros. The new data also revealed Poland has the highest spend carried out in pounds rather than the local currency (77% of spend value) closely followed by Turkey (73%) and Sweden (68%).

Hazel Harper, International Payments NatWest said: “There’s one simple trick to saving on your family holiday when you’re abroad and it’s by always choosing to pay in the local currency. Our research found that it could be up to 13% more expensive to pay in pounds which makes a big difference to the cost of a family holiday.”

Martin Lewis regularly advises holidaymakers to always pay in pounds when abroad. In an episode of the Martin Lewis Money Show Live on ITV broadcast in June this year, he said: “When you are paying in plastic overseas, you always pay in the foreign currency - you do not pay in pounds. Here’s why: if you pay in pounds, it’s the overseas ATM or shop that does the conversion and every time I’ve tested this - and I’ve done this many times - it’s a pants exchange rate.

“If you pay [in the foreign currency] it is your card that does the conversion. If you’re on a specialist card, you get a near-perfect exchange rate. If you’re not a specialist card, it’s going to cost you 3% but that’s still usually better than the overseas machine.”

You also need to be careful if you're looking to take cash abroad. You should always make sure you compared rates online, to see where you can get the best deals - and always avoid exchanging your money at the airport, as this always normally offers the worst rates.

However, Martin said there is a way to get a slightly better rate at the airport. He added: "If you’ve left it so late that you have to do it at the airport, call them up and prebook your money - you’ll get a better rate."