‘Debit cards may be bad news abroad’
September 18, 2009 at 1:41 pm
If you have been on holiday abroad recently and been using your debit card as a means of withdrawing cash from ATMs or for paying bills in restaurants, hotels, shops and petrol stations, you may be in for a nasty surprise when you check your bank statement.
More and more banks have taken to charging customers hefty fees for using their debit cards abroad and the point has come when travellers should start giving serious consideration to opting for a pre-loaded card, specifically designed for use abroad. The idea is similar to that of prepaid mobile phones and the card looks just like a credit or debit card.
Prepaid currency cards are available from a growing number of places including many of the High St banks, the Post Office, Travelex and specialists such as FairFX and CaxtonFX.
Using a debit card to get cash from an ATM abroad costs around 2.5% of the amount withdrawn or a minimum of £3, compared to no fee at all from many of the prepaid card providers. If you are unlucky enough to have your card swallowed up by the machine abroad it can be extremely difficult to arrange for a replacement to be issued and delivered. Likewise if you have your debit card stolen it is one thing arranging to have it cancelled but another one to arrange for a replacement. In the meantime you could be stuck with no means of supporting yourself financially. Many of the pre-paid cards can be replaced within 48 hours, regardless of where you are in the world.
If you use your debit card to pay a bill in a restaurant you may not notice, since it is not shown separately on your statement, but you will be charged a “loading” fee of 2.75% by almost all providers. Then there is the “point of sale” fee, charged by many High St names; this varies from £1.50 to £2 each time you use the card. There are no fees of this nature associated with pre-paid cards
Currency fluctuations can make it hard for you to keep track of what things are costing you on a daily basis. With a pre-loaded card you know exactly what the rate of exchange was when you loaded it. Talking of exchange rates, debit cards very rarely give a competitive rate of exchange, whereas bodies such as Claxton FX offer to refund the difference if you find a better exchange rate anywhere else.
Terms and conditions vary from card to card so customers are advised to read the small print carefully.
