The real cost of getting cash while abroad

http://www.theguardian.com/money/2015/jun/20/money-abroad-bank-charges-debit-credit-cards

Version 0 of 1.

You’ve started counting the days until you head off on holiday and are already thinking about which books you want to read while away. But have you given any thought to which debit or credit card(s) you are going to use to pay for items and withdraw cash from ATMs?

Pick the wrong plastic to use abroad and you could get a nasty shock when you get home and check your statement.

If you are planning to use a Lloyds, Santander, Halifax or TSB debit card, you could quite easily find yourself racking up a bill of £50 or even £100 in fees and hidden commission – and that’s just for one holiday.

However, if you have a Halifax Clarity credit card or Norwich & Peterborough building society Gold Classic debit card, you won’t pay a penny in foreign exchange loading fees or other bank charges when you use it in shops, hotels and restaurants, or to withdraw money from cash machines.

Some people with high-charging plastic may feel they can’t be bothered to take out a credit card or open a new current account just to avoid these fees, but others – particularly those who go abroad regularly – may take the view that now is the time to switch to a cheaper alternative.

The table on the left, compiled by Andrew Hagger of personal finance website MoneyComms.co.uk, shows the total debit/credit card overseas fees and currency charges that a family would pay, depending on which card they use.

It assumes they make five separate withdrawals of £150-worth of currency, plus 20 purchases, totalling £1,500 (ie, £2,250), which some may feel is on the high side, but it gives you an idea of who charges the most and the least.

Halifax Clarity and Norwich & Peterborough’s Gold Classic account came out top. The Clarity card boasts “no fee to use it anywhere worldwide”. It applies MasterCard’s exchange rate at the time you make the transaction, and doesn’t add any “loading”, fees or charges.

In addition, it won’t charge for ATM withdrawals – though watch out for the fact that some cash machine providers charge a fee, which should be made clear at the time. And be aware there is no interest-free period on cash withdrawals made with the Clarity card, so you will be charged interest from the day you take the money out at the rate for purchases. The representative APR is 18.9%.

Norwich & Peterborough has been keen to publicise the benefits of its plastic and last weekend issued research showing that seven out of 10 people think being charged to use your debit card abroad is “unfair”.

Metro Bank also scored highly in the MoneyComms survey as both its debit and credit cards are free of fees, provided you are within Europe. Metro Bank has 36 branches located mainly in Greater London and the south-east, though you have to have one of its current accounts to apply for a credit card.

One of the big problems for consumers is that the fees and charges for using your plastic abroad are often horrifically complex. Someone using their debit card to withdraw cash from a foreign ATM may well find they are charged around 2.75% to 3% of the money in hidden commission. They will also typically be hit with a separate ATM fee that is usually expressed as a percentage of the amount taken out. For example, NatWest’s ATM fee is 2% of the value (minimum £2, maximum £5).

If you have a Lloyds, Santander, Halifax or TSB debit card be aware that they all impose a fixed fee for overseas purchases in shops, restaurants etc – and that is on top of the 2.75% to 2.99% they take off you for currency conversion. The fixed fee is £1.50 at Halifax, £1.25 at Santander and £1 at Lloyds and TSB. It is applied on each transaction.

Fatima Raoufi at Norwich & Peterborough says: “We would always recommend that anyone unsure of whether their building society or bank will charge them for withdrawals and debit card use while abroad should ask their provider to give them a list of fees and charges before they set off.”