As more and more Brits continue to book much-needed holidays, bank challenger Tally has noted that many aren’t keen on foreign exchange (FX) charges and international transaction costs. This has led to UK travellers spending more than they should while overseas. Here’s what you need to know and how you can save your hard-earned money.
What do banks charge for using their cards abroad?
Surprisingly, the research from Tally reveals that 57% of the 2,000 UK adults surveyed didn’t know banks add a margin to the official FX rate. They also weren’t aware that banks charge a transaction fee for using their cards abroad in addition to the margin.
And if that’s not enough, banks will also charge withdrawal fees if the card is used at a cashpoint abroad – and then still add interest on the withdrawal fees.
It’s clear that banks are generating a lot of revenue due to a lack of clarity around foreign exchange charges and international transaction costs.
Cameron Parry, founder and CEO of Tally, explains, “We want to demystify costs for bank customers. It is important that charges are simple and transparent so people can make the best choice when it comes to spending their hard-earned cash when overseas. People can accept a cost for convenience, but no one likes having the wool pulled over their eyes.”
How can you save money when using your card overseas?
Here are four steps you can take to save when whipping out the plastic abroad.
1. Know the official FX rate
You can get this information from the UK’s central bank (the Bank of England) or the central bank of the country you’re visiting. Knowing the official FX rate helps you tell whether your card issuer has marked up the rate.
2. Compare bank accounts
Compare different card providers to get information on how charges apply when you use your card abroad. The aim is to see whether there are foreign transaction or withdrawal fees. Also, enquire about whether the bank charges interest on withdrawal fees and adds a margin to the official FX rate.
It makes sense to choose the provider with the lowest charges. Though it’s a challenge to find providers that do not charge fees, some are fee-less up to a particular limit. Take your time to read and fully understand the terms and conditions when choosing a provider.
3. Consider non-fiat accounts designed for international use
Tally is asset-based money that works seamlessly with the existing banking infrastructure. According to Tallymoney.com, it’s neither a cryptocurrency, multi-currency wallet nor trading app.
Cameron Parry highlights that a Tally account doesn’t charge foreign transaction fees or foreign withdrawal fees. Additionally, it doesn’t mark up the official FX rate. It could help you reduce costs associated with FX and international transactions while you’re abroad.
4. Pay attention to the options at the time of payment when abroad
Tally’s research reveals that around 51% of the surveyed population didn’t know that paying in the local currency rather than sterling could save them money. Retailers can set the exchange rate and even add conversion fees on top if you use your card abroad.
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About the author
Victor is a freelance writer who loves to read and write about personal finance and related disciplines with the aim of educating people to make better financial and investment decisions.
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