Banks to scrap fees for buying currency on debit cards and provide more information on currency charges.
The Office of Fair Trading (OFT) has announced that it’s gained agreement from banks and travel money providers to make travel money charges clearer.
The move follows a super-complaint from Consumer Focus, which said that we pay too much for buying foreign money and using cards overseas.
The OFT has announced the following commitments:
- Agreement from Lloyds/Halifax/Bank of Scotland, Barclays, RBS/NatWest, Santander and the Co-operative Bank to scrap charges for using their debit cards to purchase foreign currency in the UK (typically between 1.5 and 2% of the amount being purchased) in 2012.
- 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. These will be phased in during 2012.
- Lloyds/Halifax/Bank of Scotland, 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 by the end of 2013.
- Many 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. But the OFT said it felt that there was insufficient evidence that 0% commission deals misled people into believing they couldn’t get a better deal on currency elsewhere.
It’s not clear when in 2012 the banks will scrap the charges for using debit cards to buy foreign currency. Consumer Focus is calling for them to do it well before the summer holiday season.
Nationwide, HSBC/First Direct and Halifax/Bank of Scotland don’t charge a fee for this already.
And Barclays, Nationwide, RBS/NatWest (on debit cards) and Santander already provide information on charges incurred when spending on cards abroad.
It’s estimated that these charges make the UK travel money industry around £1.1 billion a year.
You'll find a selection of credit cards that don't charge a fee for overseas spending in our credit card comparison centre
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