Banks agree to ditch travel money fees
Banks and credit card companies have agreed to make it cheaper for holidaymakers to buy foreign currency and to make it clearer to customers how much they are being charged for spending on plastic overseas.
Charges to use cards to buy currency will be dropped, following an investigation by the Office of Fair Trading, and some businesses selling foreign money have agreed to review their 0% commission offers to reveal to customers the true cost.
The OFT investigation, which follows a super-complaint by the watchdog Customer Focus, found that companies offering 0% commission build a mark-up into the exchange rate, so they are not actually fee free.
After close consultation with foreign currency businesses, the OFT has received a raft of commitments from banks and other providers including:
- Agreement from Lloyds/HBOS, Barclays, RBS/Natwest, Santander and the Co-operative Bank to scrap charges for consumers using their debit cards to purchase foreign currency in the UK (typically 1.5%- 2% of the amount being purchased).
- A joint agreement from the UK Cards Association and the British Bankers Association, on behalf of their members, that they will give clearer, more accessible information about their charges for using cards abroad, on websites, statements and through call centres.
- Lloyds/HBOS, HSBC, Co-operative Bank, Capital One, RBS/Natwest and American Express have agreed to display the actual charges incurred by customers for using cards abroad far more clearly on their monthly and annual statements.
In addition, foreign currency businesses have agreed to review their marketing to make the various costs and conditions that apply clearer, particularly those applicable to '0% commission' deals.
Consumer Focus, which claims travel money providers make £1.1bn a year from customers spending a total of £32bn abroad, said holidaymakers could be charged from £10 to £30 to change £500 into euros depending on which provider they used.
It also complained that charges for using debit or credit cards overseas were unnecessarily complex and confusing, adding that phrases such as "0% commission" and "competitive exchange rates" were misleading.
OFT chief executive John Fingleton said: "Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.
"We are very pleased that the travel money industry has agreed, following a OFT short investigation, to make these significant voluntary changes.
"We believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market."
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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