Holidaymakers waste millions on credit card charges abroad

UK holidaymakers will spend £3 billion on credit cards abroad this year, and pay £62 million in foreign transaction fees for the privilege.

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by Victoria Bischoff on Aug 02, 2010 at 12:35

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UK holidaymakers are set to waste £62 million this year on charges for using their credit card abroad, research today revealed.

Holidaymakers will spend £3 billion on credit cards abroad between now and the end of 2010, according to research from Post Office Credit Card. And of these, 4.8 million people are at risk of wasting cash on foreign credit card charges.

Although fee-free alternatives are available, from the Post Office, Nationwide and Santander for example, over half of the people surveyed said they would be charged a fee by their provider if they used their card abroad. Meanwhile, an additional 13% said they did not know if their card even carried charges.

However, with many credit card providers charging fees of up to 2.99% spending on plastic abroad can often add up to more than people think.

Az Alibhai, head of cards for the Post Office, said: ‘Holidays should be a time to relax and enjoy yourself, but these extra pounds paid every time you make a purchase could result in extra stress when the credit card bill arrives’.

Worryingly, when asked why they would be using their credit card during their holiday around 300,000 people said it was because they will have no extra money left after paying for the holiday itself.

And according to new figures from insolvency trade body, R3, over two million holidaymakers have had to borrow on average more than £1,000 to cover their holiday costs and will spend seven months paying it back.

Frances Coulson, R3 Vice-President, said: ‘That people are prepared to take on a substantial amount of debt for such a long period of time in order to afford a holiday is worrying, especially as these are still economically uncertain times. Personal insolvency hit record levels in the first quarter of this year and looks set to rise - so we’re urging people not to spend more than they earn’.

‘We must continue to promote the idea that saving, rather than borrowing, to pay for luxuries is the best way to avoid a life dogged by financial problems,’ he added.

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8 comments so far. Why not have your say?

so what's the solution: travellers cheques, get enough foreign currency beforehand; or simply stay at home, for the poorly off or already in debt.?

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Credit cards still offer better security when making purchases abroad. So the 'right' card is still probably the better option.

Saga's Platinum card is another one that offers no foreign commission abroad for over 50's.

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How much longer before Nationwide scrap the fee-free credit card?

They've already announced that there will be a 2% charge on the Flexaccount debit card for cash withdrawals abroad.

There won't be much point in banking with Nationwide soon.

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Some years ago when Nationwide first trumpeted the fee free use of their credit card abroad I applied for a card, even though I had been a user of Natwest Credit cards for years. In a very crude test I used both cards on the same day in Spain buying petrol at the same price and when the respective statements arrived, I found both transactions were processed on the same day. Low and behold there was nothing to choose between the net cost in sterling tems. In my view it all boils down to the exchange rate the different banks use to get to sterling. Anyone who thinks the credit card company of whatever colour does this for nothing is living on a different planet in my view. To me the use of a credit card abroad is both secure and any "cost" for use is just part of the cost of the holiday.

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The good old British public care nothing about saving a couple of percetage points especially on holidays They are drunk most of the time. They are getting fleeced every where and they deserve it.

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@ An Elderly One

Don't your banks in U.K. issue pre-paid currency cards? In India most front line banks issue them these days. These are very handy. You buy them for a certain amount in currency of your choice, at a small issuing charge and use just like a credit/debit card. The cards are valid for 5 years and you can recharge them online or through your bank.

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The Halifax Clarity card charges no foreign exchange fee and uses Mastercard"s competitive foreign exchange rates. No withdrawal fee at ATM"s either. Just an interest charge on money drawn until it is repaid. You can top it up beforehand to avoid this.

FairFX and Caxton FX do prepaid cards.

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Andy Mc

Aug 04, 2010 at 10:04

The Halifax Clarity card is free to use abroad, no fees. In fact they will credit £5 per month to your account as long as you spend over £300 per month on the card.

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