Holidaymakers beware – overseas credit card charges are costing Britons £457 million every year. But they can be avoided.
If you’ve ever come back from a holiday only to stare wide-eyed in disbelief at your credit card statement, you’ll know that when you use your credit or debit card overseas you pay for a range of fees for transactions that are free within the UK.
Now it has been found just how much we’re losing to these charges – £457 million every year.
Many holidaymakers aren’t even aware of all the charges involved. For example, using your credit card to withdraw money from an overseas cashpoint can result in three separate charges being levied – one for withdrawing cash from a credit card, another to convert the currency and a third charge for overseas usage.
According to a survey by M&S Money, the average Briton spends £509 while on holiday – not including flights, transfers and accommodation. Add to that up to 10% in foreign exchange charges, commission of 3% and additional fees for withdrawing money from a cashpoint and this figure leaps higher, often to the surprise of the unsuspecting traveller.
Financial analyst Defaqto has discovered that a £100 purchase overseas includes average charges of £2.87 for a credit card and £3.06 for a debit card. Simply drawing £100 from a foreign cashpoint resulted in additional average charges of £5.60 with a credit card (excluding interest) and £3.96 with a debit card.
This can lead to holidays being significantly more expensive than expected and make budgeting for overseas trips that bit more difficult.
Moneyhighstreet comments: “£457 million is a shocking amount – especially because we can avoid many, and sometimes all, of these charges.
“One of the ways to do this is to use a prepaid credit card. Most of these cards won’t charge you for overseas cashpoint withdrawal fees, and when you buy your prepaid card from a currency broker such as CaxtonFX or FairFX, you’ll get much better rates on your foreign currency. You also won’t be charged for switching currencies while overseas.
» Learn how prepaid currency cards can help you save.