Holiday money charges to be made clearerChanges to credit and debit card statements
20 December 2011
Banks have agreed to provide customers with clearer information about using credit and debit cards abroad, while debit card charges for buying foreign currency in the UK are to be scrapped.
Debit card charges to be scrapped in the UK
Which? Money revealed in May this year that holidaymakers could get hit with debit card charges when buying foreign currency from a UK bureau de change. Banks have now agreed that they will no longer impose debit card charges for purchasing currency or travellers’ cheques while you're still in the UK. However, the new system is unlikely to come in for another year.
Which? welcomes the announcement by the UK Cards Association and the British Bankers Association (BBA). Which? has been involved in the discussions on travel money charges with the OFT and we have re-iterated our call to scrap debit card charges on the purchase of foreign currency in our meetings with them. We are therefore pleased that our asks have been taken on board.
Our research found that the Co-operative Bank was one of the worst offenders for imposing extra fees: if you paid for foreign currency by debit card, the Co-op charged you an extra 2% (minimum £2 with no upper cap). And that’s on top of any commission charges imposed by the bureau de change itself. Barclays, Santander, NatWest, RBS and Lloyds TSB also charged for using a debit card to buy foreign currency in the UK.
Credit and debit card charges to be made more easily understood
The card industry has also said it will work with the OFT to improve how it describes foreign transaction charges. However, this will not be done by the end of 2012.
Which? believes the changes should be implemented as soon as possible. Information about all fees incurred in the use of credit and debit cards abroad should be displayed clearly and consistently on the banks' websites and on the credit card summary boxes.
The plans currently announced include:
Credit card summary box information
The UK Cards Association plans to undertake research to find out the most helpful way to show foreign transaction fees in credit card Summary Boxes on marketing material.
Making information more accessible
According to the UK Cards Association, all banks and card companies have agreed to revamp their websites so customers will be able to see, at a glance, all the fees that apply. Information will highlight circumstances where multiple charges may be incurred, for instance when using cards in foreign cash machines (ATMs).
Breakdown of charges on statements
Banks have pledged to provide a better breakdown of travel money charges on current account and credit card statements from the end of 2012. The changes follow Consumer Focus’ super-complaint on overseas card charges.
Which? response: Proof of the pudding
Whilst the development of industry guidelines is to be welcomed, this is not a cure-all as the UK Cards Association and the BBA cannot force their members to comply with the guidelines. Whether or not these changes will ultimately improve consumer decision-making on using debit and credit cards abroad and buying foreign currency will depend on the robustness of the guidelines and the banks' willingness to comply with them.
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