Don’t Get Ripped Off On Your Holiday This Year
It is possible that your holiday may cost you more money than you planned on spending this year. With hidden bank charges this could amount to an extra £300.
This is especially true if you plan to take your holiday abroad where the exchange rates of the pound seem to be going down each day. Families who are staying at home should also be concerned because the fees associated with the use of credit cards in interest and withdrawals of cash are rising monthly.
The pound plummeted against the world currency and this coupled with the weak British economy has made it difficult to plan a holiday this year. Those heading for Europe and the US this summer, will feel the pinch in how far their money will take them and in what they can purchase for the money they have allotted for their holiday.
In 2008,with the exchange rate, you would receive €1.27 for your British pound and this year it is down to €1.14. According to Fairfax, a family spending €2000 on their credit card for their holiday will be facing a bill of £1754 this year as opposed to £1574 last year.
The exchange rate for US dollars has followed a similar trend. The exchange on one pound last year would have amounted to $1.98, whereas it is now down to $1.58. This will increase the credit card bill from £1010 in 2008 to £1265.
In addition, there are higher fees associated with converting currencies. Abbey’s American Express, Citibank, Clydesdale, HSBC and other banks have all increased their currency conversion fees by 2.75% to 2.99%. This amounts to an additional cost of about £300 if you plan to spend $2000 on a holiday to the US and an additional cost of £205 if you plan to holiday in Europe.
Nationwide has not increased its currency conversion fees, but it has announced that it will add an additional 0.84% to purchases made with Visa credit cards because of the higher fees being charged by the credit card company. This fee will rise to 1% on July for purchases made in Europe.
You can save money on these costs when you take a holiday by not using your credit card to withdraw money. The cheapest cost of taking out money on your card is 1.5% and this ranges all the way up to 3% of the amount you withdraw. You won’t notice this charge in the money right away, but it will be applied on your statement.
The minimum fee is about £2.50 in addition to the percentage fee. Some banks, such as Lloyds TSB, have increased this cost to £3 for every cash withdrawal on your card. This means that when you withdraw £200 you pay a fee of £6 and when you add in the interest charge and the currency exchange fee, you could be paying an extra £12 for this amount of money. When you need cash, it is better to use your debit card, rather than your credit card.
Interest rates on credit cards have also risen in recent months. Abbey has increased its rates from 22.9% to 27.9% and Citibank customers have seen an increase from 17.4% to 28%. The withdrawal fee on HSBC debit cards have risen from 1.5% to 2%, although the minimum charge of £1.75 has remained unchanged.
Tags: tsb, overdraft, currency exchange, lloyds tsb, Visa Inc., holiday money, US
