Review: Starling Bank and its 0% FX fees debit card

This is our review of Starling Bank and their 0% FX fees debit card.

The Starling Bank website is here but you need to download their app if you want to open an account.

Why should I get a 0% foreign exchange fee card for travelling?

As the Lloyds Avios Rewards Mastercard is no longer available to new applicants, there are no travel rewards credit cards which offer fee-free overseas purchases.

If you use a rewards credit card when travelling, you will incur a fee of 3% on everything you buy. This can never be justified by the miles and points earned on the transaction. It may be justified if you need to hit a spending target to trigger a sign-up bonus or a voucher such as the British Airways American Express 2-4-1.

Over the next week or so we are looking at a few no and low FX fee options. We reviewed Tandem a few weeks ago (click here). Here is our review of the WeSwap Mastercard travel money card and here is our review of Revolut.  We will also be looking at some 0% credit cards.

All of these products have different features – there is no ‘right’ answer. Some are more fiddly than others, some are prepaid cards and some are credit cards, some have added benefits such as 0% interest on purchases.

If you DO want to earn miles and points from your foreign spending, the best option is Curve Card. Curve is free and has a 1% foreign exchange fee (2/3rd lower than most cards). It recharges your purchase to any other Visa or Mastercard you own in Sterling. This means you earn miles and points on the underlying card without paying the usual 2.99% foreign transaction fee. Curve Card will pay you £5 for trying it out – read our article here.

What is Starling Bank?

I wasn’t planning to write about Starling Bank as part of this series of articles, but a number of people mentioned it in the comments to the Revolut review so I thought I would take a look.

Starling Bank is effectively where Revolut wants to be, but isn’t yet.  It is a full ‘online bank on a debit card’ and unlike Revolut has full FSCS compensation up to £85,000 if the company goes bust.

Starling won ‘Best British Bank’ and ‘Best Current Account Provider’ in the 2018 British Bank Awards.

Some of the services offered by Starling Bank will be familiar to Revolut or Monzo users:

0% foreign exchange fees when you use your Starling Bank debit card outside the UK

no cash withdrawal or foreign exchange fees when you use your card at an ATM abroad

you can send money via their app in 19 currencies to bank accounts in 37 different countries

the card and account are free

There are also some interesting additional features:

Starling Bank pays you interest on the credit balance on your account (0.5% up to £2,000 and 0.25% between £2,000 and £85,000)

It has high ATM withdrawal limits (Revolut has a £200 per month cap on the free card, Starling has a £300 per day limit I believe)

You can apply for an overdraft (interest applies) which will allow to spend even when the money pre-loaded onto your card runs out

Works with Apple Pay and Fitbit Pay

Other features include the ability to lock the card from within the Starling app if it is lost or stolen.

Starling Bank is a fully licensed bank.  You can, if you wish, pay your salary onto your debit card or ask friends and family to send money to your card using the standard sort code and account number format.

You can also set up direct debits and standing orders to be paid from your Starling balance, because this is a ‘proper’ online-only current account.

There is one other additional feature of using Starling Bank as opposed to taking cash withdrawals abroad from a credit card.  ATM withdrawals via a credit card can show on your credit file and some potential lenders may take a negative view of this (they may think you are desperate for cash).  As Starling is taking money from your own credit balance, it will not show on your credit file.  Revolut will also not leave a trace on your credit file but they limit ATM withdrawals to £200 per month.

Conclusion

This is only a brief overview of what Starling Bank has to offer.  I have no experience of it myself but a lot of HFP readers were very positive about it in their comments to the Revolut article.

It is important to note that this is a ‘proper’ current account.  You can, of course, download the Starling Bank app, open an account to get the debit card and use it purely for travel purposes, but you will end up with a 2nd current account in your name.

There is no obligation to pay your salary into Starling however.  You can fund your account via the app using a debit card from your main bank.

As this is a travel site, I don’t want to go into the specifics of how Starling Bank works as a current account provider.  What we can say is that – with 0% fees on foreign spending and cash withdrawals – it ticks the two main boxes you want in a card to use abroad.

If you are not willing to use Starling Bank as a full current account, you may find a product like Revolut (albeit that Revolut is also transitioning into being a ‘proper’ current account and has a low ATM limit of £200 per month) or a standard 0% foreign exchange credit card cleaner. Remember that as your Starling card is a debit card and not a credit card, you do not get Section 75 protection if you have problems with any item purchased abroad.

If you currently use Starling Bank, please let us know via the comments how you find it.

The Starling Bank website is here if you want to find out more.  To apply, visit the website and enter your mobile number on the home page – you will sent a link to download the app.