Research from bank challenger, Tally, reveals many UK travellers are confused about how foreign exchange works, with a quarter believing banks are deliberately misleading
As the travel industry slowly begins to recover from the implications of COVID-19, many Brits are booking a much-needed holiday. And some are planning big-budget trips thanks to increased savings during the height of the pandemic.
But these holidays will cost many Brits far more than necessary given the lack of knowledge around foreign exchange (FX) charges and international transaction costs, according to research by Opinium*, commissioned by bank challenger Tally.
Brits are oblivious to FX fees
Nearly six in ten (57%) people don’t know banks add a margin to the official FX rate in addition to charging a transaction fee for using your card abroad, while four in ten (39%) are unaware that many banks charge fees for withdrawing money from cashpoints when abroad as well as additional interest on the withdrawal.
Half (51%) are unaware that choosing to pay in the local currency rather than in pounds when using your card abroad gives you a more favourable exchange rate. A similar proportion (55%) are unaware that if you don’t pay in the local currency on your card when abroad, the retailer will set the exchange rate and have the option to add conversion fees on top.
A further 24% say banks are deliberately unclear on FX rates.
Lobbying for fairer fees
According to the research, many travellers are now demanding change to reduce FX costs. A third – 32% – believe a law should be introduced to stop banks from charging customers transaction fees simply because they’re abroad.
Business looks set to be brisk for the sector, with the UK government recently announcing an end to pre-departure testing for holidaymakers returning to England and Wales, along with abolishing mandatory isolation until a negative PCR test has been obtained by those visiting the UK.
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This development provides a huge boost to the travel industry, with travel company Kuoni’s CEO claiming that the industry will be “90% back before the end of spring.”
Cameron Parry, Founder and CEO of Tally, said: “A lack of clarity around foreign currency exchange and payments abroad generates revenues for banks, via unnecessary fees for bank customers.
“We want to demystify costs for bank customers. It is important that charges are simple and transparent so people can make the best choice when it comes to spending their hard-earned cash when overseas. People can accept a cost for convenience but no one likes having the wool pulled over their eyes.”
“The research tells us that consumers are not satisfied with the current system and are looking for change.”
Many savers are likely to have built up a lot of annual leave during the pandemic. This, combined with parts of the world opening up, means thousands are planning foreign holidays for 2022.
Cameron Parry added: “Our advice is to pay attention to the options presented at time of payment when abroad. And consumers should get themselves an account designed with international use in mind, such as a Tally account, which doesn’t charge foreign transaction fees, foreign withdrawal fees, or markup the official FX rate.”