July 13, 2006

Financial advice site Moneysupermarket has informed credit card holders of the potential charges that they could encounter during their summer trips abroad.

The site states that over 16 million Brits are set to travel abroad this year but could be hit by up to £335 million in charges if they are not aware of what to look out for.

Foreign currency charges are the first thing to be aware of – a fee which most providers place on purchases made abroad – typically around 2.75 per cent.

A similar charge is also often placed on cash withdrawals in foreign countries, normally of around £2.50 or 2.5 per cent – whichever is greater – when customers use an ATM on holiday.

As well as these charges, many credit card companies can also charge a higher interest rate on cash withdrawals, which typically have a higher rate than purchases anyway.

Another factor to be aware of is the dynamic currency conversion, whereby retailers convert the price of a good being purchased from the local currency into sterling at their own conversion rate – which can often lead to British consumers losing out.

Robert Kenley, head of credit cards at Moneysupermarket, said: "Spending on plastic is a popular and convenient choice for Brits abroad. But if you don't use the 'right' card in the right way the costs can far outweigh the benefits.

"Even consumers savvy enough to be aware of loading fees and ATM charges also need to bear in mind the downside of dynamic currency conversion."