/ 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?

L.M.High says:
18 February 2012

I used to pay the tollgates in France with my card (much easier than searching for spare cash) but now Santander has taken over Alliance & Leicester, for a 2.80 euro tollgate charge the cost is 50% over at exchange rate of £2.53 + int.use fee of £0.07+ transaction fee £1.25 !! Multiply that five or six times on a journey in one day and it becomes outrageous.
Ironically their statements urge one to “use your card for everyday items” and “use your card abroad”!
Very good for their profits! Ha!

David says:
18 February 2012

There’s nothing worse than getting your bank statement after a holiday and seeing the extortionate charges. Like the above commentator I have ended up banking with Santander having switched to Alliance & Leicester several years ago. Imagine my disgust at returning from a holiday in Spain to find my Spanish bank has charged me for using their services. It would be interesting to see what the real cost is to these multi-national corporations when using a card or ATM abroad. Is this the next large scale fee scandal?

Nigel Whitfield says:
18 February 2012

I have the firstdirectory option on my account, which gives me free cash withdrawals abroad, as well as travel insurance, etc. Sure, it’s about £12 a month, but at least I get a benefit.

When you have to pay each time you take money out, you end up taking more – at least I did. So I’d take 150 or 200 euro at a time, because that way the charge was easier to stomach as a percentage. Then I’d have loads of euros left at the end of a trip, doing nothing – especially annoying as I have an offset mortage.

Being able to take money out without paying a penalty means I can take what I need, and not worry about having excess foreign currency left.

Of course, if other banks can absorb the cost, you can’t help wondering why FD doesn’t too, for everyone, but at least you get other benefits with firstdirectory

Edith says:
13 June 2014

Like you, I also have a firstdirectory option on my accoun but now it costs £15 per month. But, don’t be fooled into thinking that you can withdraw cash from an ATM for free while abroad. I have just returned from Germany to the shock on my bank statement. I phoned first direct bank to find out what was happening.
Yes first direct do not charge for withdrawing cash abroad. The bad news is that the visa card that is the first direct debit card charges a transaction fee currently at about 2.57%. This works out at slightly more than £5 for £200 withdrawn abroad.
Needless to say it makes the firstdirectory option look less attractive and I am now most certainly looking around for something better.
What I would like to know is what this transaction charge is actually for or is it just another rip off!

Ann Maureen Fearon says:
23 February 2012

After reading your article on unfair card charges I agree that this practice is unacceptable. We have travelled on holidays with Saga for many years and last year we took their “World in One Country” holiday, the basic price being £5,500. At that time we were told that if we pay by credit card, due to “CHARGES IMPOSED ON US”, they would have to add a transaction fee of 1% if we paid with with a Saga Credit card and 2.5% for all other credit cards. This year I see in their brochures that payments paid by credit card are subject to a transaction fee of 2.5% (or 1% if paid by Saga PLATINUM card.) I wonder why the difference in card usage!!!? The thought did cross my mind to walk into their office and pay for the holiday in cash! They even charge £3 for a payment by cheque. In the end we used a debit card. If my calculations are correct, had we paid by a credit card other than a Saga one, we could have ended up paying an extra £137.50, which is quite a lot extra to us as retired folk on a fixed income. Totally unacceptable, and this year I cannot yet bring myself to book one of their holidays despite being inundated every few days with their brochues.


I use a no conversion fee credit card that also gives cashback for my purchases abroad.
You still need cash though and it is more difficult to get no conversion fees, no withdrawal charges and also the current conversion rate (forexrate).
Citi provide two very useful accounts – one Euro, the other Dollar – no fees, good conversion rates, cheque book in Dollars and plenty of free ATM use:


I recently had an extremely unpleasant surprise when I visited India on my annual winter trip there. I already had an ICICI bank account at the East Ham (London) branch, one of the main reasons being that they promised there were absolutely no charges for withdrawing cash at cashpoints in India. However, when I made a cash withdrawal on at least 2 occasions I noticed that the exchange rate I calculated from that day’s balance available in rupees (I already knew exactly how much I had in pounds in the account) was significantly different from the rate that I calculated from the value of the cash withdrawal at the same instant. The local cashpoints did not make any references to any fees, either on screen ( as in the UK) or on any of the extensive notices available in the booth.

I used to draw foreign cash through my Nationwide flex card up until they introduced loading fees (3%) plus a withdrawal charge of £1 per transaction in the summer of 2009. However, when I checked the exchange rates that Nationwide were offering me AFTER the fees quoted upfront, I discovered that ICICI was giving a marginally LOWER exchange than this, despite claiming no charges! It transpired that their hidden charges, in the margin they kept on the exchange rate, amounted to around 5%!

If I thought that was bad, there was more horror in store. During this trip, I opened a local ICICI account in the Calcutta branch. The bankers were falling over themselves to get my custom, fawning in a most obsequious (and to my western sensibilities, most unacceptable) way, which was only to be expected as NRIs (Non-Resident Indians) are treated just next to God in India, for the power, wealth and prestige we are perceived to bring. They pretty much opened my account in the comfort of my home there, giving me all the paperwork, including online details, debit card and PIN, and an additional card for my mum who lives there. (They even lied to me point blank in their desperation to get me to open a fixed deposit account while I was there–I resisted this determinedly, and not unwisely–but that is another story!) Not once did they state that there would be a charge for any of this. More importantly, neither did their website–on the contrary, it stated categorically that there were no charges for ATM transactions. This made sense, after all, it was labelled an international debit card and foreigners would be using it abroad. I deposited a cheque drawn on my London ICICI bank, which took a while to clear, by which time I was back home in London. On checking the balance at my local Sainsbury’s Bank cashpoint I was puzzled to notice that the amount on the slip–although it confirmed that the cheque had cleared–was quite different to that which came out on the printout slip seconds afterwards. To be sure my eyes were not deceiving me, I checked it 4 times in a row, and each time the discrepancy was obvious. Now I’m aware that exchange rates fluctuate, but surely not by so much in the course of barely a second or two!

Imagine my shock, when I came home, decided to check my balance online, and discovered that I had been charged 28 rupees (about 40 pence) on each of the 4 occasions I had checked the balance! I immediately shot off an email of complaint to Calcutta. Customer services in India is the pits, and this proved no exception, After much unnecessary and most annoying waffle, they quoted me their so-called charges, of 28 rupees for balance checking and 118 rupees (about £1.50) per cash withdrawal transaction! This seemed quite arbitrary, as there was absolutely no evidence either in their own literature, or in my numerous personal dealings with them, that such charges existed.

There’s more. I then discovered through a friend that there was a 300 rupee annual fee (about £5) levied on the debit card as well as the supplementary card, and every cash transaction–even in India–cost 150 rupees ( about £2.50)!!!

Now I’m wise to their double-dealings and sneaky hidden charges, I shall no longer be doing any business with this monstrously unjustifiable excuse for a bank. The lack of transparency and the way they intentionally mislead customers in order to get their commission is absolutely staggering, and actually makes UK banks look like Mother Teresa.

Moral of the story–when banks have the audacity to treat their customers so cynically, charging merely for for the privilege of looking to see how much money we have, and for drawing on our own savings, something is very wrong indeed, and it is time to vote with our feet. Let us go where we are not held in such contempt.


Regarding my earlier comments above, in the 3rd paragraph, I meant the discrepancy between the screen balance and that on the slip–sorry for any confusion!