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Wales Online
Wales Online
Entertainment
Neil Shaw

Warning over foreign exchange charges as people rush to book holidays

As the travel industry begins to recover from the implications of COVID-19 – there has already been a sharp rise in holidays to France after the ban on UK tourists was lifted - many Brits are booking a much-needed holiday. But these long-awaited breaks could cost far more than necessary given the lack of knowledge around foreign exchange (FX) charges and international transaction costs, according to research by bank challenger Tally.

Tally found that nearly six in ten (57%) people don’t know banks add a margin to the official FX rate in addition to charging a transaction fee for using your card abroad, while four in ten (39%) are unaware that many banks charge fees for withdrawing money from cashpoints when abroad as well as additional interest on the withdrawal.

Half (51%) didn’t know that choosing to pay in the local currency - rather than in pounds - when using a card abroad gives a more favourable exchange rate, while 55% are unaware that if you don’t pay in the local currency on your card when abroad, the retailer will set the exchange rate and have the option to add conversion fees on top.

One in four (24%) of those surveyed say banks are deliberately unclear on FX rates, and many are now demanding change to reduce FX costs with a a third (32%) saying they think a law should be introduced to stop banks from charging customers transaction fees simply because they’re abroad.

Cameron Parry is Founder and CEO of Tally said: “A lack of clarity around foreign currency exchange and payments abroad generates revenues for banks, via unnecessary fees for bank customers. We want to demystify costs for bank customers. It is important that charges are simple and transparent so people can make the best choice when it comes to spending their hard-earned cash when overseas. People can accept a cost for convenience but no one likes having the wool pulled over their eyes. The research tells us that consumers are not satisfied with the current system and are looking for change.”

Many savers are likely to have built up a lot of annual leave during the pandemic. This, combined with parts of the world opening up, means thousands are planning foreign holidays for 2022. The UK government recently announced an end to pre-departure testing for holidaymakers returning to England and Wales, this, along with abolishing mandatory isolation until a negative PCR test has been obtained by those visiting the UK provides a huge boost to the travel industry, with travel company Kuoni’s CEO claiming that the industry will be “90% back before the end of spring.”

Cameron said: “Our advice is to pay attention to the options presented at time of payment when abroad. And consumers should get themselves an account designed with international use in mind, such as a Tally account, which doesn’t charge foreign transaction fees, foreign withdrawal fees, or markup the official FX rate.”

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