Watch out for this debit card rip off!

If you're planning to use your debit card abroad this summer, find out if it's one that could charge you an extra £1.65 for every fiver you spend.

Millions of us will be jetting off to warmer climes in the next few weeks and looking forward to getting away from it all.

And holidays aren't cheap - unless you're seriously loaded, you'll no doubt have saved quite hard for this treat, spending as little as possible in the run-up and shopping frugally for all those holiday essentials in a bid to have a little more money to spend once you're there.

But what if I were to tell you that most of us could easily squander those hard-earned savings in the first few days, due to a few sneaky charges?

Not-so fantastic plastic

So what am I talking about? Your flexible friend... nope, not your credit card but your oh-so-faithful debit card.

In the UK, you usually won't be charged a thing for using your debit card to get cash out of an ATM (Automated Teller Machine). The problems occur as soon as you use a debit card abroad.

ATM charges

Pop nearly any UK-issued debit card into an ATM outside the UK, withdraw the amount of currency you want - and what happens?

For a start, to convert the cash you take out into sterling, your bank will charge you a currency conversion fee of between 2.75% and 2.99%. This, you may think, is fair enough.

However, on top of this you'll typically be charged another fee - a cash transaction/withdrawal fee which can be as much as 3% - and usually has a minimum charge of £2/3.

So if I were to withdraw €60 (approximately £50) from an ATM in France, my bank could actually slap on an extra £4 in charges. Ouch!

And if you unthinkingly made a number of small withdrawals (say £10 each time) you could be charged a whopping £3 each time - very painful indeed!

Paying by debit card

But that's fine - we all know withdrawing cash abroad can be expensive. So your strategy may be to avoid these fees by paying for everything directly with your debit card.

However, the fees attached to purchase payments abroad are arguably even more shocking.

Firstly, when you pay for something in a shop/restaurant etc. you'll be charged a retail conversion fee of between 2.75% and 3%.

However, on top of this some banks charge their debit card users a retail transaction charge/service fee of between £1.25 and £1.50, per transaction!

So if I were to pay for £5 worth of shopping in the supermarket with my debit card, I could be charged an extra £1.65 in fees. Yikes.

Now before you start panicking, not all debit cards are the same. Let's take a look at some of the most popular:

Charges applied when making purchases using debit cards outside the UK.

As you can see we're pretty much faced with the three types of card.

The good, the bad and the ugly...

The "uglies" comprise the offerings from Abbey, Halifax, Lloyds TSB, NatWest and RBS. All of these debit cards charge this unfair retail transaction fee on top of their conversion fee, meaning that cardholders are stung every time they make a purchase.

The "bad" consists of A&L, Barclays, HSBC and Cooperative Bank, which each charge a retail conversion fee of 2.75% or more, but at least spare us this rip-off transaction fee.

But one "good" guy comes to the forefront: namely the Nationwide BS debit card. Although it doesn't offer as good a deal as it used to (transactions worldwide used to be fee-free) it does only charge a 0.84% retail conversion fee at the moment with no unfair transaction fee and that's when used outside Europe.

So if you travel frequently or spend a lot of money abroad it could just be worth your while switching to the Nationwide BS FlexAccount.

And if you have one of the "uglies" but still want to use your debit card abroad? Minimise what they can charge you by using your card as little as possible: make as few purchases as you can and ensure you withdraw cash in as large blocks as possible.

Credit cards

But as a final note, don't forget there's more than one way to skin a cat (so to speak!). If you don't bank with Nationwide BS but frequently travel abroad, you may just find a credit card with cheap usage fees abroad or a pre-paid currency card may better suit your needs.

Happy holidays!

More: The best credit cards for spending | Love it or loathe it? Pre-paid currency cards