Holiday card fees hot up - costing shoppers £millions

UK holidaymakers who are planning to use their credit card abroad this summer could be wasting hundreds of millions of pounds on unnecessary fees.

Research from the Post Office shows that 49 per cent of UK holidaymakers plan to use their credit card to shop abroad, accounting for an estimated spend of around £9.4 billion.

But as the majority of credit cards typically charge 2.75 per cent for each transaction made overseas, people could be paying an extra £258 million in fees. And it’s not just credit card providers that charge a fee: several debit card providers have also recently announced an increase in fees abroad.

Yet, half of all holidaymakers (47 per cent) have no idea about these hidden costs.

Over a third of credit card users (34 per cent) believe their provider does not charge a fee at all, despite there being only two credit cards on the market – including the Post Office credit card – that do not charge for all overseas transactions.

And with almost 10 million holidaymakers (26 per cent) not setting any type of financial budget when away, many people could still be paying for their holiday months after the event.

Women are more likely than men to keep to their holiday budget with 69 per cent generally doing so compared to 59 per cent of men. 18-24 year olds are the most unlikely to know if they are paying a fee.

Post Office head of lending Gary Fitton said: “We are now four times more likely to spend on plastic abroad than 10 years ago. It’s shocking not only to see how much people are being penalised to use their cards on holiday, but how few are aware of this.

“We urge holidaymakers to check with their bank or credit card provider whether they will be paying a fee to shop overseas before they go. There are great value zero per cent deals available which can ensure you return home with only shopping bags and happy memories, and not a bigger credit card bill.

“For example, a credit card holder could save £55 in fees if they spent £2000 on a Post Office credit card abroad, compared to a typical card charging 2.75 per cent each time it’s used.”

Gary Fitton added: “We urge debit card holders to also check with their provider whether it will cost them extra to spend on holiday.”

As the UK’s leading travel money business, the Post Office is always looking at ways to offer customers an even better deal on their travels.

As well as no commission charges, the Post Office credit card also has zero per cent on balance transfers for the first 10 months, zero per cent on purchases for the first three months and zero per cent interest on balance transfers for five months on anniversary in 2008 and 2009.

Even after the promotional periods, the card still offers a competitive interest rate of 15.9 per cent APR typical (variable).