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The festive shopping season is in full swing, but that means it's even more important to be vigilant when it comes to your spending, because research from Norwich & Peterborough Building Society has found that many people are caught out by unexpected credit card fees…
Many of us shop online at this time of year, but this is often where those extra fees come into play, as you may be unaware that you're not paying in sterling. In fact, Norwich & Peterborough's research found that consumers paid an estimated £20.7m in fees for items bought online last year (out of the £396m spent in total), purely because the purchases were made in a foreign currency.
Online purchases made in foreign currencies are on the rise, too, with around 1.32m consumers – some 17% of the 7m who have made such transactions in the past year – saying that they're now making them more frequently than they did a year ago.
But why does it cost so much more than normal? Well, it's all because foreign currency purchases made online with a debit card are classed as overseas transactions, and most banks and building societies will charge their customers every time they make this kind of foreign currency purchase. In fact, some institutions levy as much as 2.99% of the transaction as a fee, plus an additional £1 each time the card is used in this way, so the cost really can add up.
Unfortunately, N&P's figures went on to reveal that three in five consumers are unaware that foreign currency purchases made online are classed as overseas transactions, while 44% are unaware that their bank or building society may charge them for using their card in this way.
That's why it's so important to not only be aware of the potential charges involved, but to try and mitigate them as much as you can, and a great way to do that is to either pay in sterling wherever possible, or use a debit or credit card that doesn't charge a fee for making transactions in a foreign currency. This will usually mean that you'll need a specialist travel credit card, and if you keep it purely for this use (or when you're travelling), you can be sure that you'll pay as little as possible.
"Shoppers need to remember that paying for goods online in a foreign currency attracts the same fees as shopping abroad," said Anthony Warrington of Norwich & Peterborough Building Society, "otherwise they could be in for a nasty surprise.
"Our research clearly illustrates that many consumers simply aren't aware that if they make a transaction in a foreign currency online, their debit card provider may charge them an extra fee… We would urge customers to become more aware of these charges and understand that the only way to ensure you will not be charged this type of additional fee is to pay in sterling when you have that option, or use a debit or credit card which doesn't charge for foreign currency transactions."
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