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Banks hit holidaymakers for card currency conversions

Fee disparity for converting into home currency

Credit cards

Many banks charge for withdrawing money abroad using dynamic currency conversion

Some of the UK’s largest banks are charging consumers additional fees if they convert into their home currency when using their debit card abroad. 

This process is known as dynamic currency conversion (DCC). Which? has found that some banks are applying their overseas debit card transaction fees on purchases and withdrawals from an ATM made using DCC, whilst others treat the transaction like those made in the UK (charging no fees).

All of the banks surveyed said that they do not apply the foreign loading fee on DCC transactions, while the majority would charge a foreign loading fee on a standard overseas transaction (ranging from 2.75% to 2.99%).

Which banks apply transaction fees to DCC transactions

Santander, Halifax and Bank of Scotland waive fees on overseas purchase and ATM withdrawal, whilst Nationwide BS waive withdrawal fees. 

NatWest was the only bank to apply both their transaction fee on purchases and withdrawals made using DCC, whilst HSBC, First Direct, Lloyds TSB, Barclays and the Co-operative just charge overseas ATM withdrawal fees.

What is dynamic currency conversion and is it good value?

DCC allows you to make a transaction in your own currency (pounds sterling for UK customers), giving you the chance to know the exchange rate you’re getting immediately, rather than waiting to see what appears on your statement later. 

The drawback with the system is that the rate you are offered is set by the overseas retailer and may be considerably higher than you would have been charged by your bank.

In a recent survey of Which? members, 30% said that they had experience of using DCC, with 61% of those members felt that it offered poor value. Some 21% who had paid using DCC said that they had not been told they were doing so beforehand. 

Check before you go on holiday

Which? credit card expert Bobby Nicholls says: ‘DCC is probably best avoided, unless you know it is offering you a better rate than your bank is offering. 

‘Before travelling check with your bank what exchange rate they are currently charging for the country you are travelling to and also what their fee structure is for purchases and withdrawals. To see how your bank compares visit our online table of overseas debit card charges.’   

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