Citywire for Financial Professionals
Stay connected:

Citywire printed articles sponsored by:

View the article online at

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
Halifax 0.84565 2.75% £1.50 £6.67
Natwest 0.84538 2.75% £1.25 £6.42
Santander 0.84565 2.75% £1.25 £6.42
Lloyds TSB 0.84531 2.99% £1 £6.18
Barclays 0.84505 2.99% No fee £5.18
HSBC 0.84402 2.75% No fee £5.16
Nationwide 0.84602 2% No fee £5.13
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
Halifax 0.84623 2.75% £1.50 £1.50 £18.89
Nationwide 0.84602 2.00% £1 £1 £18.25
Barclays 0.84653 2.99% None* 2% or £1.50 min, £4.50 max £17.43
N&P 0.846 No fee None None £16.92

*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'.

14 comments so far. Why not have your say?

Ian Murray

Feb 18, 2012 at 09:17

However If you have 1000pounds per month paid into a Santander current account in England you can make charge free withdrawals from Santander ATMs in Spain. I live in Spain and it is very useful to me and haven't noticed any hidden charges.

report this

Alan, Bristol

Feb 18, 2012 at 09:44

No mention of Santander's "Zero" credit card.

This levies no charges for using the card abroad, not even cash withdrawls.

Although interest is charged for a cash withdrawl from the day of withdrawl (like in the UK), it is a very good exchange rate (much better than getting cash from a bank/Post Office at home before you go).

The trick is to put your card in credit before you go on holiday and then there are no interest charges on the cash withdrawn.

report this

Andrew Barwick

Feb 18, 2012 at 10:13

The Caxton Euro card (a pre-paid debit card) is worth a look. Euro cash withdrawals and purchases are all done at the initial FX "card load" rate with no extra charges. Today's rate is 1.175 euro / £1 (0.851) so a 20 euro spend would cost £17.02. The big plus for me is knowing exactly how much I am spending.

report this


Feb 18, 2012 at 10:56

As Andrew Barwick comments, pre-paid debit cards for regular and/or long term travellers will reduce foreign exchange costs while providing a convenient and secure means of carrying one's money. I always use FairFX and would not countenance using a high street bank or regular credit card. My son is on his gap year and I have set him up with a FairFX euro card for his three months in France and a FairFX US dollar card for his five months in South America.

report this


Feb 18, 2012 at 11:17

Barclays is shown as no fee for the cash withdrawal whereas the structure of the fee states a mimimum charge of £1.50.

report this

Keith Snell

Feb 18, 2012 at 13:12

I believe Alan Bristol s not entirely correct in respect of Santander Zero Card, there is no charge for use of an ATM abroad however the rate used for the exchange rate calculation is not as competitive as some. More importantly it is not posible to pay extra funds into a credit card account this throws their system and you can only withdraw if your credit limit is not exceeded. i.e. There is no way of paying in extra funds in the knowledge that you are likely to exceed your credt limit.

report this


Feb 18, 2012 at 14:31

I’m not aware of the rules in other countries but I use Barclays ATMs in Spain, (even though I’m an HSBC customer) as they give you the option of confirming the deal in GBP or Euros at the machine. I’ve tried both ways on many occasions and the Barclays rate is always better. For some reason, their rate is 2.5% if you confirm in GBP.

report this

Peter Kelson

Feb 18, 2012 at 15:17

I believe that Santander are not issuing the Zero card to new customers. I don't see why it wouldn't be possible to pay money in to lake a credit balance. I have had credit balances on cards before when, for example, refunds from purchases have been received.

report this

alan franklin

Feb 18, 2012 at 16:26

We just paid a lot of money to Nationwide, the so-called non-profit organisation run by the usual fat cats, for having the temerity to use our debit cards abroad.

They advertised for years that they didn't charge for these transactions but couldn't resist the chance to rake in some more fees, while at the same time decimating the staff at their branches, which now feature long queues.

We have come to dislike the utter hypocrisy of an organisation that once, for many years, really did a good job of looking after its customers. We need some new names on the High Street!

report this


Feb 18, 2012 at 16:57

Why not use a credit card? There are no charges for using a Nationwide Visa card abroad for purchases. They use up-to-date real time exchange rate without any loaded hidden charges.

report this

dominic lloydsbod

Feb 18, 2012 at 18:08

Nick A is absolutely right. Credit cards do not usually charge consumer for purchases abroad (and the FX rate is usually as good as you'll get even from better FX bureaux). Halifax Clarity card also does not charge for cash withdrawals abroad :-) (but do remember to pop into branch day after you get back to settle up and avoid paying unnecessary interest!)

report this


Feb 18, 2012 at 20:17

Like Sinic I use the fairfx card. The charges are clear and reasonable, and the exchange rate appears to be the best around. I particularly love their text service, so you can charge up the card from your UK bank account at any time you need extra funds. I won't go abroad without this now, and also use it for foreign currency internet purchases.

report this


Feb 19, 2012 at 11:17

As always, precision is vital in calculating charges. The table does not include the spread charge for selling and so is not complete. The bid/off spread charged can be as high as 8%; just take the difference in the spread and divide it by the bid rate. The high street cambio or bank also receives half of this (4%) on top of the flat fees it charges. So your foreign exchange deal could be costing you as much as another 80 pence. Check out the actual market rate here:

There are a plethora of charges being levied against the major US banks for similar reasons as this sort of practice is being engaged in against individuals and institutions.I suspect customers of these institutions are not being told that they are being charged more than 30% to buy that bottle, but then again, even a charge of 10% is just 50 pence and there is no mention of charges for using the French payment transfer system (that the UK banks might have to pay regardless of their own charging system). The correct transaction is to find those cambios that offer low bid/offer spreads (there are some out there that only charge a 1% spread if you are lucky) and USE CASH!

report this

Paul Tricki

Mar 19, 2012 at 12:54

My thoughts:

Get a Caxton Card and drip feed funds into it whenever the exchange rate appears 'favourable'. It's currently 1.177 for £ to € conversion which is about as good as you'll find anywhere. There's no loading fee and no charge to use your card to withdraw from an overseas ATM. In an emergency, you can top it up while travelling by sending a coded text to transfer funds from your current account.

Use a credit card to buy things e.g. duty-free goods. If you MUST use it in an ATM, ensure you pay the card off (in full) ASAP on your return. Don't even wait for a statement.

Ensure that you have two or three cards when you travel, just in case there's a problem with one, (keep them separate, but be security conscious). Don't forget a rarely used PIN like I did once.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

More about this:

More from us


From the Forums

+ Start a new discussion
Sorry, this link is not
quite ready yet