- 60% have used a cash machine to withdraw money abroad, risking fees of up to £3 each time.
- 44% of credit card holiday bookings and expenses will be made using a standard credit card with no features such as cashback, rewards of a 0% purchase rate.
- 1 in 3 consumers (36%) will travel to the Eurozone this summer but just 30% will priorities finding the best exchange rate.
- Financial awareness goes into holiday mode as 1 in 4 (25%) will use whichever card is handy on holiday rather than checking the best card for the job.
- 18 million (53%) holidaymakers will put the cost on plastic this summer, bit one in ten (12%) are still struggling to pay off debts form their last holiday.
British holidaymakers risk running up over £327 million in extra charges just by using their credit card abroad this summer, according to uSwitch.com, the independent price comparison and switching service. Consumers using a debit card could end up paying out even more, with many banks charging a 'double whammy' of fees on all overseas spending. In total, 18 million holidaymakers (53%) will put the cost of their trip on plastic this year despite one in ten (12%) still paying off their debts from their last holiday.
According to the research, one in four consumers (24%) plan to use a credit card to cover their spending while on holiday abroad this summer, with an average of £992 estimated to be put on each card. Average exchange rate transaction fees of 2.75% mean that holidaymakers could come home to a credit card bill that is way over the odds; to a collective tune of £327 million. The 60% of consumers that have used their credit card to withdraw cash abroad will be hit even harder, with fees of 3% on top of the transaction fees, plus daily 'cash advance' interest charges on all cash withdrawn at rates of up to 39.9% per day, until the amount is paid back.
The 24% of consumers planning to use their debit cards abroad will also be hit hard. Not only will they have to pay a 2.75% transaction fee, they will also be charged a 'purchase fee' of around £1.25 per transaction. This means that a customer paying a £100 restaurant bill on their debit card could typically end up being charged £104 for the meal- whereas if they paid on their credit card they would be charged £102.75 in total.
When it comes to cash withdrawals, however, using a debit card works out cheaper than a credit card, with fees of 2% compared to the 3% on top of the transaction fee, and no hefty cash advance interest charge.
The research also reveals that consumers are missing a trick when it comes to paying for the holiday itself. Over half of holidaymakers (53%) are putting the cost on plastic this summer, but 44% of credit card holiday bookings are made using a standard credit card with no defining features such as cashback, reward points or 0% on purchase.
And, despite 35% travelling to the Eurozone this summer, less than a third of Brits (30%) will prioritise finding the best exchange rate to save money. On the holiday itself, it appears that consumers take a laid back approach to their finances, with one in four (25%) using whichever card they have in their wallet at the time rather than the one that gives them the best deal.
Worryingly, one in five (19%) are willing to get themselves into debt to pay for a holiday abroad, despite one in ten (12%) still struggling to pay off debts from their last holiday.
|Michael Ossei, personal finance expert at uSwitch.com says: "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.
"Too often we rely on the convenience of plastic without thinking about the extra fees that may apply, but with some planning ahead it's possible to escape hefty charges. The simple rule is, if you want to use a credit card on holiday, use a credit card for spending and a debit card for withdrawing cash. There are credit cards on the market that charge no transaction fees when you use them abroad - these are the ones to go for.
Alternatively get a pre-paid currency card which offers the convenience of a credit card without borrowing and allows you to top up foreign currency, some with no commission charges. The best thing about currency cards is that you can only spend what you load on them so you are guaranteed not to overspend.
"If you prefer to pay with cards, make sure you take both the exchange rates and commission rates into account to get the best rate on your money. This will normally involve pre-ordering your currency and collecting it before you travel. Avoid changing currency at the airport or straight from your debit card, as commission fees could cost you those well-earned poolside cocktails!