British holidaymakers could save £20m a year after the country’s major banks agreed to scrap some of the rip-off fees levied on travellers when buying foreign currency .
The Office of Fair Trading yesterday said Lloyds, Barclays, RBS, Santander and the Co-op have all agreed to ditch their debit card charges for foreign notes bought in the UK, and have also pledged to be more transparent with other charges by making them clearer on their monthly and annual statements.
However, they will still be allowed to charge customers who use their cards to make overseas ATM withdrawals.
The OFT has been investigating a super complaint from watchdog Consumer Focus, which claims British consumers spend around £1bn a year on exchanging money .
The watchdog said it found that charges for using debit or credit cards overseas were unnecessarily complex and confusing, adding that phrases such as “0% commission” and “competitive exchange rates “, were misleading.
It pointed out that charges for buying currency with a card are typically 1.5pc to 2pc of the amount converted – up to a ceiling of £4.50 – despite it only costing banks and credit card companies an average of 9p and 37p respectively to process debit and credit card payments.
Mike O’Connor, head of Consumer Focus, said: “Consumers should be able to buy foreign currency without being misled, confused or short-changed.”
“The OFT has addressed the major issues we raised in this market, which is good news for consumers. It is particularly welcome that the OFT has worked with the big banks to stop withdrawal fees being charged when people buy currency on their card in the UK.”
“It is only right that this unfair cost, which effectively charges customers for the privilege of taking money out of their own account, is stopped.”
OFT chief executive John Fingleton said the new changes should reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, thus allowing holidaymakers “to be far better informed when making choices about how they spend abroad”.
