Billions to be spent by Brits abroad this year
April 13, 2008
Brits are set to spend a fortune abroad with the use of their plastic over the coming year, and according to recent reports around £23 billion will be spent on British plastic cards abroad. This invariably means that card providers and banks will be raking in the cash as a result of the various fees, charges, and interest charges that are levied on card transactions abroad, and some consumers could end up paying a fortune in various foreign transaction fees.
Many Brits prefer using their credit and debit cards in order to make purchases and cash withdrawals abroad, rather than using cash or traveller’s cheques, as most enjoy the convenience, ease, flexibility, and security of being able to use their cards. However, whilst the cards may provide consumers with increased convenience, ease, and security, they can also end up being costly in terms of what the banks and card providers charge.
The report shows that simply from debit card use alone, banks are set to make £318 million, and from credit card transactions abroad they are due to make around £368 million. This means that in total Brits that spend on their credit and debit cards abroad could help the banks and card providers to net an impressive £686 million in profits simply from the charges levied on these transactions.
An official from uswitch.com, which carried out the research into card fees abroad, stated: “The ever-increasing plethora of overseas fees and charges on debit and credit cards could leave consumers with a holiday hangover if they don’t do their homework before boarding the plane. Charging a fee for every purchase made overseas on a debit card is a lucrative bandwagon and one that is well worth providers jumping on. The revenue from these charges represents 9.5% of the total income made from fees on overseas transactions.”
He added: “Any consumer who holds a debit card with a bank levying these charges should think carefully before handing their card over the counter whilst abroad. On a two week holiday it’s not unfeasible for someone to pay for 14 meals with a debit card - with a transaction charge of up to £1.50 for each use, the charges could soon add up to £21 with foreign exchange fees on top.”
He also touched upon the importance of familiarising yourself with the foreign fees charges on cards, stating: “As a nation we now prefer to pay by plastic rather than by cash. Consequently, when we go abroad, most of us will not give it a second thought when taking out a credit or debit card to pay the bill. However, at the very least, consumers should make sure that they are fully aware of the additional charges involved when they use their card overseas. This might go some way to preparing them for the shock when these fees appear on their statement when they get home”
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