Paying on holiday: how to avoid hefty fees

By using the right combination of cards and cash, you can keep fees to a minimum when paying for purchases abroad. It's generally a good idea to take two cards with you on holiday. This gives you an alternative if you have a problem with one card or you lose it.

Activate your card

Before setting off, it's important to check whether your cards can be used at your holiday destination. Especially when travelling outside Europe, you may have to ask your bank to activate your cards for use in that country.

Most banks provide a convenient way to activate cards via their app.

Credit cards are king

A credit card is the best option when paying abroad. Using a debit card often incurs higher fees, and some services – such as hotels or car hire – can't be booked at all without a credit card.

Before leaving, check whether your existing card limit is enough to cover what you expect to spend. If not, increase the limit with your card's issuer in good time.

For transactions executed abroad, the various cards differ in terms of the employed exchange rate and the processing fee. It's well worth comparing this fee in particular before travelling.

Incidentally, holders of the two free credit cards from Migros Bank, Cumulus credit cards and Visa Free cards aren't charged any additional processing fees on transactions in foreign currencies.

Always pay in the local currency

When paying by card abroad, always opt for the local currency. For instance, if the card reader lets you choose between euros and Swiss francs, go for euros.

Dynamic currency translation is used to convert the amount if you opt for Swiss francs. This then generally also results in additional fees - often exceeding 2% of the total.

In general, to avoid unnecessary fees, it's better to use cash for tips and paying small amounts. What's more, cards aren't accepted everywhere either.

Tip: The Cumulus credit card and Visa Free each offer free cash withdrawal of up to CHF 500 twice a year at ATMs abroad.

Barbara Russo is a customer advisor at Migros Bank and an investment expert.