Anyone venturing abroad this summer had better think carefully about the type of plastic they take with them. The banks are raising the cost of using credit and debit cards abroad by upping a whole range of hidden transaction fees.
Just withdrawing cash from a hole in the wall will attract, in most cases, a charge of about £2 a time, while the purchase of goods and services made on credit and debit cards will attract currency conversion fees as well as a flat fee of around £1-£2 as well.
Then there is the notorious “foreign exchange loading” which has been upped to a massive 3 per cent on Morgan Stanley’s Goldfish card – a whacking 0.25 per cent more than what most other providers are charging.
Debit cards issued by NatWest, Royal Bank of Scotland and Lloyds TSB have also had their foreign loading rates increased, with Lloyds TSB’s jumping from 2.75 per cent to 2.99 per cent, from the end of July.
Only a few cards, such as Nationwide’s Gold VISA and the Post Office’s Platinum Master Card, don’t impose foreign exchange loadings on overseas transactions.
For the over 50s, Liverpool Victoria and Saga issue credit cards without foreign exchange loadings, but only for usage in EU countries.
For cash withdrawals, you would be well advised to arm yourself with a Nationwide Flex Account card - the only card that doesn’t charge the normal £2 transaction fee.
The worst trick of all to watch out for while abroad is the pernicious “dynamic currency conversion” scam, whereby the merchant charges you in your home currency and then converts the bill back into the local currency at an exchange rate of their choice. The bill then has to be converted yet again back to your home currency by the card provider, incurring yet more charges.
Clearly, these stealth charges are just one of the ways in which the banks are recouping some of the income they have lost through the recent clampdown on penalty fees and overdraft charges. But whether the banks are making these fees clear enough to their unsuspecting customers is a moot point.
I expect millions of holiday makers are in for a nasty shock when they open their bank and credit card bills on return from holiday this summer.
