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News: Greedy Banks in overseas 'rip-off'

Fri, 07 Sep 07

Brits have been warned about excessive overseas card charges levied by greedy banks...

Nationwide estimates that travellers wasted over £326 million* in unnecessary foreign loading fees on their credit card whilst abroad last year. The Society therefore urges consumers to pay as much attention when selecting the card they take abroad, as they do in choosing the perfect holiday destination.

Some organisations have actually increased their foreign usage charges this year to further benefit from their customers’ holiday spending. For example, Lloyds TSB have just announced it is increasing the charge on its debit card from 2.75% to 2.99% and Halifax is reported to be increasing the charge on its credit card from 2.75% to 2.95%**.

NatWest has increased the charges on its debit card from 2.65% to 2.75% every time a purchase or withdrawal is made overseas and has increased its flat purchase fee from 75p to £1.25. Consumers should take a good look at the deal their bank is offering when travelling abroad and if necessary vote with their feet by moving to a card that doesn’t penalise them whilst they are on holiday.

Amongst the issues facing travellers are:

Foreign Loading Fees

Most lenders charge a loading fee of around 2.75% when spending abroad and most levy a flat fee each time a debit card is used as well.

For example, Halifax charge £1.50 for every purchase on top of the 2.75% foreign loading fee on their debit cards. Nationwide is the only high street financial provider to offer free use abroad for all of its customers, saving them millions of pounds each year.***

Dynamic Currency Conversion

When abroad, the Society recommends that holidaymakers should be aware that the rate of exchange offered by the retailer may not be as competitive as a provider conversion. 

Nationwide estimates that last year, its customers wasted over £850,000 by choosing to pay in sterling on their credit card whilst abroad. The Society therefore advises all of its customers to always pay in the local currency.

Jeremy Wood, divisional director at Nationwide, said: “People who are planning to go abroad over the next few months should be aware of the hidden charges that most card providers impose which are both costly and unnecessary. Anyone using a Nationwide debit card or credit card will not be charged any foreign usage fees and will therefore have a little more money to help them enjoy their holiday.”

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