How to avoid non-sterling transaction fees when travelling abroad and paying online

A non-sterling transaction fee is charged when you make a transaction in a foreign currency. When you use your card overseas, your card issuer needs to convert the transaction from the local currency into sterling - resulting in unwanted fees.

A non-sterling transaction fee could cost you up to 3% of the amount of each transaction you make. However, there are ways to avoid or minimise these fees with the help of providers, like Wise.

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How to avoid non-sterling transaction fees

1. Make no transactions in foreign currencies

One way of avoiding non-sterling transaction fees is simply to make no transactions in foreign currencies at all. If you’re online and want to purchase something from an overseas website, then have a good look at whether you can alter the currency you will be paying in to sterling. If not, then look for an online retailer who sells the same item from a UK-based website.

Of course, avoiding non-sterling transactions when you’re on holiday or travelling for business is not always practical.

2. Use a multi-currency debit Mastercard

If you know that you’ll want to use your card multiple times to pay for things like restaurant bills, shopping trips and travel arrangements, then a multi-currency card could be a great option. Multi-currency accounts allow you to hold and spend multiple currencies - and most come with a debit card so you can spend when you’re abroad.

Avoid non-sterling transaction fees with Wise

With a Wise multi-currency account and debit card, it’s free to pay for things abroad with the currencies you hold in your account.

If you don’t hold the local currency in your account, then you won’t need to pay a non-sterling transaction fee - just a low conversion fee.

So, if you were to spend £200 on a special-dinner whilst visiting Germany, Wise would only charge you £0.74 for the conversion to EUR*. This is 3% that you can be charged for non-sterling transactions from some other providers.

Plus, you can also withdraw up to £200 per month with zero cash fee, then there’s only a 2% charge after that.

*Information correct on 02/03/2020. For up-to-date details on fees, see the Wise pricing page.

3. Always select the local currency

Selecting to be charged in sterling while you’re abroad may mean that your provider’s non-sterling fee doesn’t apply - but you could actually end-up paying more. This is because the ATM or pay-point will decide the exchange rate at which they convert the transaction - and it’s likely to be unfavourable for you.

Foreign ATMs will often offer to complete your transaction in your home currency, and take care of the conversion. Sounds good, right? Wrong!

It’s actually a scam called Dynamic Currency Conversion (DCC) and can quickly result in unwanted fees.

If you need to use a cash machine abroad, then you should never allow the ATM to convert the currency for you since this will cost more. Always select to be charged in the local currency.

Always selecting the local currency will help you avoid DCC, but you will also want to choose a provider that offers low conversion fees - like Wise, so you don’t end up paying nearly 3% in non-sterling transaction fees.

Non-sterling transaction fee for debit cards

	Purchases	Withdrawals
HSBC (except Premier and Advance debit cards)	2.75%	2.75% + 2% cash fee (min £1.75, max £5)¹
Natwest (Visa debit cards)	2.75%	2.75%²
Nationwide (FlexAccount debit card)¹	2.75%	2.75% + £1.00 cash fee³
Lloyds (all debit cards)	2.99% + £0.50 purchase fee	2.99% + £1.50 cash fee⁴
Santander (except Zero debit card)	2.75%	2.75%⁵
Halifax (all debit cards)	2.99% + £0.50 purchase fee	2.99% + £1.50 cash fee⁶
Barclays (all debit cards)	2.75%	2.75%⁷

Credit card transaction fees for foreign payments

	Purchases	Withdrawals
HSBC (all credit cards)	2.99%	2.99% + 2.99% cash fee (min £3)¹
Natwest (Visa and Mastercard credit cards)	No transaction fees⁸	0% + 3% cash fee (min £3)⁹
Nationwide (Nationwide Credit Card)¹	2%¹⁰	0% + 2.5% cash fee (min £3)¹¹
Lloyds (except Avios Reward and Premier Avios Reward cards)³	2.95%	2.95% + 3% cash fee (min £3)¹²
Santander (Everyday Credit Card)	2.95%	2.95% + 3% cash fee (min £3)⁵
Halifax (except Clarity credit card)	2.95%	2.95% + 3% cash fee (min £3)⁶
Barclays (except Platinum travel credit card)	2.99%	2.99% + 2.99% cash fee (min £2.99)¹³

Always check the fees for spending abroad before you go. Compare your options and consider choosing a specialist travel credit card which is often a cheaper option, as they are created with travelling in mind.

FAQ

Here you can find the answers to some of the most commonly asked questions about non-sterling transaction fees and how they are applied.

How much will I be charged?

When you’re charged a non-sterling transaction fee, it’s worked out as a proportion of the sum that is involved with each purchase or withdrawal you make. Since the currency rates change, it is impossible to get an accurate idea of your charges until it has been applied even if you are able to estimate them. In other words, you won’t see all of the exact charges until your statement arrives detailing them all.

When will the charge be taken from my account?

Generally speaking, a non-sterling transaction fee is applied by your bank on the day that you make the transaction. If you swipe your card at a bar on holiday, for example, then the transaction may actually go through that day or, maybe, the following one. Debit card non-sterling transaction fees should appear on your statement on the corresponding date. When they are applied to a credit card, you will have until your next monthly bill is due to clear the balance or interest charges will also apply.

In Summary

Non-sterling transaction fees are applied to UK holidaymakers, business travellers and even people who are not overseas and simply buying something from abroad. Banks charge differently for them but you can expect a fee to apply every time you make a transaction which can mean you spend more than you expect when overseas.

However, the good news is that you can take charge of the situation by opting for something as simple as a Wise multi-currency account with debit Mastercard, which you can use virtually anywhere abroad. Indeed, you can even use them to make purchases online as well.

Sources used:

1. HSBC: Using your card abroad - Fees
2. Natwest: Spending Abroad
3. Nationwide: Travel - Card fees
4. Lloyds: Debit card abroad
5. Santander: Credit cards - Fees when travelling
6. Halifax: Using debit and credit cards abroad
7. Barclays: Using debit card abroad
8. Natwest: Credit card fees
9. Natwest: Credit card fees - Foreign Usage
10. Nationwide: Card fees - Foreign purchases
    11.Nationwide: Card fees - Foreign cash withdrawals
11. Lloyds: Using debit and credit cards abroad
12. Barclays: Credit card fees

Sources checked on: 02-March 2020 .