Banks scrap hidden charges on holiday cash bought with cards
Five high street banks have agreed to scrap 'hidden' charges on holiday money bought with plastic cards before setting out abroad.
The move is expected to save consumers up to £20 million a year and should come into force before next summer.
Barclays, Lloyds, NatWest, Santander and the Co-operative all said their fees on debit or credit card purchases of foreign currency at bureaux de change, the Post Office and at other banks will be abolished.
These are 1.5 or two per cent of the money being withdrawn with a typical minimum of £1.50 to a maximum of £7.50. About 40 per cent of foreign currency purchases in Britain are on cards rather than with cash.
The climbdown follows an investigation by the Office of Fair Trading triggered by a "super-complaint" from the Consumer Focus watchdog in September.
High street banks and card issuers have also agreed to display the actual costs of using cards abroad clearly on statements and review the marketing of misleading "zero per cent commission" offers.
Mike O'Connor, chief executive of Consumer Focus, said: "Consumers should be able to buy foreign currency without being misled, confused or short-changed.
"The OFT has agreed with Consumer Focus that people are losing out due to the action of banks and others buying and selling holiday money. The fees charged are opaque and difficult for consumers to calculate.
"It is particularly welcome that the OFT has worked with the big banks to stop withdrawal fees being charged when people buy currency on their card in the UK. It is only right that this unfair cost, which effectively charges customers for the privilege of taking money out of their own account, is stopped."
The head of the OFT 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."
British holidaymakers spend an estimated £27 billion a year abroad with total revenue for banks and other travel money providers from fees and spreads between "buy" and sell" rates of about £1.1 billion.
