Baffling travel costs go under the microscope
Saturday 24 September 2011
I was pleased to see Consumer Focus, the statutory consumer champion, submitting a super-complaint to the Office of Fair Trading (OFT) this week, regarding the charges and commission consumers pay for their holiday money.
For too long now, travellers have struggled to understand how much it costs them to use their plastic overseas while many others are taken in by the so called "0 per cent commission" currency deals.
No matter how the banks want to dress it up, it's an area that continues to annoy holidaymakers with complex tariffs and rip off charges taking an excessive bite out of the holiday spending budget.
While our cards offer a secure and convenient way to pay for holiday spending, the associated fees and charges vary widely and are a constant headache for many of us.
When using a credit card abroad, people need to remember that the majority of providers will add on a foreign loading fee to all cash and purchase transactions. In most cases these charges are around 2.75 per cent to 2.99 per cent, however there are a few cheaper options available.
On top of the loading fee, most credit card cash withdrawals, are subject to an additional levy (as in the UK) of around 3 per cent, minimum £3, so a credit card cash withdrawal of £100 can easily set you back a combined charge of around £6.
Some credit cards such as the Halifax Clarity card and Sainsbury's Gold card (£5 monthly fee inc comprehensive travel insurance) don't charge any loading fee on purchases or cash transactions and are free of ATM withdrawal fees too.
Charges on debit card transactions overseas is the biggest holiday money gripe. Because the card doesn't cost anything to use while in the UK, it's often something that travellers overlook, until their post-holiday bank statement hits the doormat and then it's too late.
As with credit cards, there is a loading fee for cash withdrawals (2.75 per cent to 2.99 per cent) plus a withdrawal charge, typically between £1.50 and £5.
However the charges that catch most people out are those levied for debit card purchases which are subject to the conversion fee above, plus up to an additional £1.50 per transaction. If you're a frequent traveller, take a look at the Norwich and Peterborough BS current account, where you benefit from free debit card usage abroad.
In the meantime, if you're venturing overseas, take a couple of minutes to check with your bank what the charges are for your particular plastic before you jet off, rather than getting a nasty shock when you check your account on your return.
At least if you understand the overseas charges, you can adapt your spending pattern accordingly – for example, you don't want to be making small value purchases if you're going to be hit with charges of £1.50 plus each time.
While the individual transaction costs don't sound much in isolation, if you look at a scenario where a family is away on holiday and they make five debit card cash withdrawals of £100 currency equivalent and eight debit card purchases of £50 currency equivalent, they could easily be faced with paying between £40 and £50 extra with some cards.
Consumer Focus estimates that consumers are paying £1bn per year for exchanging travel money, so let's hope the OFT embarks on a thorough investigation and flexes its muscle to deliver a cheaper and more transparent deal for us all.
New 6.9 per cent credit card from Sainsbury's Finance
For most of 2011 the credit card market has been flooded with long term 0 per cent balance transfer deals and rewards-based cards, so it was a refreshing change to see the launch of a no frills card from Sainsbury's Finance with a long term rate of just 6.9 per cent APR.
You'll need to have a Nectar card to be able to apply for this particular plastic, but at a representative APR of just 6.9 per cent, it's currently the lowest on the market and only the third sub-7 per cent card to be issued in the last four years.
This card offers a much cheaper way to manage your cash flow than an overdraft, with most bank accounts stinging you with interest rates between 16 per cent and 20 per cent.
Even if you can't clear your statement balance in full every month the interest charges aren't going to hit your pocket too hard.
It's healthy for the wider financial services industry to see the supermarket brands offering stiff competition to the big credit card players.
Credit card rates below 10 per cent are a rarity, but with base rate holding firm at 0.5 per cent for the foreseeable future, it's time we saw more credit cards offering rates at this level.
Andrew Hagger is an analyst at Moneynet.co.uk
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
- 3 Zayn Malik already working on solo material, just days after quitting One Direction
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...
Day In a Page
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station