/ Money

Thanks to banks, buying holiday cash costs more

Pile of foreign notes

The banks now have holidaymakers in their sights, charging extra fees to buy foreign currency even before they’ve left the UK. And that’s on top of what the Bureau de Change already charges you…

Pop down to the Post Office, Marks & Spencer or your local Bureau de Change to buy some currency before you go on holiday, and you’ll probably get stung by your bank with debit card charges.

You’d expect this with a credit card – cash withdrawals on credit cards are notoriously expensive, with most imposing transaction fees, high APRs and no interest-free period. But a debit card?

Sneaky currency charges

Some banks do more than simply charge you for using your debit card overseas – they will also charge you for foreign currency purchases in the UK, as well as abroad.

The Co-operative Bank is one of the highest chargers for buying foreign currency in the UK. If you go to a UK cash machine to withdraw cash with your Co-op debit card and then use that money to buy foreign currency, you won’t pay any debit card fees.

But if you pay directly with your debit card in this country, the Co-op will charge you an extra 2% (minimum £2 with no upper cap). And that’s on top of any commission charges imposed by the Bureau de Change itself.

Barclays, Santander, NatWest, RBS and Lloyds TSB will all charge you for using your debit card to buy currency at a UK Bureau de Change.

They’re not all bad

On the plus side, there are some ‘good guys’ that don’t charge you for using your debit card to buy currency in the UK: First Direct, HSBC, Nationwide, Halifax/Bank of Scotland and Yorkshire Bank don’t impose any extra charges.

And if you’re looking for an all-round good-value bank account for overseas use, look no further than Norwich & Peterborough Building Society. Not only does it not charge you for buying foreign currency in the UK, it won’t charge extra for cash withdrawals or purchases overseas either.

When it comes to charging fees for buying currency by debit card, if some banks can make a profit without hitting their loyal customers with sneaky charges, why can’t the others? Unless, of course, they think of their customers as nothing more than cash cows to milk for a quick buck, especially now their PPI wheeze has dried up.

James Harrison says:
31 May 2011

This is yet another financial robbery which the omboudsman and possibly parliament will have to get heavy with the banks on. Just like they did with the banks causing a global financial meltdown! It is not only unfair but criminal to charge for using one’s card to ‘purchase’ an item, this one being money. A small percentage may be allowable for utilising the services of a foreign bank, but with the global economical mechanisms, even this is unnecessary and should be stopped. Banks are a business, I agree, but they make money out of the money we entrust to them. If we don’t like it, we can always move….

We should object to secret charges, not directly visible prior to commiting to a purchase.
Preditory traders ought not hide behind charges advised after the event or in small print.

Mike says:
31 May 2011

This is disgraceful –
Happily I have accounts with two of the good banks as well as three of the bad ones!
I shall move money from bad ones to good before using good ones to buy foreign currency !
Or would the banks prefer that I use a cheque !!!!
That’ll cook their goose.

Each time they pull a stunt like this they lose more of my goodwill.
Perhaps we should each ask the banks who’ve introduced these charges to remind us when, and how openly ( ie honestly? ), if at all, they informed us of the change.

Sophie Gilbert says:
1 June 2011

Ah, when the world has only one currency, won’t we all be better off. (I’m allowed to dream, aren’t I?) In the meantime I have opened an account with Nationwide and will deal with my foreign currency through them as appropriate.

Elitist says:
6 August 2015

No we will not with your Fake unity talk, what’s next one religion, one government one world under one command! “”I joke… obviously :P””

How does the bank know it was currency I bought? The transaction goes through in Sterling as you are not allowed to make a transaction in this country in a currency other than Sterling, otherwise you could buy Dollars using Euro and not be required to “pass through” Sterling to do it. Also note that the last time I bought currency at the Post Office, they would not accept a debit card and suggested I visit the ATM first.

Mr_Tickle says:
10 June 2011

Mr Beck,

The bank know because the card machines used are either programmed as Retail (the type you use in high street shops) or Bureau De Change machines.

I work for a high street currency provider and it’s infuriating when banks make a charge and when the customer complains they direct them to us thinking we’ve made the charge.

Stefan Kowal says:
3 June 2011

Watch out for the exchange rates. Even the good guys might not be that good. On my last trip abroad, I used cash obtained at the best rate I could find at a high street ‘money shop’. I know that some folks might not want to carry too much cash around but it was the most financially efficient way that I could do it. I’m just sick of handing over my money to the bank. The bank exchange rates were a joke and the cost of using the cards abroad expensive.

LIL says:
12 June 2011

Fed up of the banks charging for travel cheques and foreign currency bought and sold,my husband bought a body money belt which he wears even in bed.We now only take enough curency to do us for a day as we can exchange our sterling at a much better rate than we get back home We have saved a great amount over the years instead of the greedy bankers pocketing our hard earned cash.

Mahomed Moosa says:
22 June 2011

i would like clarification on one of the finer points of this informative discussion – with regards to the ‘good guys’, does the no charge for debit card foreign currency purchases apply only when you are purchasing currency from that particular provider or is one allowed to purchase from any provider in the UK without incurring charges? The reason I ask is that I have noticed exchange rates of the bigger banks/institutions are much lower than that quoted by many online providers which then negates any savings made on tranaction charges.

I was warned by the cashier in Sainsbury’s yesterday that my bank might charge me for using my debit card for foreign currency. So I went outside and drew cash from the hole-in-the-wall. As it turns out, I’m with one of the banks that doesn’t charge.

Richard WP says:
13 March 2012

Can’t believe it! Just been charged £35.00 for a £350.00 transaction, that’s 10%, from Sterling to Israeli Shekels, by my local POST OFFICE! Just been back to query it….don’t want to know. No wonder less people use the PO now…….I’ve just quit them too.

Rebecca says:
21 April 2012

does anybody know the reason why they charge for using debit cards for buying euros?!?! I bought some euros the other day and was unaware that i would receive any charges at all. If i’d of know i would’ve drawn the money out and paid with cash. Why do they charge?? if i spent £250 on shoes they wouldnt charge me but just because i spent it on euros i receive a charge? why? really dont understand.

PeterM says:
25 April 2012

I’m sorry to put you down but the Halifax/Bank of Scotland DO charge for any transactions from another institution, I have just been charged £4.50 today for buying my currency from ICEPLC, would have been cheaper going to my local Cheque Centre had I actually known about this fraudulent bank charge, what a cheek they have.
I’m now in the process of closing my account and moving to another company as I’m sick to the teeth with the Bank of Scotland.

The Co-operative Travel does not charge any commision or extra charges to purchase travel money!

Re the Coop Bank charging 2% if you buy your currency using a Coop debit card…. the Coop bank has assured me today that this charge does not apply if you buy your currency from a UK based bank, for eg., over the counter, or ordered on line, at M&S or Sainsbury’s, etc. It applies if you get your currency from them or a non-UK based provider. As they point out it’s no different than making any other purchase in the UK with a debit card. I think Which? should reassure themselves of this and make it clear in their literature.

Andyc says:
2 May 2015

Modern day ‘fagins’