Overseas fees are too high and too complicated
New research by Which? reveals that some banks are charging exorbitant fees for overseas transactions with details of fees often hidden away on providers' websites or undisclosed on statements.
Which? put the country's seven biggest banks and building societies to the test to see which offers its customers the best deal for transactions abroad.
Which? researchers went to Calais in December 2011 and compared the amount charged by each bank for the same €5.95 debit card purchase and a €20 ATM withdrawal. The results showed a huge difference in charges between the best and worst banks.
Norwich and Peterborough's (N&P) Gold Light current account came out on top. Account holders aren't charged any fees for overseas use. In comparison, Halifax charged 33% more than N&P for the supermarket purchase. Even when compared to its high street rivals, Halifax's fees for overseas purchases were much higher - charging 29% more than both HSBC and Barclays. Lloyds TSB charged 15% more than N&P for the ATM withdrawal.
Additional fees can make card purchases incredibly expensive. For example 10 transactions of £50 made with a Halifax debit card would cost the cardholder £28.75. The same 10 transactions made with N&P would be free.
Which? is calling for all banks to be clearer about the fees they charge so that consumers can easily compare whether they are getting a good deal.
Which? experts also found it difficult to calculate how the foreign loading fees had been calculated using the bank statements alone. HSBC, Halifax and Lloyds TSB included their foreign loading fee as part of the exchange rate. Santander showed only the exchange rate with no mention of the foreign loading fee, even though it had charged one.
Which? executive director, Richard Lloyd, says: "Banks are charging exorbitant fees for the most straightforward overseas transactions, pushing up the price of even the most basic purchases.
"We are pleased that the Office of Fair Trading agrees with us that the industry needs to improve the way it displays charges online and in statements. We want to see overseas bank charges made clear to consumers when they sign up for their current account or credit card. Consumers must be able to easily see whether they are getting a good deal or not.
"The issue of overseas charges is just one of the things that we want the new financial regulator to tackle. It must act as a watchdog for consumers to make sure they aren't exposed to what we believe are unfair charges."