Holidaymakers don't understand dynamic currency conversion

Holidaymakers who think that they are being saved from a foreign exchange fee if they pay in pounds while abroad could be in for a shock. According to research by Abbey Credit Cards, as many as 42 million people - that's 92 per cent of the adult population - are unaware of the practice of dynamic currency conversion.

Nearly 40 per cent of people said that they would choose to pay in pounds while abroad if it was offered as an option to them, thinking that they would be able to avoid costly foreign exchange fees. However, this is not the case.

Where a customer opts to pay for a transaction in pounds in a foreign country, while the issuing bank often does not charge a foreign exchange fee, the acquiring bank will. In addition, the acquiring bank sets the exchange rate, which can often be uncompetitive.

Callum Gibson, Head of Abbey Credit Cards, commented: "Generally people assume that if they pay for a transaction in pounds then this means they can avoid paying a foreign exchange fee. Unfortunately, this is not the case. When you pay for anything abroad, no matter what the currency, some form of foreign exchange is going on and with most cards, you will be charged for it. Abbey Zero is one exception. This card has no fees for foreign exchange and cash withdrawals, so it's perfect for holidaymakers.

61 per cent of people believe that the exchange rate is set by their own credit card provider or bank when they transact in pounds abroad

Midlanders were most likely to fall into the trap of paying for goods and services in pounds whilst abroad (45 per cent)
About the Abbey Zero card:

The Abbey Zero credit card is the first card to offer no balance transfer fee, no foreign exchange fee and no cash advance fee on the same card. In addition, the card offers an introductory six-month interest free period on balance transfers and purchases.

Other features include:

18.9 per cent APR on all balance transfers and purchases (after the introductory six months interest free period)

25.9 per cent APR on cash advances (calculated from the day of withdrawal)