£53 million wasted by using credit cards abroad - Business Works
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£53 million wasted by using credit cards abroad

Michael Ossei of uSwitch.com With a long bank holiday weekend fast approaching and the Eurozone crisis meaning that the pound goes further than this time last year, getting away may be on the minds of many. But British travellers and holidaymakers risk running up over £53 million in stealth charges just for paying with their credit card abroad, according to uSwitch.com. While more than a fifth of Brits holidaying abroad (21%) intend to take money out of foreign cash machines using their debit card, almost four in ten (38%) will risk being stung by fees by using their credit cards to pay for things on holiday - 3% will even use their credit card to withdraw cash despite the high fees this can incur.

  • British holidaymakers risk running up over £53 million in fees for using their credit cards abroad;
  • A further fifth of Brits abroad (21%) risk charges by using their debit card to withdraw cash when they’re away, while 3% withdraw cash using their credit card;
  • 7% of consumers don’t understand the costs involved with using cards abroad, or how they vary, and more than a quarter (28%) just use whatever card they have in their wallet;
  • Getting the best exchange rate is the most important factor for nearly four in ten Brits (38%) when choosing how to pay for items abroad – an increase on last year (30%). But more than two in ten (22%) are ruled by convenience;
  • Almost a fifth (18%) don’t plan their holiday spending, but almost one in ten (9%) of those who do budget still overspend.

Holidaying Brits spend an average of &pond;784 while on holiday – but take less than half of this (47%) as local currency. Those caught short abroad risk getting burnt by high fees. More than a fifth (22%) have been forced to take cash out using a credit card – which can carry fees of up to 2.99% - or £2.99 for a £100 withdrawal. And although credit cards have the convenience factor, paying on plastic could see holidaying Brits handing over an eye-watering £52 million in fees and charges to credit card companies.

However, it seems consumers are getting slightly savvier - last year 21% intended taking cash out using their debit card and 38% said they would make purchases with their credit card abroad. But despite this, almost one in ten (7%) still don’t understand the costs involved with using a credit card abroad and that they vary between cards. Only a third (35%) do their research and make sure the best credit card to use abroad is in their wallet.

And even those who avoid expensive credit and debit cards may still be left short-changed. Almost six in ten of those travelling abroad (59%) plan to pay for this year’s holiday expenses with cash they changed up before they went. However, 5% are unlikely to benefit from the best exchange rate – leaving it to the last minute to change their money. Less than half (49%) always make sure they’re getting the best rate – 13% rarely or never check that the rate they get is the best. In fact, while getting the best exchange rate is a top priority for almost four in ten (38%) – an increase from last year as cash-strapped consumers try to make their money work harder - more than a fifth (22%) choose convenience as their overriding priority instead.

"Sorting out your spending money is often the last thing on a holidaymaker’s list," says Michael Ossei, personal finance expert at uSwitch.com. "But if you leave it to the last minute, or rely on the convenience of plastic, it can cost you dear. While some holidaymakers are starting to wise up and ensure that they make their spending money work as hard as possible for them, too many still risk getting burnt for using cards while abroad. Fees from using your credit or debit card abroad can be the holiday souvenir from hell, but there are a number of ways to avoid them."

"The best way of tackling holiday finances is to start thinking about your spending money ahead of when you go. If you like the convenience and security of paying on plastic, check with your current credit and debit card supplier to see what their foreign usage fees are and shop around to see if you can get a credit card with low or no overseas fees. Alternatively, get a pre-paid currency card which allows you to top up foreign currency, some with no commission charges and can be used like a standard credit card abroad. The best thing about currency cards is that you can only spend what you load on them so you are guaranteed not to overspend."

"If you prefer to pay with cash, make sure you get the best rate on your money. This will normally involve pre-ordering your currency and collecting it before you travel. Avoid changing currency at the airport or straight from your debit card, as commission fees could cost you that well-earned poolside drink."

For more information on uSwitch.com, the independent price comparison and switching service, visit: www.uSwitch.com

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