Avoiding Bank Charges When Abroad

[Vernon B]

Sorry, I don't know the answer but I got your attention!

 

As most of us that are lucky enough to spend reasonable periods on the other side of La Manche will know the banks have just introduced new charges for foreign transactions. Fortunately, for the present at least, it is still possible to avoid additional charges for credit card purchases by using a Nationwide (and I believe a Saga) credit card. But that still leaves charges for withdrawals from Cash Point Machines.

 

My Bank, Lloyds TSB, have raised their foreign exchange fees from 2.75% to 2.99% but that is just one of three separate charges they levy on cash withdrawals. As I understand it (and these charges are anything but transparent) you'll pay between £5 and £6 when withdrawing £100 worth of Euros.

 

It seems to me that since these charges are related to withdrawals in a foreign currency it might be possible to avoid, or at least reduce, them by setting up some form of Euro account in the Euro zone. Obviously there will be some initial charges incurred when doing this but over a period of time it may well be worthwhile.

 

Do we have any current/former bank managers, financial advisers, private equity specialists, spives or barrow boys out there who can advise (free of charge of course) about the practicalities of doing this?

 

 

Vernon

[chas]

If you have a Nationwide credit card you should also have a Flexiaccount card, which is a debit card. With money in that account you will be able to draw money from your account in local currency from any ATM machine with no charges and and a very good rate of exchange to boot.

[CliveH]

 

Chas is correct Vernon

 

Have a look at:-

 

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=418422&in_page_id=9

 

Other cards do do this as well but you sometimes have to ask. After HSBC ringing me to check it was me using my card abroad (their computer flagged a transaction up as being "unusual") I always warn the card operators that I intend to use telling them roughly where and when I am going to be outside of the UK.

 

When I do this I ask if they will charge me for purchases, ATM withdrawals etc and if they say yes then they get told their card will not get used.

 

On a couple of occasions I have had these charges waived.

 

But it is easier just to get yourself a Nationwide card.

 

[Mel B]

chas - 2007-08-06 8:11 PM

 

If you have a Nationwide credit card you should also have a Flexiaccount card, which is a debit card. With money in that account you will be able to draw money from your account in local currency from any ATM machine with no charges and and a very good rate of exchange to boot.

 

Err, nope! Should we have? (!)

[twooks]

should you have the credit card or the debit card???????

[sounds like Daves 'fun' thread ]

 

Def recommend Nationwide Flexaccount - easy to run via internet - nice little e-savings account runs off it for any surplus cash, and their debit card comes out top in just about every survey going - assuming you use ATMs to get your spending monies when abroad.

Don't know anything about their credit card - currently use Tesco's - tho that may change if the ferry vouchers stop.

 

B-)

[Vernon B]

chas - 2007-08-06 8:11 PM

 

If you have a Nationwide credit card you should also have a Flexiaccount card, which is a debit card. With money in that account you will be able to draw money from your account in local currency from any ATM machine with no charges and and a very good rate of exchange to boot.

 

Interesting Chas, I didn't know that. I took out a Nationwide credit card when the CC started charging for foreign transactions but was unware of this Flexiaccount card. If I understand correctly you are saying that by opening a deposit account with Nationwide you can draw from that, using the F/card, without incurring charges. If that's right it certainly solves the problem so thanks very much.

 

As Nationwide are "selling" their credit card on the basis of its "zero" exchange fee hopefully they'll continue with the policy for a few months at least.

 

I owe you one.

 

Vernon

[twooks]

Flexaccount is a chequeing account not a deposit account,

you get a Visa Debit card - which presumably also doubles as a cheque guarantee - but since I hardly ever write cheques I wouldn't really know.

 

if you open a Flexaccount you can also open an internet based savings [ie deposit] account - you pay money in and out of this through the Flexaccount.

hth

 

B-)

[Philman]

If you have a Credit Card with Nationwide but do not have their Debit Card, you will get charged interest on cash withdrawals when abroad as well as the cash advance fee. Their exchange rate seems much better than other banks.

 

Phil.

[CliveH]

If you have a look at the link I posted earlier you will see a brief comparison of the cards for the major providers.

 

I have repeated the data for Nationwide and Nat West to give a flavour.

 

NATIONWIDE

 

Debit card

 

 

ATM Charges: Free

Cost per £100 ATM Withdrawal: £0

Retail Charges: Free

 

 

Credit Card

 

 

ATM withdrawal: 2% transaction fee (Min £2)

Cost per £100 ATM Withdrawal: £2

Retail Charges: Free

 

 

 

 

--------------------------------------------------------------------------------

 

 

NATWEST

 

 

Debit card

 

 

ATM Charges: 2.65% exchange rate transaction charge and 2.25% transaction fee (Max £4)

Cost per £100 ATM Withdrawal: £4.90

Retail Charges: 2.75% exchange rate transaction charge plus 75p

 

 

Credit Card

 

 

ATM withdrawal: 2.75% exchange rate transaction charge and 2.5% transaction fee (Min £2.50)

Cost per £100 ATM Withdrawal: £5.25%

Retail Charges: 2.75% exchange rate transaction charge

 

 

 

 

 

As you can see - Nationwide comes out very well against Nat West. Must be the fact that Nationwide is a Mutual run more for the benefit of its members. Whereas that Banks are run more for the benefit of there Shareholders.

 

[W3526602]

Hi,

 

We have a French bank account, and pay about €5 a month for the priviledge of letting them hold our cash. But at least that is only one payment and not related to what we spend. They also pay our routine bills.

Getting money into that account is more difficult.

 

Electronic transfer accross borders costs (or did) £20, irrespective of the amount involved. The French bank may, or may not, add further charges. It is now illegal to charge that £20 between Euro states....but UK don't use euros.

 

A banker's draft costs £10 plus postage, or we can take it accross with us.

 

Latest is to order euros from our credit card company, they will be delivered to your (UK) door the following day. No commission, and goodish exchange rate. Buying foreign currency is considered to be a normal purchase, so no interest charges until you don't settle up in a few weeks time. I'm sure there is a potential scam there somewhere.

 

602

[Mel E]

Two additional tips:

 

1. Make sure you register ALL your cards with one of the card security companies, so that one call stops them all if you lose your wallet.

 

2. Ensure that you and your partner have at least one credit card each which is entirely your own and NOT on a shared account. That way when you make the phone call in 1, you can stop just yours and you'll still have a way of getting money and spending on your credit card.

 

By far the best way of doing this is to each open a Nationwide Flex Account (which pays 4.5% interest on contents up to £3,000, 0.1% over that limit) and open an e-Saver account attached to the Flex Account. After the most recent rate changes, that pays a reasonable (but not exceptional) 5.80%. You could also open a Regular Saver account into which you can transfer up to £250 per month at the very high rate of 6.75% AER, and you can set up the Flex account to do the transfer automatically.

 

The Flex account is one of the best online banking services - I have been using it now as our prime account for over 5 years and it works well and simply. Since Nationwide also still have branches, anything complicated can be taken there.

 

You use the Flex Account card as your Visa Debit card (no charges for cash withdrawals or any other use abroad) and get a Visa Credit card linked to your Flex Account so you can monitor it online as well - again no exchange rate loading or charges on purchases (the usual charges for cash withdrawals on any Credit Card).

 

Mel E

====

 

[robin]

I can also sing the praises of NW Flexaccount - I have been using this on-line for years.

The NW e-savings account is also one of the best going.

[Vernon B]

Seems that Nationwide is the way to go and I've just gone through a very thorough screening to open an account - they obviously don't accept any tom, dick or harry.

 

All in all it's nice to hear glowing reports about a bank, especially as most of them appear to be receiving a lot of unreasonable flack from the press at the moment. As I see it if people "break the rules" and go over drawn they should be charged heavy penalties rather than the costs being recovered from good customers.

 

Vernon

[CliveH]

Hi Vernon

 

Sadly the fact that mutuals were forced to de-mutualise means that virtually all the “High Street” outlets are now “Banks” with the Nationwide being a notable exception as it is still a Mutual Society and therefore owned by its members not shareholders. Still I have my Abbey (Santander) and NU shares which are doing rather well thank you!

 

In my opinion the collective term for all High Street Banks is a Wunch. ( - Wunch of Bankers????)

 

Other notable Mutuals can be found via the FSA website - http://mutuals.fsa.gov.uk/

 

BUT!!!! – Please note – just because an organisation is a Mutual does not mean it is well run or even fair to its members. Remember that “The Equitable Life Assurance Society” was the oldest mutual Life Office in the world and that did not stop some very dodgy dealings in deed!

 

One of the problems with Mutuals is that those that run them are not subject to the same rules as plc’s or Ltd companies and they do not have shareholders to answer too.

 

So whilst not having shareholders taking some of the profit is a potential advantage, it also means that Mutuals can be a bit of a law unto themselves.

 

One of the most respected Financial Journalists – Jeff Prestridge has lead a campaign to make those in charge of Mutuals more accountable.

 

[Philman]

Hi Clive your statement that the only charge for ATM withdrawals when using a Nationwide credit card when abroad is 2% is not quite true as they also make a cash interest charge of 1.45% per month.

 

Phil.

[donna miller]

The post office do a euro card, you have to put credit on it then use it as a debit card. Not sure about ATM withdrawal charges but apparently it is widely accepted.

 

Hope that helps.