Where not to get Euros?

[Guest Derek Uzzell]

In my response to Mel B's "Where to get Euros" posting of 01/06/2005 I suggested using credit-cards from Frizzell. This is what I said: "Using a credit-card does have potential pitfalls regarding charges. (There's been reports in Which? magazine about this.) Many (most?) credit-card providers impose a charge for purchases made abroad and, for cash withdrawals, add a further handling charge on top. They may also add interest from the moment that the cash is withdrawn from the ATM. Our credit-cards are issued by the CSMA (Civil Service Motoring Association) via Frizzell Bank, an offshoot of Liverpool Victoria Building Society. No charges are imposed for purchases made within the EU, though a 1.5% handling charge is made for ATM cash withdrawals (I think there was a £3 minimum charge for cash withdrawals when I last checked). However, you do get a good rate of exchange. On 23/04/2005, when I withdrew 400 euros from an ATM in France, my credit-card statement subsequently showed a rate of 1.4703 euros per pound (hence £272.05) and the 1.5% handling charge was £4.08. No extra charges (for interest, etc.) were added. How this compares financially with the other options you mention I don't know, but we think it's OK. I believe all Liverpool Victoria Building Society-related credit-cards (eg. the Caravan Club card) have similar charging terms, though specific 'perks' will differ. The Nationwide Building Society's card is also held in high regard by travellers." This was all true except for the sentence "No extra charges (for interest, etc.) were added". We are normally pretty careful about checking our credit-card statement (we don't trust each other's spending habits!) but, in this instance, we both missed the £3.14 interest charge lurking near the top of our May statement. However, we both spotted the £4.03 interest charge at the start of the June one. These two charges relate to separate cash withdrawals from ATMs in France - the 400 euros in April and another 300 euros in May. The charges are perfectly legitimate and are due to the card-issuer's decision that, from 1 March 2005, interest would be charged on Cash Advances from the date of the transaction. This interest is calculated on a daily basis and the current rate is 1.24% PER MONTH, so it soon mounts up. We pay our credit-card bill in full by monthly direct debit but, however you pay, the interest charge seems unavoidable. What irks me about this is not so much the extra 7 quid that have been snaffled, but that I appear to have received nothing from Frizzell highlighting the addition of Cash Advance interest charges. I've got a colourful leaflet telling me how wonderful the revised rewards scheme that began on 1/3/2005 would be (Not!!) but nothing saying "Watch out - from March 1st we're going to impose a significant new penalty if you withdraw cash from an ATM." The first warning of it seems to be an additional line in the small print on the back of our March and subsequent statements. Now, I'm not saying that Frizzell credit-cards are bad and, when it comes to charges for overseas Cash Advances, they are definitely better than many competitors. For example, Nationwide's credit-card has the same 1.5% handling charge (minimum £1.50), but a higher monthly rate of interest (from 1.31% to 1.45% according to card type). In fact, if you want to get currency out of a cash machine abroad, probably the cheapest way appears to be via Nationwide's DEBIT-card as no charges are levied by Nationwide for this service. To obtain the debit-card you'll need to have a Nationwide "FlexAccount" and, if this is not your primary bank account, before you go abroad you'll need to 'pre-load' it with funds to draw on. (Better be sure you don't go accidentally overdrawn too, as the financial penalties of doing so are a bit nasty.) So the next steps are: 1. A snotty letter to Frizzell that is unlikely to be productive but will certainly take more than £7 of bureaucratic effort to respond to. 2. A visit to Nationwide to apply for their FlexAccount. (By the way, just in case there's a sting in the tail of Nationwide's debit-card that I've overlooked, does anyone use this method of obtaining euros abroad and can recommend it?)

[Guest Neal]

Derek I have used Frizzell CC for many years as a means of accessing cash abroad. I too thought they offered the best method and, similarly, I had not spotted the change in policy either. I will shortly write to Frizzells asking if the "rumour" I have heard is true and why there was nothing to advise me of it. This forum is great, isn't it? Regards Neal

[Guest patrick winks]

Derek, I have just returned from 5 months in Spain, Portugal and France. I used my Nationwide debit card for cash and my Nationwide Visa card for diesel and other purchases, no surcharges and very good exchange rates. I used my "reserve" card once for diesel and got 5 cents less per £. Nationwide , like several other providers has shortened it's credit free period by 10 days but as I pay my card off by due date it does'nt make much difference to me.

[Guest ja]

Derek, Go for Nationwide flexaccount - debit card, we've used it for several years and nary a moments problem. There are no hidden snags that we have ever found. Nationwide may be experiencing a slight rebellion at this years AGM, but it is always good to shake up the non exec directors, and at least with Nationwide you get the option!

[Guest Derek Uzzell]

Thanks for the feedback, everybody. I've written to Liverpool Victoria Banking Services (Frizzell) complaining that I apparently received no forewarning about the Cash Advance interest charge that was introduced last March and inquiring whether a similar charge now applies to Advances made via all the Frizzell cards (which will include the Caravan Club one). I've also asked whether it's possible to put Frizzell credit-cards deliberately into credit before going abroad and, if so, whether this would negate the Cash Advance interest charge as long as the in-credit amount were not exceeded. If I get a worthwhile response I'll post it to the forum. We've now applied for a Nationwide FlexAccount to obtain their debit-card. A touch of irony here as, when we began getting cash out of foreign ATMs, we used to use our Abbey debit-card, mistakenly believing that (as we would be accessing our own money) this method would be cheapest. For a while we couldn't understand why the exchange-rate shown on our bank-statement was so poor for these transactions. Then we realised that the Abbey debit-card attracted a 1.5% fee for using the foreign ATM, plus a 2.75% commission on the transaction itself. The ATM fee was shown separately on our statement, but the commission charge was levied by a reduction in the exchange-rate. (Patrick - as this was (and may still be) standard practice, it could explain why the exchange-rate provided by your back-up card was so much lower than your Nationwide's rate.) There are a couple of reasonably recent articles in Which? magazine (April 2003 and December 2004) advising on obtaining foreign currency or on credit-card usage generally. For purchase transactions within the EU it looks like the credit-cards from Nationwide or Frizzell are as good as any (and better than most!) as no 'Eurozone-use' commission is charged. But, for foreign ATM cash advances, Nationwide's debit-card is the clear winner.

[Guest RonB]

Derek For your information I recently loaded my Frizzell card before going abroad and have received charges for cash withdrawals whilst there. Again, I was not forewarned on this. I can see them losing a lot of customers, not for the charges but for the way they have slipped them in. Banks never learn do they? Regards Ron