Watchdog calls for investigation into forex charges
A consumer watchdog has today issued a super-complaint to the Office of Fair Trading about the amount holidaymakers and business travellers pay for foreign currency.
Consumer Focus says a combination of complex charges and poor or misleading information means travellers are being ripped off when they exchange money or use cards overseas.
Britons spend around £27bn abroad in 2007 and Consumer Focus estimates they were charged a total of £1bn for swapping their pounds for local currency. "It is unclear how much of these charges are warranted and how much are excessive, which is why Consumer Focus is calling on the OFT to carry out its own investigation," it said in a statement.
The watchdog is asking the OFT to investigate three key areas:
* Charges for using debit or credit cards overseas, which it says are unnecessarily complex and confusing as they vary significantly, making it difficult for users to establish the full costs and shop around for better deals;
* Banks and credit card fees for buying travel money with a card in the UK, which Consumer Focus says do not reflect actual costs. It says a debit card payment costs on average 9p to process and a credit card payment 37p, yet charges for buying currency with a card are typically 1.5-2% of the amount converted (up to a ceiling of £4.50)
* The use of marketing phrases such as ‘0% commission' and ‘competitive exchange rates' by suppliers, which it says are misleading and make it difficult for consumers to make informed choices and compare banks with bureaux de change or the Post Office. In practice, it says, the exchange rates already include mark-ups levied by suppliers and so are not fee-free as ‘0% commission' implies
Consumer Focus chief executive Mike O'Connor said: "Converting £500 into euros can cost from under £10 to over £30 depending on where you switch your money. This is a huge difference for essentially providing the same service and typically banks offer the worst deals.
‘If holiday makers buy their currency from the Post Office, travel agent or bureaux de change many are stung with cash withdrawal charges by their bank, effectively for the privilege of taking money out of their own accounts.
‘Individuals buy holiday money infrequently and so may not shop around much or may just stick with the same supplier. A cocktail of confusing charges and poor transparency means collectively we are losing out in a big way. We are calling on the OFT to investigate and work with the industry to send these dubious and complex charges packing."
Most holidaymakers (70%) buy foreign cash in the UK with one in five using debit or credit cards overseas.
With permission from Travelmole
Consumers warned of danger of pre-paid plastic
Consumers using pre-paid cards, including Ryanair's new own-brand MasterCard, have been warned that they are not protected by the financial compensation scheme is the card provider goes bust.
The warning comes from the Financial Services Compensation Scheme (FSCS), which is concerned that consumers using the cards could be unaware that they are not covered.
Ryanair announced last week that it was launching its own MasterCard, which will be the only way for customers to avoid paying an administration fee when they book flights.
Holidaymakers also use pre-paid cards as an alternative to credit cards and travellers cheques overseas as they can load them with the amount of local currency they want, making it easier for them to budget.
FSCS chief executive Mark Neale told The Times: "Those people who already have a card, or are considering getting one, should be aware that they are not covered by the FSCS.
"This means that if the provider goes bust then cardholders will lose all of the money on their card and will not be eligible for protection."
With permission from Travelmole
UPDATE 11 OCT
Ryanair refutes claims above by FSCS:
http://www.holidaytruths.co.uk/viewtopic.php?f=45&t=68514&p=1552607#p1552607
Consumers using pre-paid cards, including Ryanair's new own-brand MasterCard, have been warned that they are not protected by the financial compensation scheme is the card provider goes bust.
The warning comes from the Financial Services Compensation Scheme (FSCS), which is concerned that consumers using the cards could be unaware that they are not covered.
Ryanair announced last week that it was launching its own MasterCard, which will be the only way for customers to avoid paying an administration fee when they book flights.
Holidaymakers also use pre-paid cards as an alternative to credit cards and travellers cheques overseas as they can load them with the amount of local currency they want, making it easier for them to budget.
FSCS chief executive Mark Neale told The Times: "Those people who already have a card, or are considering getting one, should be aware that they are not covered by the FSCS.
"This means that if the provider goes bust then cardholders will lose all of the money on their card and will not be eligible for protection."
With permission from Travelmole
UPDATE 11 OCT
Ryanair refutes claims above by FSCS:
http://www.holidaytruths.co.uk/viewtopic.php?f=45&t=68514&p=1552607#p1552607
Had fun today trying to exchange my unused travellers cheques back to cash.
Had £2300 worth of sterling travellers cheques. In the end I didn't use them as I changed up English money with someone who was coming to England from Seychelles so I was more then happy to exchange my English money with them for Seychelles money (however illegal it is!)
First the Post office said they wouldn't change them as I didn't buy them from their. I showed her the receipt with her name signed on it! She then said they didn't have £2300 there to give me. I said fine, I'll take a cheque. Then all of a sudden the manager (who I have known for 25 years) said that will be fine and she'll get the money out of the safe for me.
Then after 60 odd minutes she counted out the money minus commission. I asked why I was paying commission when it clearly said in big bold writing on the receipt that any unused travellers cheques are exchanged back commission free. She said it wasn't actually a commission charge but the exchange rate was different to what it was when I ordered the travellers cheques back in September.
I then reminded her that they were STERLING travellers cheques and as far as I could remember a pound was worth a pound for as long as I could remember!!
In the end she agreed after phoning up head office to check! After around 1h 20minutes I finally had my cash. Now I'm stuck with nearly 2000 Seychelles rupees that nobody in the UK seems to want to exchange, looks like I'll have to go back again soon.
Had £2300 worth of sterling travellers cheques. In the end I didn't use them as I changed up English money with someone who was coming to England from Seychelles so I was more then happy to exchange my English money with them for Seychelles money (however illegal it is!)
First the Post office said they wouldn't change them as I didn't buy them from their. I showed her the receipt with her name signed on it! She then said they didn't have £2300 there to give me. I said fine, I'll take a cheque. Then all of a sudden the manager (who I have known for 25 years) said that will be fine and she'll get the money out of the safe for me.
Then after 60 odd minutes she counted out the money minus commission. I asked why I was paying commission when it clearly said in big bold writing on the receipt that any unused travellers cheques are exchanged back commission free. She said it wasn't actually a commission charge but the exchange rate was different to what it was when I ordered the travellers cheques back in September.
I then reminded her that they were STERLING travellers cheques and as far as I could remember a pound was worth a pound for as long as I could remember!!
In the end she agreed after phoning up head office to check! After around 1h 20minutes I finally had my cash. Now I'm stuck with nearly 2000 Seychelles rupees that nobody in the UK seems to want to exchange, looks like I'll have to go back again soon.
Banks agree to ditch travel money fees
Banks and credit card companies have agreed to make it cheaper for holidaymakers to buy foreign currency and to make it clearer to customers how much they are being charged for spending on plastic overseas.
Charges to use cards to buy currency will be dropped, following an investigation by the Office of Fair Trading, and some businesses selling foreign money have agreed to review their 0% commission offers to reveal to customers the true cost.
The OFT investigation, which follows a super-complaint by the watchdog Customer Focus, found that companies offering 0% commission build a mark-up into the exchange rate, so they are not actually fee free.
After close consultation with foreign currency businesses, the OFT has received a raft of commitments from banks and other providers including:
* Agreement from Lloyds/HBOS, Barclays, RBS/Natwest, Santander and the Co-operative Bank to scrap charges for consumers using their debit cards to purchase foreign currency in the UK (typically 1.5%- 2% of the amount being purchased).
* A joint agreement from the UK Cards Association and the British Bankers Association, on behalf of their members, that they will give clearer, more accessible information about their charges for using cards abroad, on websites, statements and through call centres.
* Lloyds/HBOS, HSBC, Co-operative Bank, Capital One, RBS/Natwest and American Express have agreed to display the actual charges incurred by customers for using cards abroad far more clearly on their monthly and annual statements.
In addition, foreign currency businesses have agreed to review their marketing to make the various costs and conditions that apply clearer, particularly those applicable to '0% commission' deals.
Consumer Focus, which claims travel money providers make £1.1bn a year from customers spending a total of £32bn abroad, said holidaymakers could be charged from £10 to £30 to change £500 into euros depending on which provider they used.
It also complained that charges for using debit or credit cards overseas were unnecessarily complex and confusing, adding that phrases such as "0% commission" and "competitive exchange rates" were misleading.
OFT chief executive John Fingleton said: "Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.
"We are very pleased that the travel money industry has agreed, following a OFT short investigation, to make these significant voluntary changes.
"We believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market."
With permission from Travelmole
Banks and credit card companies have agreed to make it cheaper for holidaymakers to buy foreign currency and to make it clearer to customers how much they are being charged for spending on plastic overseas.
Charges to use cards to buy currency will be dropped, following an investigation by the Office of Fair Trading, and some businesses selling foreign money have agreed to review their 0% commission offers to reveal to customers the true cost.
The OFT investigation, which follows a super-complaint by the watchdog Customer Focus, found that companies offering 0% commission build a mark-up into the exchange rate, so they are not actually fee free.
After close consultation with foreign currency businesses, the OFT has received a raft of commitments from banks and other providers including:
* Agreement from Lloyds/HBOS, Barclays, RBS/Natwest, Santander and the Co-operative Bank to scrap charges for consumers using their debit cards to purchase foreign currency in the UK (typically 1.5%- 2% of the amount being purchased).
* A joint agreement from the UK Cards Association and the British Bankers Association, on behalf of their members, that they will give clearer, more accessible information about their charges for using cards abroad, on websites, statements and through call centres.
* Lloyds/HBOS, HSBC, Co-operative Bank, Capital One, RBS/Natwest and American Express have agreed to display the actual charges incurred by customers for using cards abroad far more clearly on their monthly and annual statements.
In addition, foreign currency businesses have agreed to review their marketing to make the various costs and conditions that apply clearer, particularly those applicable to '0% commission' deals.
Consumer Focus, which claims travel money providers make £1.1bn a year from customers spending a total of £32bn abroad, said holidaymakers could be charged from £10 to £30 to change £500 into euros depending on which provider they used.
It also complained that charges for using debit or credit cards overseas were unnecessarily complex and confusing, adding that phrases such as "0% commission" and "competitive exchange rates" were misleading.
OFT chief executive John Fingleton said: "Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.
"We are very pleased that the travel money industry has agreed, following a OFT short investigation, to make these significant voluntary changes.
"We believe they will reduce confusion about the charges that apply when buying travel money in the UK or using cards overseas, and hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market."
With permission from Travelmole
ever so slightly off topic, but I've just seen reports from BBC, Sky and the Press Association which contradict each other and don't make sense - I've had to come here to find out what has actually been agreed so the chances of most people understanding things any better are slim.
Anyway, there doesn't seem to be any change to the charges for transactions done outside UK, which is going to disappoint and confuse a lot of people.
Anyway, there doesn't seem to be any change to the charges for transactions done outside UK, which is going to disappoint and confuse a lot of people.
I saw the item on BBC this morning and it gave me the impression that charges would no longer apply when I use my card abroad. My first thought was that we would see a dramatic change in the rates we got (Well they need to make the money up somewhere) but as Steve says, here on HT it is very clear exactly what is going to happen. No doubt we shall see an increase in complaints from those who get caught out.
Personally I prefer to use my (debit) card abroad only taking around £100 in cash. Perhaps I need to rethink it.
fwh
Personally I prefer to use my (debit) card abroad only taking around £100 in cash. Perhaps I need to rethink it.
fwh
hi all....anyone know rules around american express sterling travellers cheques...
Last year took a lot extra incase of emergencies like I always do...usually I take them to my bank and pay them back into account I save holiday cash in....it doesnt cost me any fees ect to do this.
Last year I decided to just hang on to them to use this year and save the bother of having to order and collect them again.
Is there a time limit on being able to use them ....bought last week of july last year....going away second week in july this year....will they be ok.
I did ask the cashier in my bank last dec...and she said as far as she knew there was no dates on them...but she didnt look like she was certain herself.
Too much gone on since last year and forgot about them....now planning to use them was a bit worried..........tweetie
Last year took a lot extra incase of emergencies like I always do...usually I take them to my bank and pay them back into account I save holiday cash in....it doesnt cost me any fees ect to do this.
Last year I decided to just hang on to them to use this year and save the bother of having to order and collect them again.
Is there a time limit on being able to use them ....bought last week of july last year....going away second week in july this year....will they be ok.
I did ask the cashier in my bank last dec...and she said as far as she knew there was no dates on them...but she didnt look like she was certain herself.
Too much gone on since last year and forgot about them....now planning to use them was a bit worried..........tweetie
Amex travellers cheques don't expire.
hi sunaddict.....propably asking the obvious but is Amex short for american express...tweetie
Hi tweetie. Sorry! Yes Amex is American Express.
Hi Tweetie ... do you still have the original receipt ? If not, you should write down a list of serial numbers of the remaining cheques, emergency contact numbers for Amex etc, just in case of loss or theft. Keep it separate from the cheques at all times, just as you would with the receipt.
David
David
.....thanks sunadict....thats us all sorted for spends then 
....oh happy times...tweetieThanks for that David....dont know what I did with reciept and wouldnt have thought about needing the numbers
.... tweetie
Just make a list and tick them off as you cash them, it makes it easier then to give Amex the serial numbers of the uncashed cheques in the unlikely event that you do have to contact them.
David
David
Hi all
Have read in the papers that at the moment you can get more Euro for the Pound, where is the best place to get them? Post Office, Thomas Cook anyone know? We are off to Cyprus in July and want to get more for our money. Have been to Post Office and Thomas Cook in the past
Thank you
Dawnie-Rob
Have read in the papers that at the moment you can get more Euro for the Pound, where is the best place to get them? Post Office, Thomas Cook anyone know? We are off to Cyprus in July and want to get more for our money. Have been to Post Office and Thomas Cook in the past
Thank you
Dawnie-Rob
You could try this comparison website:
http://www.currencyexchange-uk.co.uk/index.php/travel-money.html
Unless you are taking thousands with you the difference on £500 of Euros between the best and worst exchange rate is 15 Euros.
http://www.currencyexchange-uk.co.uk/index.php/travel-money.html
Unless you are taking thousands with you the difference on £500 of Euros between the best and worst exchange rate is 15 Euros.
We are off to Cyprus in July and want to get more for our money
You will always get more in your actual destination, if you have one of those payday advance type shops close to you check in there as they are competative, we have 'The Money Shop' which I use for small exchanges to just start me off when we arrive in resort.
http://www.moneyshop.tv/foreign-currency/
Be aware that the walk-in rate at the Post Office is a lot less than if you order it in advance for collection.
luci
luci
Hello
The Halifax clarity credit card does not charge for use abroad. I've just got one and I'll leave the money in the bank and
pay off in full when I get back. Thats one way to avoid charges.
The Halifax clarity credit card does not charge for use abroad. I've just got one and I'll leave the money in the bank and
pay off in full when I get back. Thats one way to avoid charges.
andrea, if you want to withdraw cash abroad they don't charge you a withdrawal fee, but you still pay interest on it though, from the day you withdraw the cash.
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