The Office of Fair Trading (OFT) has received a ësuper-complaintí from Consumer Focus about the cost of foreign currency and overseas use of credit and debit cards.
Consumer Focus have called on the OFT to investigate the charges that customers face when taking out money abroad. The OFT is being asked to investigate banks who confuse consumers over complex pricing structures, putting off customers from shopping around for the best deal.
Banks and other lenders are taking advantage of cash strapped Brits as charges add up to £1 billion a year, Consumer Focus research found.
Transaction fees widely vary between the lenders. For example, if you wish to exchange £500 into Euros, fees can vary from anything around £10 to more than £30.
Brits are left in the dark when it comes to transaction fees and how they work. The watchdog said that the current fees are not a true reflection prices as the processing cost on a debt card is around 9p and for a credit card it is 37p, however banks and lenders typically charge at 1.5 or 2% so customers can be hit with a service charge of up to £4.50.
ìA cocktail of confusing charges and poor transparency means we are losing out in a big way,î said Consumer Focus chief executive Mike OíConnor.
ìWe are calling on the OFT to investigate and work with the industry to send these dubious and complex charges packing.î
Almost half of us travel abroad every year and we face a confusing array of often hidden charges every time we buy currency.
Norwich and Peterborough Building Society currently offer a debt card that does not charge anything to withdraw cash abroad, compared to Lloyds TSB where holidaymakers could be looking at spending up to £45 for a two week family holiday.
Compare debit cards with Money Exert
One way to avoid charges whilst on holiday is to take out a prepaid card. Prepaid cards are growing in popularity as a safe option for taking money abroad.
Mark Neale, Chief Executive of the FSCS, said “In recent years, pre-paid cards have become increasingly common, especially for those people who are unable to get standard bank accounts with debit or credit cards.
Prepaid travel money cards typically offer better exchange rates than simply using a bureau du change. As well as being a good way to manage your money, prepaid travel money card providers tend not to add the extra charge.
Compare Prepaid Cards with Money Expert