Customers buying travel money in the UK with a debit card will no longer be charged fees – typically ranging from 1.5%-2% – at five major UK banks
British banks are swiping £1.1bn a year from holidaymakers, much of it in hidden fees, the Office of Fair Trading (OFT) has revealed.
It has ordered a major overhaul of the way consumers are charged for using debit and credit cards to buy or withdraw foreign currency, and banks have agreed to scrap controversial cash withdrawal fees for using debit cards to buy currency in the UK.
The fee, typically 1.5%-2% of the amount taken out, outraged consumer groups as it was charged to people using debit cards to buy currency in post offices and bureaux de change inside the UK, but not to those who changed their money in cash.
The OFT found that once abroad, holidaymakers are paying as much as 6% to withdraw money from cash machines, and ordered the banks to reveal to consumers the true amount they are charged.
Lloyds, HSBC, Co-op, Capital One, RBS/Natwest and American Express have agreed to display the actual charges incurred by customers far more clearly on their monthly and annual statements.
All major card providers will be required to break out and show in pounds and pence the amount of the exchange rate fee on monthly statements, and an annual statement, again in pounds and pence, which will show the total foreign use charges applied over the year.