Fury over Nationwide's travel money U-turn
Society plans first ever fees for overseas card use
By Kate Hughes, Deputy Personal Finance Editor
Thursday, 5 March 2009
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A dramatic U-turn on overseas credit and debit card charges will mean significant new fees for millions of Nationwide customers planning to use their cards abroad, it emerged yesterday. From May, Nationwide customers with a Visa credit card will be charged 0.84 per cent of the value of any transaction made outside Europe. The same fee will apply to debit card holders from 1 June, but the fee will swiftly increase to 1 per cent for both groups of card holders from 1 July.
The fees are being introduced in stark contrast to the building society's well publicised fee-free approach to overseas transactions, which it has often used in advertising campaigns. For example, last year, Jeremy Wood, divisional director for Nationwide, warned: "People who are planning to go abroad this Easter should be aware of the hidden charges that most card providers impose, which are both costly and unnecessary. Last year, we saved our customers just under £46m in foreign currency loading fees."
Nationwide said it was passing on an authorisation fee charged by Visa, having previously absorbed the fee, ever since it joined the Visa scheme almost 20 years ago.
"The financial climate continues to be volatile and as a prudent provider we have to ensure that our products are sustainable," said Rachel Jensen, a spokesperson for Nationwide. "All we are doing is passing on a fee that Visa charges us. We are not making any profit from passing this fee on to our customers and the majority of customers making transactions are doing so within the Visa Europe region and so won't be charged."
The credit and debit card industry's complex charging process means that holidaymakers pay an estimated £700m every year in commission payments to banks and card providers, the equivalent of an extra £40 per customer over a two-week break. Nationwide's fee-free approach has therefore been a big selling point for the society.
The travel agent Thomas Cook has also announced plans to charge customers for the first time for overseas transactions on their credit card. From 18 April, customers will be charged a 2.5 per cent foreign exchange fee for all purchases and cash withdrawals abroad, as well as the pre-existing additional 2.99 per cent fee on any cash withdrawals both in the UK and overseas. The Post Office Mastercard is now the only credit card which doesn't charge commission for overseas spending.
Martyn Saville, credit card expert at Which?, said the decision would hit cash-strapped consumers already facing a challenging exchange rate. "Nationwide's decision to start charging customers fees for most purchases outside Europe is incredibly disappointing," Mr Saville said.
"The building society had been a shining light to the credit card industry with its no-fee policy on overseas purchases – it's a shame Nationwide has now sold out and fallen into line with the rest of the market."