/ Money

Is your bank cashing-in on your holiday?

Euros and prepaid exchange card

With a multitude of different fees charged by credit and debit card providers it’s hard to track how much you’re paying to use your card abroad. Unfortunately, some banks are charging far too much.

When we go on holiday we often push the thought of debit card charges to the back of our minds. After all, when you’re on holiday the last thing you want to do is worry about what your bank is charging you for every transaction.

And then there’s the exchange rate – are you getting a good deal or paying through the nose?

The truth is it all adds up – and to perhaps more than you think.

Which banks are charging the most?

When I checked the rates charged by all the major debit card providers on the market I was surprised by the variety of fees that they can apply on purchases and withdrawals.

The banks making the most out of holidaymakers are NatWest/RBS, Halifax/Bank of Scotland, Santander and Lloyds TSB. All of these charge a foreign loading fee of 2.75% or 2.99% on every transaction, as well as transaction fees for making purchases and cash withdrawals.

When factoring in all the fees, the amount you’re charged quickly adds up. For example, if you made ten £20 purchases and five £50 cash withdrawals abroad (a total of £700) you would be charged £34.88 by Halifax, Bank of Scotland, Natwest and RBS.

Is it possible to avoid the fees?

The good news is that there are some decent products that could save you money on overseas charges. Norwich and Peterborough BS (N&P) and Metro Bank charge no overseas fees on their current accounts. Nationwide BS offers the next best deal, charging a 2% foreign loading fee and £1 per cash withdrawal.

Alternatively you could opt for a good credit card that charges no foreign loading fees. There are also some good euro and dollar prepaid cards that will charge 0% foreign loading and no fees on purchases.

If N&P, Metro and, to a lesser degree Nationwide BS, can manage to absorb the overseas fees, why can’t the rest? And why is it so complicated? Far too often, not only do you have to pay a percentage of your overseas spending in fees, they then whack a per-transaction cost on top, penalising people who prefer not to carry large amounts of cash around with them.

How much does your bank charge you to use your card abroad? How do you avoid it, or are you happy to pay a bit extra when you’re on your hols?

John Bowers says:
25 May 2019

I have twice been charged a transaction fee by the operator of the cash machine. Once in Germany at a cash point in a cheap hotel, when the 4.99 Euro fee flashed up on the screen after I thought I was about to get the 40 Euros I asked for. I tried to cancel, but too late. Once in Spain at a Santander cash point. The receipt showed a 5 Euro transaction fee on a 40 Euro withdrawal. There was no warning on the screen or at the machine.
I eventually got a refund from Halifax for the 4.99 Euros. I have not contacted them yet about the 5 Euros.
I go for 40 Euro withdrawals because shops etc do not like giving change for 50 Euro notes on small purchases.