Banks cash in on holidaymakers

BANKS are making £500m a year charging customers every time they use their debit or credit cards overseas. The charges appear on bank statements as part of a complex calculation converting foreign currency into sterling.

That ensures many holidaymakers remain unaware of how much their withdrawals and purchases are really costing.

A tourist who uses a debit card to withdraw £200 in cash and buy items worth £1,000 over a two-week stay abroad could end up paying up to £81 for the privilege.

Taking money out of a cash machine overseas with a debit card costs up to £4.50 a time. Banks also inflict a charge based on a percentage of the value of each purchase, plus, in some cases, a set fee.

The charge is normally 2.75% of the price. However, NatWest has an additional fee of 75p per purchase, while Lloyds TSB charges an extra £1 and the Halifax £1.50.

British holidaymakers and travellers spend £20bn a year overseas on debit and credit cards, mostly over the summer months. This delivers a huge seasonal windfall to the banks.

Consumer groups have accused the banks of using small print to con their customers. They are angry that the charges remain unclear to many customers because they are included in a foreign currency conversion. Rather than setting out the fees clearly, the banks use a deliberately lower exchange rate in the calculation to allow them to cream off their charges.

The Nationwide building society is the only major High Street name not to impose such charges. Its calculations show charges imposed on a family making two £100 cash withdrawals and £1,000 of purchases can be massive. They range from £36 with Barclays and £36.50 with HSBC to £58.80 with NatWest, £66 with Lloyds TSB and £81 with the Halifax.

The same pattern of spending with a credit card would generate charges ranging from £3 with Nationwide up to £36 at HSBC, £37 at NatWest, Barclays and Halifax, and £38 at Lloyds TSB.

The customer lobbying group, the Independent Banking Advisory Service, is appalled. 'The big banks are making a fortune from charges which many customers simply don't realise they are being charged. This is pure greed,' a spokesman said. 'The charges are hidden away. You need to be some sort of mathematical genius to work them out.'

The banks which impose the charges said they regarded them as 'processing' fees. They said details were included on summary boxes printed on card application forms and in the small print on monthly statements.