Credit cards: dangers abroad

Choose your credit cards carefully when you go abroad, say experts

13 April 2012

Travellers were today warned of the hidden costs of using their credit cards while on holiday.

A new study claims that £495 million is wasted each year by consumers unaware of how much they have to pay for the privilege of using their cards outside the UK.

The research found that "loading fees" imposed for withdrawing cash were among the worst hidden fees, along with added ATM charges of up to two per cent or £2 for every transaction.

Taken together, the charges mean that some cards will penalise you by almost £5 each time you take out £100 from a cash machine abroad.

Mike Naylor of consumer watchdog Which?, said: "Charges vary a lot between cards so you need to be careful. It's not always a bad thing to use a card, as it gives you protection you don't get with cash. But it can surprise people if they don't know what charges they are incurring."

With more than £18 billion spent on credit cards abroad last year, experts warn that even small fees can add up quickly. Stuart Glendinning of travel website travelsupermarket.com, which carried out the survey, added: "There are cards out there that offer great rates, but won't give you a free replacement if you lose it. If you are stuck abroad that is not good.

"People need to use their cards more intelligently when they are abroad."

Key charges travellers should check for are:

Foreign cur rency charge - most providers, including Natwest, Lloyds TSB and Abbey, levy a loading fee (typically-2.75 per cent) on all cash withdrawn overseas.
ATM withdrawal fee - many banks make an additional charge of up to £2 or two per cent if a consumer withdraws cash from a foreign ATM.
Higher interest rate charged on cash withdrawals - for example, the Capital One No Hassle Platinum card charges a standard rate of 5.94 per cent APR for purchases made on the card, compared with 20.5 per cent APR for cash withdrawals.

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