Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Don't Get Burnt with Unnecessary Foreign Credit Card Usage Fees this Summer

Personal_Finance / Credit Cards & Scoring Jul 12, 2007 - 09:16 AM GMT

By: Nationwide

Personal_Finance Nationwide reveals holidaymaker's lost £326 million last year : With summer holidays around the corner, millions of holidaymaker's are planning to travel abroad. Despite shopping for the best holiday deal, many people overlook the foreign usage charges imposed by their card provider. Nationwide estimates that travelers wasted over £326 million* in unnecessary foreign loading fees on their credit card whilst abroad last year. The Society therefore urges consumers to pay as much attention when selecting the card they take abroad, as they do in choosing the perfect holiday destination.


Some organisation's have actually increased their foreign usage charges this year to further benefit from their customers’ holiday spending. For example, Lloyds TSB have just announced it is increasing the charge on its debit card from 2.75% to 2.99% and Halifax is reported to be increasing the charge on its credit card from 2.75% to 2.95%**. Nat West has increased the charges on its debit card from 2.65% to 2.75% every time a purchase or withdrawal is made overseas and has increased its flat purchase fee from 75p to £1.25. Consumers should take a good look at the deal their bank is offering when traveling abroad and if necessary vote with their feet by moving to a card that doesn’t penalise them whilst they are on holiday.

Amongst the issues facing travellers are:

Foreign Loading Fees

Most lenders charge a loading fee of around 2.75% when spending abroad and most levy a flat fee each time a debit card is used as well. For example, Halifax charge £1.50 for every purchase on top of the 2.75% foreign loading fee on their debit cards. Nationwide is the only high street financial provider to offer free use abroad for all of its customers, saving them millions of pounds each year.***

Dynamic Currency Conversion

When abroad the Society recommends that holidaymakers should be aware that the rate of exchange offered by the retailer may not be as competitive as waiting for their provider to make the conversion, in order to get the best exchange rate and no commission charges.# Nationwide estimates that last year its customers wasted over £850,000## by choosing to pay in sterling on their credit card whilst abroad. The Society therefore advises all of its customers to always pay in the local currency.

Jeremy Wood, divisional director at Nationwide, said: “People who are planning to go abroad over the next few months should be aware of the hidden charges that most card providers impose which are both costly and unnecessary. Anyone using a Nationwide debit card or credit card will not be charged any foreign usage fees and will therefore have a little more money to help them enjoy their holiday.”

For further information:
Rachel Shephard, press officer, telephone: 01793 657225
Steve Blore, senior manager, telephone: 01793 655199

Notes :
Nationwide does not levy any foreign usage charges on its debit or credit card, but it is important to note that anyone using their credit card to withdraw money from an ATM at home or abroad will be charged a cash advance fee.

* £326 million estimate for money wasted in unnecessary foreign loading based on:

  • UK credit card issuers processed £12.3 billion worth of overseas transactions in 2006. (source: APACS).
  • Nationwide transactions represented £439 million of this overseas spend.
  • Assuming an average 2.75% loading fee, total loading fees applied on other issuers overseas spend (£12,300 million - £439 million = £11,861 million) was £326.2 million (2.75% * £11,861 million = £326.2 million).

** Source of Halifax Data – Daily Mail, 11 July 2007. Date of new rates to be confirmed.

*** Last summer, Nationwide credit card customers alone were around £3.4 million better off for choosing one its cards over another provider.

Nationwide customer saving of £3.4 million based on:

  • Nationwide customers spent £122 million on foreign currency transactions last summer (June 06 – August 06).
  • Nationwide do not apply a foreign loading on these transactions. Typical loading applied by UK financial institutions is 2.75%.
  • Saving to Nationwide customers is £3.4 million (2.75% * £122 million = £3.4 million).

#DCC

  • Cardholders who bank elsewhere face a complicated scenario. For certain transactions it may be less expensive for them to pay in sterling. They would have to know what their bank charges for foreign usage and currency conversion. In addition, they would have to find out the VISA rate for that day and compare this to the sterling rate being offered by the retailer.
  • If the cardholder opts to pay in sterling the payment will be converted from the local currency to sterling. Payment in sterling prevents Nationwide from handling the currency conversion via VISA on our customer’s behalf. For regulatory and anti-competitive reasons VISA is unable to prevent the operation of DCC by retailers or ATM providers but has introduced rules to govern it. Prior to the transaction, a shop or restaurant offering the service should verbally inform the cardholder of the payment choice available, but language barriers will often prevent this. This should be followed by a statement on the signature slip illustrating the choice the cardholder has made.
  • Nationwide can only state the VISA positioning as we do not issue Mastercard branded Debit or Credit Cards.

## £850,000 wasted by choosing to pay in sterling based on:

  • Volume of Nationwide credit card holder transactions performed overseas in Pound Sterling was over £31 million in 2006.
  • Nationwide believes the exchange rates used by merchants offering to convert local currencies into Pound Sterling will represent worse value than the 2.75% loading applied by other card issuers. 2.75% of £31 million worth of transactions equates to £852,500.

Cost of various purchases with a debit card overseas-Assuming all ATM transactions and purchases are single transactions.

Debit Cards Nationwide NatWest HSBC ***** Lloyds TSB (from 30/07/2007) Barclays Halifax
ATM charges Free 2.75% + 2.00% (min £2, max £5) 2.75% + 1.5% (min £1.75) 2.99% + 1.5% (min £2.00, max £4.50) 2.75% + 2% (min £1.50, max £4.50) 2.75% + £1.50
Retail purchases Free 2.75% + £1.25 2.75% 2.99% + £1 2.75% 2.75% + £1.50
£100 ATM withdrawals Free £4.75 £4.50 £4.99 £4.75 £4.25
New clothes (£50)**** Free £2.63 £1.38 £2.50 £1.38 £2.88
Train tickets (£150) **** Free £5.38 £4.13 £5.49 £4.13 £5.63
Restaurant (£120) **** Free £4.55 £3.30 £4.59 £3.30 £4.80
Food shopping (£100) **** Free £4.00 £2.75 £3.99 £2.75 £4.25
General travel (£400) **** Free £12.25 £11.00 £12.96 £11.00 £12.50
Other (£180) **** Free £6.20 £4.95 £6.38 £4.95 £6.45
Total Free £39.76 £32.01 £40.90 £32.26 £40.76

**** NatWest charge customers £1.25 per retail transaction, Lloyds TSB charges £1 per transaction and Halifax charges £1.50 per transaction. These charges are in addition to the foreign currency loading fees.

***** On HSBC’s Bank Account Plus and Premier Accounts the 1.5% (min £1.75) for cash transactions is not charged.

Source of Competitor Data – Moneyfacts.co.uk - the money search engine 10 July 2007.
Source of Calculations – Nationwide, 12 July 2007.

Cost of purchases with a classic credit card overseas-Assuming all ATM transactions and purchases are single transactions.

Credit Cards Nationwide NatWest HSBC Lloyds TSB Barclaycard Halifax**
ATM charges 2% (£2 min) 2.75% + 2.5% (£2.50 min) 2.75% + 2.5% (£2.50 min) 2.75% + 2.5% (£2.50 min) 2.75% + 2.5% (£2.50 min) 2.95% + 3% (£3 min) date of new rates to be confirmed
Retail foreign currency loading fee Free 2.75% 2.75% 2.75% 2.75% 2.95%
£100 ATM withdrawal £2.00 £5.25 £5.25 £5.25 £5.25 £5.95
£1,000 retail spend Free £27.50 £27.50 £27.50 £27.50 £29.50
Total £2.00 £32.75 £32.75 £32.75 £32.75 £35.45

Source of Competitor Data (except Halifax) – Moneyfacts.co.uk – the money search engine 10 July 2007.
Source of Calculations – Nationwide, 12 July 2007.
**Source of Halifax Data – Daily Mail, 11 July 2007. Date of new rates to be confirmed.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in