Play your cards right: overseas bank charges
May, 30, 2008
As the weather becomes nicer, consumers will no doubt be thinking about getting away from it all on a break in the sun.
Taking the opportunity to relax, take part in some fun activities and pick up a few souvenirs may sound like the best way to spend a couple of weeks, but people should be aware that they could end up paying more than they might expect.
Many financial services providers will levy a charge against consumers when they use their card abroad, meaning that withdrawing foreign currency from cash machines or paying for a gift or meal could cost a significant amount more than it would first appear.
How much are they?
The amount consumers are charged can vary greatly, with price comparison site moneysupermarket.com noting that some providers actually charge nothing when their cards are used aboard.
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"For savvy consumers after the best rates, the Nationwide Flex debit card is the best product for overseas cash withdrawals as there are no extra charges.
"If you are stuck with an uncompetitive debit or credit card and don't have time to get a new one, the Caxton FX or Fair FX prepaid cards are good options, allowing you to budget well and only spend what is on the card," it suggests.
However, an article featured in the Guardian recently suggests that the majority of banks add a currency conversion charge every time a card is used abroad and this ranges from 2.75 per cent to 2.99 per cent.
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In addition to this, most financial services providers make a separate charge for withdrawals from cash machines and some slap a retail transaction fee on top of a card purchase.
As such, if consumers make a lot of small withdrawals, they may find that they pay more in charges than they actually take out of their accounts, the publication notes.
How can you avoid the charges?
One solution to avoid overseas credit and debit card charges is to take a prepaid card, as mentioned above, which has the capacity to be "loaded up" with funds before the consumer goes away on holiday.
It can then be used to withdraw money and make purchases while the consumer is on vacation without incurring any fees.
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The publication suggests that it can also provide an alternative for people who do not feel comfortable carrying around their regular credit or debit cards, cash or travellers' cheques while they are away from home.
Other tips for making your money go further include purchasing foreign currency well in advance to take advantage of better conversion rates.
The Telegraph explains that many people leave it to the last minute to buy their euros, dollars or rupees and may even purchase them in the airport or ferry terminal, despite the fact that exchange rates there will usually not be as good.
As such, it may be wise to take a few steps to ensure that holiday money is spent on fun activities and purchases, rather than being spent on charges that can be avoided.
Feature: Happy Holidays? Rising costs in the Euro Zone suggest not
