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Nationwide ends free debit card use abroad – time to move on?


If you opened a Nationwide FlexAccount with the intention of using its fee-free debit card for holiday spending, be aware that paying with your plastic’s about to get more expensive. Is it time to close your account?

In a move that’s surprised and dismayed many FlexAccount debit card holders, Nationwide has decided to significantly alter the way it charges for foreign transactions from 1 November.

After just one more golden holiday season, when customers can spend on their debit cards for free within Europe, the building society is putting the squeeze on overseas spending.

New debit card costs make us sad

Currently, Nationwide charges a 1% foreign exchange fee when the FlexAccount debit card is used in non-European countries – spending in the Visa Europe region is fee-free.

The 1% worldwide fee was introduced last year to some muted grumbling, but the debit card has – up to now – retained its position as the best debit card for use abroad.

This is because its rivals hit consumers with far nastier fees, such as charges for cash machine withdrawals and even one-off ‘penalty’ fees for over-the-counter payments. (Yes, Halifax, I’m looking at you. And I’m frowning.)

But now Nationwide is doubling its foreign exchange fee to 2% and scrapping the exemption for European spending, with a further £1 charge for foreign cash machine withdrawals. This means taking £100 out of an ATM in Paris using your Nationwide FlexAccount card will cost £3, come winter – whereas right now it costs nothing. Sigh.

To fee, or not to fee?

Nationwide has been quick to point out that, despite these new charges, the FlexAccount will remain ‘the cheapest mass market current account to use abroad’. This is true, though I’m sure it’ll be pretty cold comfort for those of us who’ve grown used to exercising our debit cards on holiday without a care in the world.

The building society has also introduced free travel insurance for ‘everyday’ FlexAccount customers. This, as Hamlet would say, is the rub. It looks like Nationwide is miffed that around a third of FlexAccount holders only use their accounts on holiday – the society would rather reward loyal customers than give casual users free foreign debit card use.

I have to say I’m bemused by this. While free travel cover is all very well (and according to our experts, it’s decent enough), it isn’t what people signed up for. More to the point, I’m not convinced that making everyone pay higher fees is going to convince anyone to bank with Nationwide on a daily basis.

Time to ditch the debit card?

Lots of people I’ve spoken to have said they’ll be ditching their FlexAccounts as a result of Nationwide’s announcement. Perhaps this is the point.

Maybe Nationwide’s intention is really to jettison those customers who don’t make the building society any profit. So if you’re really annoyed, you might want to keep using your debit card just to spite them.

If you’re after a cheaper way to spend overseas from November, however, it looks as though you’ll be better off using a prepaid card or a carefully-chosen credit card.

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30 October 2012

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