The Fixer: overseas card charge shock
Filed under: Credit Cards
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Travel Insurance Tips
I have recently returned from a two-week holiday in Ibiza with friends. We had a great time.
However, when I received my Barclaycard credit card bill this morning, I got a bit of a shock.
Not only have I been paying interest on the euros I bought with my card at the hotel exchange office, I also seem to have been charged a lot more for all the drinks, meals and trinkets I bought while away than I thought I was paying.
My bill is almost £200 more than I was expecting as a result, but when I called Barclaycard I was told that these extra charges were normal!
Is this really legal? And how can I avoid paying so much in fees when I go away in the future?
M Haynes, Exeter
Dear Mrs Haynes,
Unfortunately, these charges are almost certainly legal and mentioned in the small print of your credit card agreement.
What's more, Barclaycard is not the only lender adding to holidaymakers credit card bills. Most banks and card companies impose a raft of charges every time you use your plastic overseas.
These include currency conversion or loading fees, which add up to 3% to the cost of both withdrawals and purchases, and flat withdrawal fees that increase the cost of a cash withdrawal by at least 2.5% or £1.50.
Using your credit card to buy travel money was also a mistake as such purchases are treated like cash withdrawals, meaning that they attract interest immediately and at a much higher rate.
This should therefore be avoided in the future by getting your holiday money before setting off.
To get the best deal on your holiday card purchases, you could, for example, take out a prepaid card that gives you better exchange rates and allows you to escape the foreign-exchange fees charged on most overseas card purchases.
Another option is to choose a credit card that offers cheap overseas transactions. The Saga Platinum card, the Post office Platinum card and the Nationwide Building Society credit card all offer commission and fee-free purchases while you are abroad.
Finally, look out for dynamic currency conversion (DCC), which involves extra charges of up to 4% as well as poor exchange rates if you choose to withdraw cash or make a purchase in sterling rather than the local currency.
Whatever your financial problem, write to firstname.lastname@example.org and The AOL Money Fixer will get on the case.