Confusion cleared up for Credit card users over travel charges

The Office of Fair Trading (OFT) has announced today that five of the leading high street banks will scrap transaction fees for buying travel money in the UK.

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Lloyds, Barclays, Royal Bank of Scotland, Santander and the Co-operative Bank have all agreed to scrap charges for consumers who use their credit or debit cards to buy foreign currency in the UK.

Currently, these banks will often charge between 1.5% and 2% of the amount of foreign cash being bought in the UK. Buying £500 worth of euros with your debit card could set you back around £10-£30 in fees and charges currently with some banks.

Following a complaint from Consumer Focus in September, the OFT found that the charges imposed on holidaymakers were confusing and unclear.

Now, with an agreement from the UK Cards Association and the British Bankers Association, the listed banks have been instructed to give ìclearer and more accessible information for using cards abroad.î This will be implemented through websites, bank statements and call centres at the end of next year.

John Fingleton, OFT Chief Executive, said; ìCompanies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.î

ìWe believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad.î

Last year, Brits spent an estimated £32 billion while travelling abroad. With many using their debit and credit cards to buy foreign currency in the UK, the banks took in a staggering £1.1 billion in transaction charges.

The Consumer Focus also asked the OFT to investigate retailers who use the phrases ‘0% commission’ and ‘competitive exchange rates’ as this could be misleading and prevent consumers from shopping around.

As a result, businesses have agreed to review their marketing conditions, particularly those applicable to ë0% commission deals.

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