Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/money/article/a567701
Bank customers charged 'exorbitant' foreign currency fees
An investigation reveals the costly and complex fees banking giants charge customers for using their card abroad.
by Victoria Bischoff on Feb 18, 2012 at 00:01
Banks are continuing to charge holidaymakers exorbitant overseas fees that are unclear and far too complicated, new research has revealed.
The news comes just months after Consumer Focus called on the Office of Fair Trading (OFT) to investigate misleading foreign currency charges, which it claims costs customers £1 billion every year.
All too often the details of these fees are hidden away on providers’ websites or undisclosed statements, said consumer group Which?
Its recent investigation reveals the 'huge difference' in overseas fees charged by the UK’s seven biggest banks and building societies.
Making a purchase abroad using a debit card
The cost of buying a €5.95 (£5.03) bottle of wine in a French supermarket in Calais in December:
|Provider||Exchange rate||Foreign loading fees||Purchase transaction fee||Total charged|
|N&P||0.8454||No fee||No fee||£5.03|
Withdrawing cash from an ATM machine
The cost of withdrawing €20 (£16.92) from a cash machine in France in December:
|Provider||Exchange rate||Foreign loading fee||Withdrawal fee||Pricing structure of withdrawal fee||Total|
|Lloyds||0.8462||2.99%||£2||1.5% or £2 min, £4.50 max||£19.43|
|Natwest||0.84602||2.75%||£2||2% or £2 min, £5 max||£19.39|
|Santander||0.84623||2.75%||£1.99||1.5% or £1.99 min||£19.38|
|HSBC||0.84578||2.75%||£1.75||2% ir £1.75 min, £5 max||£19.13|
|Barclays||0.84653||2.99%||None*||2% or £1.50 min, £4.50 max||£17.43|
*Cash withdrawal fee of £1.50 not applied as cash machine is part of the Golden Alliance Group
With its no-fee policy on using a card abroad, the clear winner in both tests was Norwich and Peterbourgh Building Society's Gold Light account, said Which?
At £6.67, meanwhile, Halifax charged customers the most for buying the wine. And at £19.43 Lloyds charged the most for the cash withdrawal.
What's more, additional fees can make purchases even more expensive. For example, 10 transactions of £50 made with a Halifax debit card would cost the cardholder £28.75, while the same 10 transactions made with N&P would be free.
Richard Lloyd, executive director of Which?, described the charges as 'unfair' and said customers must be able to see if they are getting a good deal or not.
‘Banks are charging exorbitant fees for the most straightforward overseas transactions, pushing up the price of even the most basic purchases'.