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Nationwide to end free debit card use abroad

FlexAccount customers will be charged 2%

Nationwide Branch

Nationwide is to hike charges for customers who use its FlexAccount debit card abroad from 1 November 2010, increasing the cost of holiday spending for around 3.5 million account holders.

Currently, Nationwide charges a 1% foreign exchange fee (also known as a ‘load’) when you use the FlexAccount debit card outside of Europe, while the card is free to use within the Visa European region.

However, from 1 November this fee will double to 2% and will be levied on spending within Europe as well as transactions made elsewhere in the world. In addition, Nationwide will introduce a £1 cash withdrawal fee, to be charged when the FlexAccount debit card is used to take out money at overseas ATMs.

Using your Nationwide debit card abroad

Withdrawing £100 from a cashpoint in a European country will cost £3 from November, whereas it is currently free.

According to Nationwide, the cost of making four £50 debit card purchases and withdrawing £100 on eight occasions while abroad will stand at £28.00 after the building society’s new charges come into force.

Nationwide has pointed out that the FlexAccount remains the cheapest mass market current account to use abroad. Most debit card providers charge load fees of around 2.75% on all overseas transactions, and some apply charges of up to £1.50 whenever the card is used – whether it’s for an over-the-counter payment or a cash withdrawal from an ATM.

However, Which? savings and current accounts expert Jo Langenhan said: ‘Nationwide’s decision to charge customers more for using their debit cards abroad is very disappointing. After the introduction of Nationwide’s new charges in November, customers may want to consider using a Best Rate credit card for overseas spending instead.

‘Some come with 0% fees for over-the-counter transactions, which means they are now the cheapest way to pay with plastic on holiday. Alternatively, you might want to try a prepaid card.’ 

You can read more about these options in our comprehensive Travel money advice guide.

Free travel insurance from Nationwide

Alongside increasing the cost of using the FlexAccount debit card for overseas spending, Nationwide has launched a new benefit for people who use the FlexAccount as their main current account.

These customers will now get European multi-trip travel insurance that the building society says is worth up to £80 a year, as well as access to Nationwide’s ‘tied’ financial products (which include a market-leading personal loan).

Together, the changes to the terms of Nationwide’s FlexAccount seem designed to prevent consumers from opening an account with the sole intention of using their debit card abroad.

Chris Rhodes, executive director of marketing at Nationwide, said: ‘Our current account now works in a way which ensures that those members who have the deepest relationship with Nationwide receive the most benefit.

‘Previously, only a third of our current account customers used their card abroad, and many used it only for that, holding their main current account with another provider and bringing little benefit to the society and its other members.’

Should you stick with Nationwide?

Jo Langenhan says: ‘Nationwide’s travel insurance meets our stringent Which? Best Buy criteria, so it could be a worthwhile benefit for customers who use their FlexAccount on an everyday basis. 

‘However, if you’re thinking of switching it’s worth remembering that the FlexAccount isn’t a Which? Best Rate current account for in-credit customers because it pays no interest on balances, whereas you could get up to 5% AER elsewhere.

‘Overall, I’d advise consumers who have been casually using the FlexAccount to think carefully before making it their main current account, and consider alternatives to using their debit card abroad when Nationwide’s new foreign transaction charges come into force.’

For more information on the best ways to spend overseas – whether you’re looking to use cash, a credit card or a debit card – read the Which? Travel money guide.

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