Britons are warned about hidden costs associated with their bank cards when travelling abroad.
One man was hit with a “hefty fee” after coming back from his holiday to Spain because he did not check the fees attached to his card before travelling.
Matt Howe, a junior doctor living in Leeds spoke exclusively with Express.co.uk about his situation.
He said: “Since 2018, I’ve been using Monzo whenever I go abroad after I was hit with hefty bank charges from another bank during a trip to Spain.
“I was a third-year student at the time, so being left with unexpected fees can really catch you off guard financially when you’re not earning a full wage.
“After that trip, I researched different banks and saw that Monzo allowed customers to spend abroad with no fees, so I immediately opened an account with them. I now use Monzo exclusively on any trip I take.
“I think that the new digital banks (neobanks) have a really competitive offering for people like me who enjoy travelling.
“They also offer great features like the ability to quickly transfer money to friends or family, as well as being able to request money that is owed easily from the app.”
He emphasised the importance of people knowing what cards are for everyday use, compared to cards that are better used abroad.
Neobanks, sometimes called “challenger banks,” usually specialize in a few financial services, such as spending and savings, and insure deposits through a partnership with a bank insured by the Federal Deposit Insurance Corp. Institutions that are commonly referred to as neobanks include Chime, Revolut and GoBank.
Barclays and Lloyds Bank charge 2.99 percent to make a transaction whilst Monzo, Starling and Chase don’t charge anything.
Somebody spending £1,000 on their Barclays card on holiday would therefore be left with £30 in charges, research from GFT Banking Disruption Index shows.
As the summer holidays approach, millions of holidaymakers are warned they may be caught out by huge fees just for using their debit card abroad.
Two-thirds (67 percent) of people think there are “hidden costs” when using a debit card overseas, while 58 percent say they feel they are being “ripped off” when they use it, according to research by travel debit card Currensea.
Calculations by Currensea show that a family on a week’s holiday in France could be £212 out of pocket while a couple heading to New York for a weeklong break face additional fees of up to £295.
Some debit cards from high-street banks charge as much as 4.75 percent for withdrawing cash at ATMs abroad, and 2.75 percent for buying things in shops and restaurants.
Matt spent £750 on his trip to Spain in 2018 but was left with £42.50 in additional fees by the end of the week on his card. This was a result of using his card for a lot of his spending and being caught out by cash machines by not opting for the local currency.
Those withdrawing cash at ATMs abroad are particularly feeling the sting from hefty fees as figures from Moneyfacts show that travellers withdrawing £250 from an overseas ATM will typically face charges of £11.88. For withdrawals on credit cards, this rises to £14.95 in fees, before interest.
Richard Kalas, Client Solutions Director, Retail Banking at GFT UK said: “As we enter the summer months and foreign travel increases, there is a real opportunity for banks to provide better clarity and support to their customers whilst abroad.
“The traditional banks seemingly have the most work to do. But small changes to their digital offering, to make foreign spending easier and clearer to understand, could improve their customers’ experience whilst abroad almost instantly, without having to review their foreign spending charges.
“Meanwhile, despite the fact that neobanks continue to lead the market on low foreign transaction fees, they also have their own challenges.”
Mr Kalas continued: “They must still ensure their wider offering is attractive enough to convert the consumers who only use their services whilst abroad, into full-time active current account users back at home.
“Understanding the role that digital services can play in making the customer experience better abroad and at home, will be key for banks who want to remain competitive in this challenging market.”