The Hidden Cost Of Your Holiday Spending Money
Uswitch.com have released a very interesting research document into the real cost of holiday spending, and the extra millions of pounds in fees which fall into the coffers of the main UK banks. Next time you spend money overseas, just remember this article!
While the fees involved are no where near the estimated £4.75 billion which the banks had been making from “illegal†overdraft charges, they are still substantial. So what exactly happens when you spend abroad, and how do you lose out?
There are a number of unorthodox charges which include :-
· An exchange rate “loading fee†of 2.6% in the US and 2.5% in Europe. In effect you are charged an extra amount on all conversions, and this makes UK banks in the region of £204 million a year.
· A withdrawal fee of 2.3% for funds taken out overseas. This little bonus is currently bringing in an extra £151 million a year.
· Transaction fees. Many of the UK banks also charge an extra £1 or 75p per overseas transaction, on top of the other fees. This is estimated to bring in an extra £25 for Lloyds TSB alone.
When you also take into account the fact that foreigner retailers also charge up to 4% for converting from sterling to local currency, you can begin to see the real impact of your holiday spending.
Even though all of the above charges are perfectly legal with details available on request from the banks, many people are unaware of the real cost. It seems unlikely that the banks will relinquish these charges without a fight, as more of their charging structures come under public scrutiny.
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