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Banks Ordered to Drop Charges Against Foreign Travelers

Banks Ordered to Drop Charges Against Foreign Travelers

According to a recent report, banks have charged travelers about £20 million in fees to buy foreign currencies. A statement from Consumer Focus said that this practice must come to an end after facing criticism from the Office of Fair Trading.

Speakers from Consumer Focus have found that the fees the banks charge are typically around 1.5-2% of the amount of currency being exchanged. However, the exchange rate for travelers using debit or credit cards can be closer to 5%. This has enabled banks to get over 1 billion pounds in fees off of these travelers. These fees have been hidden within purchases that were made abroad and many customers have been completely blindsided by the fees the banks imposed on them while they were traveling to the UK.

The banks were charging these fees to customers every way they possibly could. Even travelers who brought prepaid cards into the UK ended up paying several fees on their purchases. Apparently, travelers didn’t have any possible way to escape these fees before the OFT decided to get involved and get the banks to withdraw them.

The biggest conspirators, in this case, have been five of the biggest banks in the UK. Many UK citizens weren’t surprised at all to find out that Barclays, Santander, and Lloyds were among the companies that have had to face criticism from the OFT and several consumer advocacy groups. These banks have all agreed to drop the bank fees they have been charging. Many other banks operating in the UK and abroad do not charge any such fees, so this may help them be more competitive in the long run.

In addition, the banks have agreed to be more open about their policies on the charges they issue to foreign travelers. Although this sounds like these banks are turning over a new leaf, Consumer Focus and several other critics aren’t sure their scruples have changed. Many feel that the banks are just going to increase fees on other services to make up for the waved travelers fees.

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