Credit Cards Exchange Rate Costs - Did you know?

I'm in the process of cutting my losses again - I do this once in a while and with surprising results at times.

One I've just come across is the credit card exchange rate and hidden costs, quite big ones. Many will know about this and many won't.
It's an issue for me as I earn money in the UK and often spend it overseas as I live in the euro-zone.

I always thought that the VISA exchange rate is good and that a credit card was a good way to spend money overseas. Half right, half wrong. The VISA exchange rate is good, but your credit card company are PROBABLY / POSSIBLY hiding an additional % charge in that which does not appear on your statement billed separately. This can be 3% - £30 more on your £1000 holiday is not insignificant in my view. Some cards do not charge anything.

I always thought my Egg card was cheap - I pay an extra 2.65% on every purchase I make on it. Ba5stards. I will be applying for a new card today.

For more info, see here:

http://www.moneysupermarket.com/cards/cardsresults.asp?cardtype=CreditCard&Adverse=No&feature=usingabroad

This site is actually worth a look for any credit card related stuff as it has a series of tables for which card is best for different types of card use, who has offers, who charges for balance transfers etc.

 

The plot thickens. A letter to my 'bargain' internet bank Smile reveals that I get hit twice for drawing cash out on my DEBIT card while overseas:

From Smile:

"Dear Mr Good GO,
.....
When you use your card to buy currency or travellers cheques or to draw money from a cash machine abroad, as well as the 2.75% charge you'll also be charged a Visa fee.

- Debit cards 2.0% (minimum £2.00)
- Credit cards 2.5% (minimum £3.00)

This charge will show separately on your statement as 'Visa charge'. "

To be fair to smile, while they've been quietly robbing me every time I use my debit card, they do foreign transfers via the co-ops Tipanet system which is £8 flat and much cheaper than most other banks. And their customer service is good. I won't leave but I will be changing the way I use cards.

 

try switching to the Nationwide. They dont charge for using your card abroad. :thumright:

 

GCO - Have just drawn some Euros from the Post Office (lots of benefits including ability to cash them back without penalty) and was introduced to their new Travel Money card. Initial charge of £10 but then you can top it up as many times as you like and use it to draw foreign currency from most ATMs abroad. Saves carrying around wads of ickies or relying on normal credit/debit cards and the associated charges. Higher conversion rate if you load it with £500 min to start with. Worth looking here for further details.

 

I recently heard this and thought 'that sounds good, can change my Euro's back for the same rate as I got when getting them initially'. Wrong! You can exchange them back without penalty (the without penalty being no commission). So you only get the 'we buy' rate and not the 'we sell' rate when changing your 'dib dobs'

 

Must confess Mrs N_G always seems to find a use for any euros left over so I've never had to change them back. Besides, the way our exchange rate is going, it would probably be best to hang on to them for future use.

 

Concur

 

Yes I saw that and nearly did, but they use Swift for transfers and thats about £15 a time I think. Overall I would still save money - I do one bank transfer a month and useD my debit card quite a lot, but I have decided to stick with smile and just NEVER use my debit card overseas.

Thanks for the post office tip.

 

I have never been charged extra for using my card abroad and the exchange rate is usually pretty good with them :thumright:
However with my lloyds cards i did pay an extra amount on both my credit and debit cards

 

If you have any CREDIT card other than a Post office card, Saga Card, Thomas Cook Card or Nationwide BS Gold then you are probably wrong. You don't see the charge as a separate amount (as you do when you withdraw cash - see my bank's reply), and as you say the exchange rate is good, but as far as I can work out every card except those above take their % cut on top of the exganhe rate - and its hidden from you.

 

This is the worst of the cards according to http://www.moneysavingexpert.com/cards/cheaper-spending-overseas :

"Let's make this plain - do not use the following cards for spending overseas; and it may surprise you to learn the worst offenders are all debit cards.

Halifax Debit Card
Spending penalty: £1.50. Exchange load: 2.75%. Cash Withdrawal fee: £1.50

Lloyds Debit Card
Spending penalty: £1. Exchange load: 2.75% (2.99% from 30/7/07). Cash Withdrawal fee: 1.5% min £2 max £4

IF Debit Card
Spending penalty: £1.50 Exchange load: 2.25%. Cash Withdrawal fee: £1.50 or 1.5%

RBS Debit Card
Spending penalty: £1.25. Exchange load: 2.75%. Cash Withdrawal fee: 2% min £2 max £5

NatWest Debit Card
Spending penalty: 75p. Exchange load: 2.65%. Cash Withdrawal fee: 2.25% max £4"

 

The reality is changing currencies is a real cash generator for those who do it, after all there are companies who only change money and seem to do quite well out of it. Equally cross border transfers are another cash generator for the banks.

Until we all use the Euro, and the EC does away with charges for cross border bank transfers so no one pays a penalty for spending their money in another country tha banks are going to take cash of you one way or another every time you do it.

 

Of course. The point of this thread though is that the difference in how much they take can be very large. The difference in the Natoinwide debit card and mine is over 5%. Of course that may not bother you, but for people who spend a lot of time overseas (like many on RR I imagine) that difference is big.

 

Another useful link on this subject:-

http://www.moneyforums.co.uk/post-6359.html

Nationwide is the best card, credit or debit, if you are going abroad.

 

I have the Post Office CC, it doesn't charge you to use abroad either.

 

Slightly off the track, but in the UK I use my Visa credit card to pay for most everything through the month and then ensure that I pay it all off on due date. That way we don't pay any interest and they give us cash back at end of year. Last December they gave us £79 back. Not much I know but always nice to get something for nothing. Not only that but by not paying my cash every time I buy something it is earning a bit of interest in the bank.