Hidden Fees with Credit Cards

Credit Cards and Debit Cards are seen as the safest option for travelling. UK residents feel that the credit and debit cards provide more security as well as convenience when they are overseas; however there is a problem that could earn you a higher credit balance. Many of the credit and debit card companies charge hidden fees as well as foreign transaction charges. These charges can make it worse for you to bring your plastic friend on the trip with. We are going to look at a few of those fees so that you may be aware the next time you go out of town.

First are the loading fees. These fees are exchange rate loading fees that can add even more to you foreign transactions. The fees are placed on the cards by the bank every time you make a foreign transaction. Your card rate is going to be created by Visa and MasterCard wholesale rates. This means they are usually competitive and around 2.75 percent per transaction. In other words the fee is definitely not friendly. The fee usually doesn’t show up on the statement either, so you may not even know that you paid it unless you read the terms and conditions section of your credit or debit card agreement. To avoid the fee you can take out a Post Office card or one from Nationwide as they don’t have these issues.

Cash withdrawals will also be extremely costly. When you make a withdrawal using your credit card there are a number of ways they may charge you. You may see a charge for 2 pounds or 2 percent from a cash machine. You will be charged interest as soon as the money is taken out, and you will usually pay a higher interest rate on the withdrawals. This means that if your purchase rate is 14 percent you could be paying two to four percent more for a cash withdrawal. To avoid these fees you would need to check the terms and conditions because you will discover that usually these are the last amounts you pay off when you have a balance on the card. Typically you pay off the balance that has the lowest interest rate first because the bank can make more by keeping the higher interest rate debts.

The question you may be asking yourself right now is, if it is worth taking your card on holiday with you? The answer is yes. You will be able to use the card for emergencies if need be, and there are other ways of accessing your funds. After all you don’t want to have a huge amount of cash on your person.

The best thing to do is make sure your bank knows that you are going away and that they need to watch out for unusual spending. As long as you know the terms of your cards you can also avoid some of the fees.

There are other things you should consider when bringing your credit or debit cards on vacation. The exchange rate tends to be more favourable when you use the local currency. Some of the banks are going to have bank fees when you try to gain money in a foreign bank. In this case the fees are avoidable by not using the bank points. You should also calculate the difference in whether it is cheaper to pay the withdrawal fee or the spending fee. Once you know about the extra costs and what could cost you more you can make a better decision.

Something else to consider is section 75 on your credit card policy. If you buy goods that are over a hundred pounds and the goods are faulty your bank and the retailer are responsible not you. You need to be careful of what you purchase because it can be difficult to get the charges dropped after the vacation is over.

Switching cards is an option that you have. Check the terms of the card you have against the conditions of another bank card. You may find that there are less fees and charges on foreign transactions with a different credit or debit card. You may discover that the difference in fees is significant enough to have you get a new card or just bring a different card on vacation. When you compare credit cards you can get the best options for you, rather than taking on the roll of the dice for these fees.