Holidaymakers ripped off more than £1bn in fees using debit and credit cards abroad

Posted: 18 July 2018 5:28 pm

There are clever alternatives if you follow our guide.

When travelling overseas individual levies on card payments can appear small on their own but over time they total significant sums. The charges travellers face are commonly applied to simple financial tasks like withdrawing cash from a cash machine.

The Money Advice Service, an organisation established with cross-government party support, warns that using your usual cards can result in racking up expensive overseas fees. The advice is to save a substantial amount by choosing a special “travel-friendly” debit, credit or prepaid card before you go.

There are some sophisticated solutions on the market. Revolut, for example, allows you to spend abroad with no fees. In addition, you can make fee-free international money transfers, as well as buy certain cryptocurrencies with ease. More than two million users are currently taking advantage of this elegant, streamlined smartphone app. Sign up takes just 60 seconds.

Another alternative is WeSwap. Its MasterCard enables travellers to spend money anywhere in the world. It’s completely free to use your WeSwap MasterCard online or at point of sale, and you won’t incur any fees at ATMs as long as you withdraw no more than twice a day and the withdrawal is £200 or more each time. Smaller ATM withdrawals incur a charge of £1.50 per withdrawal.

With London-based WeSwap you can also swap sterling for euros, dollars and 15 other currencies. Plus, as well as swapping money into any currency, homeWeSwap can match people travelling in opposite directions and directly swap their travel money.

It’s also possible to swerve paying fees if your bank has international ATM alliances that enable you to withdraw cash for free. For example, global lenders like Citi and HSBC have ATMs worldwide, and Citi does not charge for any international ATM withdrawals as long as you head to a Citi ATM. Then all you pay for the withdrawal is the currency conversion fee.

However, according to research by global payments firm FairFX, not so savvy UK holidaymakers are still spending more than £32 billion on their cards when they travel abroad each year. For spending that amount the total charges come to £217 million just for using cash machines and £814 million for using cards to make purchases.

Ian Strafford-Taylor, FairFX’s chief executive, told the BBC that it’s too easy for us to turn a blind eye to what we think is just a few quid. But the majority of British banks charge a fee of 2.8% on credit card transactions that are not in British pounds, FairFX says.

On this basis, a £50 meal costs an extra £1.40 when a credit card is used to pay, and debit cards incur almost double the cost of credit cards. In addition, we face several charges when we draw out cash from an ATM using our debit cards.

For example, it’s possible for a 2.5% fee to be applied to the total amount withdrawn – about £1.25 for every £50. Plus another fee of £1.39 is added on average when using a foreign ATM. The UK-based banks justify the charges they levy on the basis that their cards are an effective protection against fraud and are a more flexible way of paying than using cash when travelling abroad.

But taking a travel card is much less stressful than taking a regular bank card when you go abroad. There are loads of savings to be made! Our guide takes you through the benefits and lets you compare some of the best options for holidaymakers.

If you are going abroad and are considering your travel money options, head to our travel money section to find cheap deals on foreign currencies. Our travel section can also help with tips on getting cheap flights!

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