Higher banking fees mean that holidaymakers will have to hand over a whopping £754 million for using their debit and credit card this year.
This represents an increase of £44 million, or 6%, on last year, as the cost of “free” banking continues to soar.
According to price comparison site uSwitch, debit card customers will be charged around £401 million in fees for their purchases and cash withdrawals, while
credit card holders will be stung a further £352 million.
Harder to avoid the fees
Worryingly, it's getting harder than ever for savvy shoppers to give the fees a skip. Uswitch says seventeen banks now levy this charge - almost twice as many as last year
Nationwide, which has long boasted of being the only bank not to charge fees on its debit or
credit cards, has started charging all its customers up to 1% for doing so.
Similarly, Thomas Cook is exiting the fee-free overseas market, with the introduction of 2.5% foreign exchange fee on the 18th April.
Still possible to avoid them
So what options are left to the savvy shopper? Well, you can either make use of the Santander Zero card or the Post Office
credit card (which charges 0% commission on overseas purchases) or open a prepaid travel card.
These work just like your bank card except you can load it up with foreign currency, thus allowing you to avoid the foreign transaction fee altogether.
The downside is that you'll simply be hit with fees elsewhere (such as top up fees), so be sure to read the fine print before signing up.
Be careful with credit cards
If you plan to use your credit card while abroad, it's essential you don't withdraw cash on it.
Not only will you be hit with a cash advance fee of up to 3% and a 2.75% foreign transaction fee (depending on which card you use), that debt will also incur a far higher interest rate of anywhere up to 30%.
Worse, you will have to clear all other debt on the card before you can begin paying it off thanks to the
inverse order of payments enforced by most banks.
