Sunday 17 November 2019

Play your cards right to avoid paying bank charges when abroad

CREDIT CARDS: Your flexible friend or your plastic predator?
CREDIT CARDS: Your flexible friend or your plastic predator?
Louise McBride

Louise McBride

IF you're planning on a trip to the sun this Easter,, you won't have much choice when it comes to your holiday money. Most banks don't sell travellers' cheques any more and it is unwise to carry large amounts of cash. So most of us have to use cards when splashing out abroad.

Cards can be handy when travelling abroad – but they can cost you. Here are three rules of thumb which should save you from a financial hangover when you come back from holiday.

* Avoid three banks when taking out cash with your credit card

Many of us use our credit cards to withdraw cash when we're on holiday or business trips abroad. Only do so if you can avoid being hit with interest, however.

From today, Bank of Ireland is charging credit card customers interest from the moment they use their cards to withdraw cash. Previously, Bank of Ireland customers could avoid getting hit with interest on such credit card borrowings if they repaid their credit card bills on time. This is no longer the case.

Ulster Bank and Tesco Personal Finance are the only other banks which hammer you with interest the minute you use your credit card to withdraw cash. Topping up your credit card account before you go away can get you over this hitch with those banks – but make sure to put enough money in your account to cover both the amount of cash you're withdrawing and any fees you are charged for taking out money on your card.

"Customers can avoid paying interest on cash advances by pre-loading their account if they needed to use the card for cash overseas," said a spokeswoman for Bank of Ireland.

"No interest is applied if the account is in credit and fully meets the cash advance value [the amount of cash withdrawn] and the relevant fee."

AIB and Permanent TSB don't charge their credit card customers interest from the date of the cash withdrawal. So, if you have a credit card with AIB or Permo, you can avoid interest if you use your card to withdraw money – as long as you repay your credit card bill on time.

If you are charged interest for withdrawing money on your credit card, you will be fleeced – it can be as high as 21 per cent.

* Know where you stand if your card is lost or stolen

If you top up your credit card before you go away and your card is lost or stolen, and then used by someone else, some credit card providers will not give you your money back, according to the consumer watchdog, the National Consumer Agency.

The Sunday Independent asked the main credit card providers here if they would refund any money that was stolen if a customer's card was lost or stolen when they were away. Most providers said it would come down to each individual case. "We review each fraud case individually in line with our terms and conditions of use; therefore it would depend on the individual fraud case," said a spokeswoman for AIB.

A spokesman for Ulster Bank said that cardholders must notify the bank as soon as possible if their card is lost or stolen.

"If the card is misused before the customer notifies the bank of its loss or theft, they will only have to pay up to €30 for amounts arising from the misuse – unless the customer acted fraudulently or failed intentionally or with a gross lack of reasonable care to fulfil their obligations as set out in the terms and conditions," added the spokesman.

"The customer will not be liable for any misuse of their card or PIN after they have notified the bank of the loss, theft, misappropriation or unauthorised use of their card or PIN, unless they have acted fraudulently."

* Don't use your cards willy-nilly when outside the eurozone

Debit cards are one of the cheapest ways to organise your holiday money abroad – depending on where you are travelling. You can't get charged any more to use your debit card to withdraw money from a cash machine in the eurozone as you would were you at home.

If you're using your card outside the eurozone, however, it can be expensive – particularly if you regularly take out small amounts of money.

You are usually charged a transaction fee every time you use your card to withdraw money outside the eurozone – and most banks have a minimum fee. As the minimum transaction fee can be as high as €3, it can add up.

If you're away for two weeks, for example, and you use your debit card to withdraw money once a day, the transaction fees alone could come to €42.

You'll also be hit with hefty fees when you use your credit card to withdraw cash outside the eurozone. These fees – which are typically between 1 and 2 per cent of the amount withdrawn – can include currency conversion and fees, cash advance fees (for cash withdrawals), and handling charges.

If you're planning to rely on your debit card when abroad, make sure you have enough money in your current account to cover any withdrawals you plan to make – otherwise, if you go into the red, you'll be hit with overdraft interest and fees. Remember too to check the daily limit on your card – banks usually restrict the amount of money you can take out on your debit card each day.

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