Schools out … but holidaymakers jetting off abroad risk £327 million in extra charges for using their credit card abroad
12 million consumers (24%) plan to use a credit card while holidaying abroad this summer, racking up fees of £327 million
But the 12 million (24%) planning to use a debit card will also be stung with a double set of fees
60% have used a cash machine to withdraw money abroad, risking fees of at least £3 each time they do so using a credit card.
Millions of families set to head abroad this summer risk falling prey to various fees and charges by using the wrong credit and debit cards abroad. With the school holidays fast approaching, analysis from Uswitch.com, the independent price comparison and switching service, warns holidaymakers to plan ahead to avoid paying over the odds.
With average exchange rate transaction fees of 2.75%, British holidaymakers risk running up over £327 million in extra charges just by using their credit card abroad this summer. However, it could prove even more costly for those consumers planning to use a debit card. Not only will they have to pay a 2.75% transaction fee, but they will also be charged a ‘purchase’ fee of around £1.25 per transaction.
When it comes to cash withdrawals, however, using debit card works out cheaper than a credit card – with fees of 2% rather than 3% on top of the transaction fee, and no hefty cash advance interest charges. But six in ten Brits (60%) still take money out of a cash machine while they’re abroad – leaving themselves vulnerable to high charges.
Michael Ossei, personal finance expert at Uswitch.com, says: “Family holidays inevitably end up costing more than you think, especially during the peak months of July and August. And with trips abroad now costing more than they did a year ago, as a result of the weakening pound, it’s even more important that holidaymakers don’t get ripped off by using the wrong card this holiday season.
“Taking action now and snapping up the cheapest travel cards could save you hundreds from the cost of your trip. There are credit cards on the market that charge no transaction fees when you use them abroad – these are the ones to go for.
“However, the card application process can be lengthy and waiting for your card to arrive can take weeks. If you think you’ve missed the boat, then at the very least you should compare the options in your wallet and follow this one simple rule, if you want to use a card on holiday, use a credit card for spending and a debit card for withdrawing cash.
“Alternatively consider a prepaid currency cards which offer the same flexibility for purchases and withdrawals as a debit or credit card with fixed charges. These cards can offer very good exchange rates as well as the security that you can only spend what you load onto the card.
“If you prefer to pay with cash, make sure you take both exchange rates and commission rates into account to get the best rate on your money. This will normally involve pre-ordering your currency and collecting it before you travel. Avoid changing currency at the airport or straight from your debit card, as commission fees could cost you the much needed ice-cream for the kids and well-earned drinks for Mum and Dad.”
Table 1: Credit Card Fees Abroad Based on Most Popular Cards
|
Rank
|
Supplier
|
Product name
|
Exchange Rate Transaction Fee
|
Cash Fee
|
1
|
John Lewis & Waitrose Partnership
|
Partnership Card
|
2.75%
|
2.50% (min £2.50)
| |
2
|
First Direct
|
First Direct Credit Card
|
2.99%
|
2.99% (min £3.00)
| |
3
|
American Express
|
American Express Platinum Cash back
|
2.99%
|
3.00%(min £3.00)
| |
4
|
Co-operative Bank
|
Platinum Fixed Rate credit card
|
2.75%
|
3.00%(min £3.00)
| |
5
|
Marks & Spencer
|
M&S Credit Card
|
2.99%
|
2.99%(min £3.00)
| |
6
|
Nationwide
|
Nationwide Credit card
|
2.00%
|
2.50%(min £2.50)
| |
7
|
Tesco
|
Tesco Bank
|
2.75%
|
3.00%(min £3.00)
| |
8
|
Sainsbury’s Finance
|
Sainsburys Bank Cash back credit card
|
2.75%
|
3.00%(min £3.00)
| |
9
|
Capital One
|
Capital One Classic
|
2.75%
|
3.00%(min £3.00)
| |
10
|
Virgin
|
Virgin Balance transfer card
|
2.99%
|
5.00%(min £5.00)
| |
11
|
MBNA
|
MBNA Platinum Credit Card
|
2.99%
|
5.00%(min £5.00)
| | |
Typical Rate
| |
2.75%
|
3.00%(min£3)
|
Source: www.uswitch.com, correct as of 14/5/13
Table 2: Debit Card Fees Abroad Based on Most Popular Current Accounts
|
Rank
|
Supplier
|
Exchange Rate Transaction Fee
|
Purchase Fee
|
Cash Fee
|
1
|
Nationwide BS
|
2.00%
|
N/A
|
£1 + 2%
| |
2
|
Co-operative Bank
|
2.75%
|
N/A
|
2% (min £2.00)
| |
3
|
First Direct
|
2.75%
|
N/A
|
2% (min £1.75, max £5.00)
| |
4
|
Halifax
|
2.75%
|
£1.50
|
£1.50
| |
5
|
Natwest
|
2.75%
|
2.75%
|
2% (min £2.00, max £5.00)
| |
6
|
RBS
|
2.75%
|
2.75%
|
2% (min £2.00, max £5.00)
| |
7
|
Santander
|
2.75%
|
£1.25
|
1.5% (min £1.99)
| |
8
|
Barclays
|
2.99%
|
N/A
|
£1.50 (free if you’re using a Barlcays ATM or an ATM at a Global Alliance member bank)
| |
9
|
Lloyds TSB
|
2.99%
|
£1.00
|
1.5% (min £2.00, max £4.50)
| | |
Typical rate
|
2.75%
|
£1.25
|
2%
|
Source: www.uswitch.com, correct as of 14/5/13
FOR MORE INFORMATION
Charlotte Nunes
Phone: 020 7148 4664
Email: charlotte.nunes@uswitch.com
Twitter: @uswitchPR
Notes to editors
Research carried out online with the Uswitch.com Consumer Opinion Panel in April 2013 amongst a sample of 1,042 GB adults
60.3% of consumers are planning to go abroad this summer and 39.4% of these are planning to use their credit card for general spending while they are there. This means that 24% of consumers will be using a credit card abroad this summer – or 12 million consumers when applied to the population of 50 million (ONS). The average amount they will spend on their card is £992.11. Using a typical transaction fee of 2.75% based on the most popular credit cards on Uswitch.com (see table 1), each consumer will pay £27 in fees whilst on holiday. This is £327 million when applied to the 12 million consumers.
When asked ‘Which of the following ways did you use to pay for your holiday expenses?’ 24% said ‘Debit card’. See Table 2 for debit card charges incurred.
When asked ‘Thinking about previous holidays abroad, have you ever been forced to take cash out of a cash machine?’ 60% said ‘Yes’ and 40% said ‘No’. See Table 2 for credit card cash withdrawal charges.
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