UK holidaymakers are running the risk of paying £327 million in extra charges on their credit card while overseas this summer, according to new …
UK holidaymakers are running the risk of paying £327 million in extra charges on their credit card while overseas this summer, according to new research by iSwitch.
Many consumers do not know about the charges until they get home and find a large bill, which can potentially lead to an increased amount of credit card debt should it not be possible to pay off.
The research notes consumers using a debit card could end up paying out even more in fees, with many banks charging a a large amount on all overseas spending.
In total, 18 million holidaymakers (53 per cent) will put the cost of their trip on plastic this year despite one in ten (12 per cent) still paying off debts from their last holiday.
According to the report, a quarter of consumers (24 per cent) plan to use a credit card to cover their expenditures while on holiday abroad this summer, with an average of £992 estimated to be put on each individual card.
However, average exchange rate transaction fees of 2.75 per cent mean holidaymakers could find a massive bill when they arrive home.
It is the 60 per cent of consumers that use their credit card to withdraw money from ATMs abroad who will be hit even harder, with fees of three per cent on top of the transaction fee, plus daily ‘cash advance' interest charges on all cash withdrawn at rates that can go as high as 39.9 per cent a day until the amount is paid back.
Michael Ossei, personal finance expert at uSwitch, said: "Travelling abroad is expensive enough without the extra penalties for using the wrong card while you're there. Financial awareness may go into holiday mode, but a high credit card bill is one holiday hangover you can do without."
Paying for things via plastic can be incredibly convenient, although it may come with excessive charges that could lead to an increased amount of debt if individuals are not careful.
It is vitally important for holidaymakers to explore all options when looking to pay for things abroad as debit and credit card usage can be more painful than many people think.
By James Francis