/ Money

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.

Diana Babb says:
3 August 2010

The Free Travel Insurance is only for those who pay £750 per month into their Flex Accounts and therefore does not benefit the lower income bracket customers they have
My part time wages as a Casual employee only came to a maximum of £400 one month and this month £13.
What benefit will that be to customers who are in a similar situation
There is no mention of how customers with Savings will be treated
As your article says, I think they must be trying to lose my kind of customer who has been with them for over 20 years
I shall certainly be looking for alternate means of having SAFE money when on holiday

Colin Chaston says:
3 August 2010

All good things come to an end. Hopefully Which? will now do a report on how to get the most of a £100 or £200 exchange for the Euro. Nationwide will now cost £5 for a £200 exchange, BUT the rate is much better than tourist rates. So would it now be cheaper to make purchases using credit cards, or local money exchange or exchanging your money via Travelex before you go.
Travel insurance, will this cover over 60’s and pre existing conditions?
When with Nationwide lets its customers know about this IMPORTANT alteration?

I’m one of those people who opened a Nationwide account just for transactions abroad. I haven’t used the account over here – except briefly for e-savings (the interest rate isn’t worth it now) so I may well be closing my Nationwide accounts very soon.

Flex has been my main account for more than 20 years. I started off very happy with Nationwide but a number of things have happened over recent years to make me considerably less happy; I’ve come close to switching. I can understand why they’ve made these changes but don’t like them. The free travel insurance is of no value to anyone who travels outside Europe and so buys annual worldwide insurance. They really need to offer the option of paying a small fee to upgrade to worldwide cover, or perhaps allow customers to choose between European cover including baggage and worldwide excluding baggage.

pickle says:
4 August 2010

So…the poor old customer loses out again….I often made use of the "free" money withdrawal from ATMs when on holiday – that’s why I opened a Flexaccount. Will have to think long and hard what to do about it…Will probably close the account and invest elsewhere – Nationwide please note.

I have had mortgages and savings with Nationwide for over 30 years and never been overdrawn. I bank online now and accidentally overdrew by £30 for 2 days as I hadn’t checked my Flexaccount online. I immediately transferred cash into it but was charged a £20 fee despite my explanation and protest. Flexaccount now pays no interest, e-Savings a paltry amount, and their customer care seems to be non-existent, so I am seriously considering changing.

This foreign exchange fee applies also to most credit cards and I have just applied for a Post Office credit card which does not charge when used abroad. This is worth thinking about even if you are only going to use it when on holiday.

I have already emailed to Nationwide’s Steve Blore, Senior Manager – Member Engagement, what I think of their changes. I have done the maths and there is no way using the flex account abroad can carry any savings now – will have to use moneycorp or its like, or carry cash (you are allowed up to 10000 when moving around Europe) and change this with the money exchange places. You will find in Spain they are very competitive compared to any high street banks, such as Halifax-espana, etc. There is still free use if you have the Nationwide credit card but for how long is another matter but till that goes too this is a way of at least paying for some of your living/holiday expenses. In the meantime looking at their offer of travel insurance – what a take on! – even if the offer is a Which best buy – you still have the problem that in the UK this insurance will not cover you when National Health Service kicks in or your own household policy and this also will apply in Europe where the first thing you should produce is your own EHIC card, failure to do so and this travel insurance no doubt will refuse to pay out again. Also £750 balance for £80 travel insurance – ************!!!! I can tell you – reading the above comments – that I have not only been a customer of Nationwide back to its original Anglia Status in the 70s but I have a mortgage and ISA’s with them and their credit card for at least 10 years – spending an average of 12.000 a year so I can assure you there is no loyalty for the saver or the long term customer at all. As I have stated to Nationwide they are now just one of the much maligned herd – a high street banker that comes second in the pecking order (politicians being first) when it comes to the question "who put us in this position" and "who is making us pay whilst they continue to accrue bonuses and profits?" Vote with your feet on 1st November 2010.

I too have been banking with Nationwide for over 20 years and travelled abroad extensively during that time. I never took large amounts of cash and relied on Nationwide’s free banking. I am now retired and do not travel so much but still use the service. My initial reaction is disapointment and I have decided to take more cash but once I have bought Euros I never change them back on my return, keeping them for my next trip. I will continue to use Nationwides service. Maybe Nationwides current boss is trying to boost his bonus.

Grassmarket says:
5 August 2010

I too am disappointed in Nationwide. Recently they’ve been chipping away at all the things that persuaded me to make the effort to move my account to them. I used to be rather proud that my bank was different from the ‘Big Four’, that they ploughed a more ‘customer-focused’ furrow. All that seems to have gone now; no point in staying loyal any longer, is there?

If they don’t like having so many casual members who only use the FlexAccount for cheap travel money, then just close that particular loophole – don’t penalise the rest of us as well! The travel insurance is a poor substitute – I prefer to choose my own annually, thank you. The convenience of being able to nip abroad at short notice & not worry about the travel money was a much more attractive benefit.

Lynne Taylor says:
6 August 2010

My son is a student and does not have £750 per month going into his account so won’t benefit from the insurance. My experience of bank provided travel insurance was when I was delayed in the UAE by the ash cloud and they didn’t pay out for anything so I wouldn’t rely on this insurance for anything more than basic cover. He is currently back packing around Europe so is relying on his debit card. Next year he will need to find an alternative cheaper method to draw cash. I will be looking at prepaid cards to see how they compare. .

Gill says:
6 August 2010

I too am a very disappointed Nationwide customer, having seen all the genuine benefits which led to my move from one of the "big four" disappear in recent years. Their flex account now pays no interest, the e savings account is very uncompetitive and now the cost of using their cards abroad has increased twice in the last year or so. I shall be looking to take my money elsewhere and will no longer be a champion for the "mutuals" and particularly Nationwide.

Steve M says:
6 August 2010

Another very disappointed Nationwide customer of over 30 years here. What has happened to this once proud ‘mutual’? I too will be moving everything, including my annual multi-trip travel insurance, from Nationwide to alternative providers.

Phil Hoyland says:
8 August 2010

I have also had accounts with Nationwide for 30 years from the days when they were consistantly a best buy. I always liked the fact that they didn’t behave like the big banks and appeared to "play fair and look after their customers" Sadly in recent years they seem to be following the other banks far too often. It seems those of us who have genuinely banked with them for years are to be treated the same as those who have opened the account just for the debit card travel perk.

Beware Nationwide… you may get rid of as many of your long standing customers as the ones who you are really trying to target. Travel insurance instead…Not impressed!

Ann Gilbody says:
9 August 2010

I agree with all the previous comments, but can anybody come up with a named alternative that we can use, and will benifit us>

Jerry Evans says:
10 August 2010

I would recommend everyone who moves their custom elsewhere at least keep their account open until the next AGM so we can have the chance to vote out the directors responsible for this rip-off.

I like others are disappointed with the way Nationwide has gone. I had saving accounts with them over the years and thought they appeared to be different and try harder . How they can even consider this offer of travel insurance to compensate what they have taken away is beyond me. The policy of the whole banking industry in this country is to take as much as possible and to give nothing, ie service interest rates etc.

Mark Bennett says:
27 August 2010

I have had a current account with the Nationwide since the very early 1980s. I have been a good customer. In recent years I have stuck to Nationwide because of the free use on purchaces in Europe. Now that they have cynically removed this benefit I can see no reason to stay. The alternitive Halifax account now looks very tempting. I don’t want thier free travel insurance, I already have insurance and in any case it does not cover my family so what is the point? I will definatly move my account and I would urge others to do the same. Keep the Nationwide credit card for now that still gives fee free purchaces in Europe- have a good look at alternitive current accounts according to your needs, as I say the Halifax is looking good to me.

Angus says:
30 November 2010

We recently went to Turkey for a month and before going, I checked how much Turkish money I would get for a given Sterling sum. After visiting all the major travel agents and baks that would quote me, some would only deal with existing customers, I did an internet search and found that Tesco would deliver the money I needed at a far better rate than anyone else.

Abroad, I used my Nationwide account and found the exchange rate was pretty good. The commission charge is only part of the cost. Agents can offer no-commission exchanges but their exchange rate is awful. Don’t just look at commission rates but look at what you will actually get.

Which should report the overall package and not just the commission rate.

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