It has been reported that Brits abroad are paying fees, for using their debit or credit cards whilst on holiday or journeying overseas, totalling a massive £1bn a year.
The standard fees being charged by banks are nearly 3% and on top of that there are costs for using cash machines. The banks say using cards when abroad is safe, flexible and cost effective. Customers are encouraged to apply for cards with zero charges to make their money go further whilst on holiday.
Standard credit and debit cards slap fees of nearly 3% on all spending, plus extra costs for using cash machines.
Customers are being encouraged to apply for cards with zero charges to make their holiday money go further.
But banks say using cards overseas is a safe, flexible and cost-effective way of paying.
The BBC spoke to some holidaymakers in Malaga who were shocked when told the amount of fees Brits paid each year. They said, “That is outrageous! They are surcharging us for going on our holidays.”
“You are likely to be spending €500-€800 a week. 3% of that is a lot of money.”
One example of the way the charges work is spending £50 on a card will incur a 2.8% transaction fee. That is £1.40 being charged. If you withdraw £50 cash from an ATM whilst on holiday it will incur a transaction fee of 2.5% or £1.25 plus an ATM fee of £1.39 making a total of £2.64 in charges.
For those using a standard credit card, the average “non-sterling transaction fee” is 2.8%, added to the amount you have spent, with some banks charging 2.99%. The average fee on standard debit cards is nearly as much.
The charges appear on your bank statements when you return home.
The banks say that holiday makers spend £32b on their cards while abroad and according to FairFX, the foreign exchange specialists, they say the charges are having a “huge impact on consumers’ pockets”,
“When we’re on holiday it’s easy to turn a blind eye to what we think is just a few quid,” said Ian Strafford-Taylor, FairFX’s chief executive.
Cards do have advantages. A spokeswoman for UK Finance, the body which represents banks, describes them as an “extremely safe, flexible and cost-effective way to pay”.
“If you do not get what you paid for, if the goods or services turn out to be faulty or you are a victim of card fraud, you will get your money back”.
Total charges have been calculated by adding the amounts people spend on foreign cash machines, £200m on debit cards and £17m on credit cards and amounts spent on the cards with debit cards at £372m and credit cards at £442m. This incurs charges overall of £1.03bn.
UK Finance points out that some banks, such as Halifax, Santander, Nationwide and Barclays offer alternative credit cards which have no fees when you spend overseas. There are no guarantees, however, that you will be accepted if you apply for one.
You can also buy pre-paid currency cards which have zero charges, though the exchange rates they use can vary.