“Je voudrais payer en devises du pays”: Beware the hidden costs of unnecessary currency conversion

Nationwide urges consumers to be alert when spending abroad this summer

28 July 2014

Holidaymakers are being warned by Nationwide Building Society not to get stung by hidden charges when spending abroad. Many people habitually pay in Sterling instead of the local currency, as they are either unaware or confused about potentially high conversion fees.

Consumers travelling abroad this summer should be aware that they could be affected by Dynamic Currency Conversion (DCC) - an ‘optional’ service provided by individual retailers or at ATMs that converts payments into the relevant home currency using an exchange rate which often includes a service charge of 3 per cent or higher. But despite DCC requiring cardholder consent, language barriers can often lure tourists into going ahead with the transaction in Sterling, while others will simply pay in Sterling out of habit.

Alternatively, if a customer chooses to pay in the local currency, such as Euros, the card provider may impose a foreign usage charge, which could be around 2.75%¹ of the purchase cost. Although a potentially cheaper option, it is still not ideal as it is eating into the holiday fund.

However, these costs can be avoided completely by choosing a card provider that offers a cost-free solution – Nationwide enables commission-free purchases abroad through its Select Credit Card² and commission-free cash withdrawals abroad with the FlexPlus³ current account.

Nationwide also advises consumers to brush up on their foreign language skills by learning the phrase for: ‘I want to pay in the local currency, please’ - just as they would learn how to say ‘good morning’ or ‘thank you’.

Nationwide’s Graham Pilkington said: “Each year holidaymakers are being caught out by the hidden charge of DCC, which adds pounds to their overall holiday bill. Even though many card providers charge foreign usage fees, they will generally be lower than the average fee charged by converting the payment to sterling.

“Trying to work out the best option can be confusing for the customer, as they need to compare the retailer’s exchange rate against their card provider’s foreign usage charges. Often there is no way of telling what exchange rate and fee you will be forced to accept by choosing Sterling. It may be best to stick with your card provider, which will be clear and consistent about the fee they charge you to pay for goods and services abroad.

“For Nationwide credit and debit card customers who benefit from commission-free purchases and cash withdrawals abroad, the advice is clearer. They should always opt to pay in the local currency, as they will not receive a foreign usage charge.”

Consumers should avoid being caught out by the language barrier and use the following useful phrases, which translate to ‘I want to pay in the local currency, please’:

  • Spain: “Puedo pagar con divisa local, por favor?”
  • France: “Je voudrais payer en devises du pays, s’il vous plait.”
  • Italy: “Vor pagare con la valuta locale, per favour.”

Notes to editors:

¹ May data from Moneysavingexpert.com shows 2.75% was the most common amount charged by main providers. See: http://www.moneysavingexpert.com/travel/overseas-card-charges

² Select Credit Card

Our combined purchase and low balance transfer fee offer

  • Exclusively for our main current account customers
  • 0% for 15 months on balance transfers* Balance transfers at 0% must be completed within the first 3 months of account opening
  • 0.55% balance transfer fee (minimum £5) Balance transfer fee of 0.55% applies for the first 3 months of account opening, after which time it will revert to 2.4%
  • 0% on purchases for 15 months* Spread the costs of purchases at 0%
  • Earn 0.5% unlimited cashback Earn 0.5% unlimited cashback on all purchases in pounds sterling
  • Unlimited commission- free purchases abroad.
  • No annual fee
  • Fraud guarantee Our Fraud guarantee gives 24/7 account monitoring and the latest card protection technology

* Introductory rates apply from the date the account is opened. Balance transfers at 0% must be made within 3 months from account opening and are subject to a fee of 0.55% (minimum £5.00). Balance transfer fee of 0.55% applies for the first 3 months of account opening, after which time it will revert to 2.4%. If you already hold a Nationwide credit card or have closed one in the last 12 months you will not be eligible for the introductory offers.

² Select Credit Card

Our longest combined balance transfer and purchase offer

  • Exclusively for our main current account customers
  • 0% on balance transfers for 26 months** Balance transfers at 0% must be completed within the first 3 months of account opening
  • 2.4% balance transfer fee Minimum £5
  • 0% on purchases for 15 months**Spread the costs of purchases at 0%
  • Earn 0.5% unlimited cashback Collect 0.5% unlimited on all purchases in pounds sterling
  • Unlimited commission-free purchases abroad
  • No annual fee
  • Fraud guarantee Our Fraud guarantee gives 24/7 account monitoring and the latest card protection technology

** Introductory rates apply from the date the account is opened. Balance transfers at 0% must be made within 3 months from account opening and are subject to a fee of 2.4% (minimum £5.00). If you already hold a Nationwide credit card or have closed one in the last 12 months you will not be eligible for the introductory offers.

³ FlexPlus

Our premium account gives you access to in-credit interest and some great benefits for £10 a month.

  • Worldwide family travel insurance, worldwide family, mobile phone insurance, UK and European breakdown cover and extended warranty***
  • Identity theft and emergency card assistance ***
  • 3% AER (2.96% gross p.a.) variable in-credit interest on balances up to £2,500
  • Commission-free cash withdrawals abroad
  • 3 month fee-free overdraft and a £100 fee-free limit after that ****
  • Flexclusive product offers and rewards (conditions apply)

*** There are some conditions and limitations on the insurance policies and benefits that come with our FlexAccount and FlexPlus accounts.

**** Overdrafts are only open to customers aged 18 or over and are subject to approval.

Please note: If you are a customer looking for information on our products and services, please visit the main website.