Both are mentioned in our guide to the best travel and debit card for spending abroad, but whilst they both work to maximise your travel money, they differ in some pretty fundamental ways.
What is Revolut and how does it work?
Founded in London, Revolut started life as pre-pay travel card in 2015, but has grown to become on the largest new FinTech’s in the world serving over 15 million customers. It not only offers banking services but also investments and crypto purchases too.
UK customers get a sort code and account number just like a regular bank, plus an IBAN for international payments. You can hold cash in multiple currencies, exchange between various currencies, and use your card to spend abroad without incurring fees.
How much does Revolut cost?
The basic Revolut account is free to open and use. You’ll be issued with a virtual card for online or contactless spending, but can also order a physical card too. Whilst the physical card is free, there is a delivery fee. If you sign up to Revolut via our link will also get a free £10 welcome bonus.
There are multiple membership packages, free, plus, and premium. We’re only going to focus on the free version in this article.
ATM withdrawals are free up to five or £200 per month. After this there is a 2% fee is applied, with a minimum free of £1.
Spending in store or online is generally free up to the £1,000 exchange limit. After which there is a 0.5% mark up, or 1% at the weekends.
What is Currensea and how does it work?
Currensea is a debit card account, that links to your existing bank accounts. Its aim is to shield you from the loading and exchange fees that most high street banks charge when using your regular debit card abroad.
It does this by acting as a middle man between your foreign spending and your bank. Foreign spending and ATM withdrawals are automatically converted from the local currency to pounds. Currensea then deducts this pound sterling amount from your bank account.
As far as your UK bank is concerned you’ve spent in pounds, and so won’t incur any fees.
How much does Currensea cost?
Like Revolut, Currensea also offers three price plans, but most will likely opt for the ‘Essential’ plan. This is free to open and operate. It charges 0.5% mark up on foreign exchange, and has an ATM withdrawal limit of £500 per month. Withdrawal amounts over the £500 limit will result in a 2% charge.
The Premium plan is £25 a year, but removes the 0.5% markup. The £500 stays, but additional amounts are then charged at just 1%. This plan only really starts to pay for itself if you’re planning on spending more than £5000 abroad in a year.
There’s also an Elite plan at £125 a year. Like the Premium plan it removes the 0.5% mark up, and ups the free withdrawal limit to £750. It also offers a host of other benefits, such as a concierge service, airport lounge access, and various memberships.
How safe is my money with these accounts?
In the UK Revolut is an e-money provider rather than a bank (as it is in the EU). That means money in your Revolut account is not protected by the FSCS.
Instead, there a ‘safeguarding’ system in place where customer deposits are stored and ringfenced in an account with a major UK bank, completely separate from Revolt’s own funds. As such the risk to your money limited. Using it purely as a holiday and foreign spending card and there’s even less risk. Just don’t store large amounts in the account for long periods.
As for Currensea, you can’t physically deposit or load money onto your card/account. Instead, it links directly to your current bank account, so as long as your money is stored in a UK bank you enjoy fully FSCS protection.
Currensea vs Revolut – which is better?
Asked a year ago and would have heavily leaned towards Revolut for most usage cases. Since then, it’s slowing been eroding its free and plus products and increasing its charges.
That being said the best card is going to depend on your indented use, and also who you currently bank with, so we’re going to look at a variety of scenarios. These assume that you don’t currently bank with Starling, Monzo, Chase, which are the absolute cheapest method of spending abroad.
Travelling abroad to the Eurozone and spending less than £1,000 in foreign currency. In this case Revolut will still be the cheapest as there would be no fees to pay. Currensea’s 0.5% fee would end up costing you £5.
If spending over £1,000 in foreign currency or exchanging money on the weekends then Currensea works out cheaper, as although the 0.5% fees will cancel each other out, Revolut’s weekend fee bumps this up to 1% for common currencies (e.g., Euro, USD etc..), and 2% for less common currencies.
One way to get around the weekend exchange fees, is to convert your money into the local currency beforehand. This also gives you the benefit of locking the current rates at the time.
Travel to Thailand however and things start to change. This is because Revolut keeps a list of what it considers illiquid currencies. On these currencies such as the Thai Bhat, it charges 1% on weekday exchanges and plus 2% at weekend. As such, £1,000 spend would now cost between £10-20. Spending over that £1,000 limit would also trigger the 0.5% fair usage fee. Meaning spending via Revolut could cost as much as some of the worst high street debit cards.
How to lock in the best exchange rates – Revolut
One big advantage of Revolut is the ability to lock in an exchange rate before you go, or whenever it is favourable.
Holding your money in pounds, and spending in Euros, means you get whatever the interbank exchange rate is on the day (minus any fees previously mentioned). This is the same with all debit and credit cards including Currensea.
If, however you exchange pounds to your chosen currency when rates are good, you lock in that rate, and enjoy increased spending power. For example, if you had a holiday booked for mid-September 2022, and spent £1,000 equivalent in Euros with Currensea, you would have gotten roughly €1,140 for your money. Had you exchanged that £1,000 in Revolut back in August you could have gotten €1,180, and those that really planned ahead, exchanging money in July would have had closer to €1,200.
Of course, this is can also go the other way too. You are essentially Forex gambling, but you aren’t necessarily trying to beat the market, just trying to lock in best exchange rate you can when you can.
News articles regularly mention the strength of the pound against popular currencies such as the dollar and Euro. Big events can often lead to currency fluctuations too. An example would be the appointment of a new PM, a rise in interest rates etc… Over time you tend to get a feel of when the rate is strong and when it is weaker, especially if you regularly spend in both pounds and euros. In any case, that is an entirely different topic and not one can advise on.
How to beat Revolut’s fair use policy
Exchanging money in advance also allows you to beat Revolut’s 0.5% fair usage fee. This is measured on a rolling monthly basis and resets on the day of the month your plan started. So as long as your exchange happens before that day you effectively double your limit.
For example, if you signed up to Revolut on 27th July, your allowances would reset on the 27th of each month. So, in the scenario above exchanging £1,000 pounds to Euros on 26 August 2022 would have locked in a £1 to €1.18. The £1,000 fair usage limit would reset the next day, meaning you’d then be able to exchange another £1,000 afterwards. Leaving you with double the amount for that mid-September break.