Using your credit card abroad has become absurdly expensive over the past few years, with the average provider charging a whopping 2.63 per cent for every transaction you make when you're out of the country. On £500 worth of spending, that's more than £13!
This week, I received a letter from Virgin Money saying they were increasing their fees for overseas transactions to 2.99 per cent, and others in the market are sure to follow suit.
If you don't want to get ripped off when you're abroad, my advice is to use a Nationwide credit card. They still don't charge anything for overseas transactions. They're also the only credit card company to allocate your repayments to the most expensive debt first.
For example, with most credit cards, if you spend £1,000 on your card one week, and then £500 the next, any repayments you make will only go towards paying off the second transaction, which has been accruing interest for a shorter time. Meanwhile, you'll continue to rack up interest on the first £1,000. Nationwide, however, makes sure your repayments go towards the most expensive debt first.
Unfortunately, credit card charges are only going to get worse over the coming months, as banks try to recoup lost income from the credit crunch and bank charges crackdown. So it's well worth carefully reading all your mail from the bank - a change in the terms and conditions can quite easily turn a good deal into a bad one.
That's disgraceful. How do they get away with this. Plus the service you receive is terrible. When I was away in Asia recently I wasn't even allowed to check my balance
Posted by: george | Friday, 15 February 2008 at 01:32 PM
The exchange rates applied to foreign transactions also needs to be taken into account. Nationwide charge a higher exchange rate margin than other banks. I took out two lots of €100 at the same time in Austria at Christmas using a Nationwide debit card and a Virgin One (RBS) Maestro card. Nationwide converted this at €1.3635 to the £ while Virgin used €1.3804, a difference of £0.90. Extra charges of 1.75% + £1.50by Virgin meant that Nationwide was a better deal, but the difference would be much smaller on larger sums. For electronic transfers of larger sums Nationwide's exchange rate margin gives a very poor deal.
Posted by: Bill | Sunday, 30 March 2008 at 08:12 PM