Happy holidays for credit card providers

Credit card providers are raking in the cash from unwitting holiday makers who use their credit cards abroad to pay for everyday items such as groceries or trips to restaurants and to do so withdraw cash from bank machines.

Credit card charges amount to £457m every year. That's money thrown away, as withdrawing cash from an ATM abroad can induce a charge for withdrawing cash from a credit card, a charge for using the card overseas as well as a foreign exchange fee.

Bob Atkinson from the consumer website Travelsupermarket.com has some 'sterling' advice. He says: 'When offered the chance to pay in sterling on your card, rather than the local currency, always decline. The retailer applies their own conversion rates to the transaction, inflating costs by up to 5pc on the true cost of the transaction.'

That sounds like practical advice we could all take heed of Bob! Meanwhile financial analyst Defaqto found that on spending £100 abroad on a purchase the average charge tends to be £2.87 for a credit card and £3.06 for a debit card. And withdrawing £100 of foreign currency is likely to set you back £5.60 – not including interest – with the equivalent debit card charge £3.96.

If at all possible, we think you should leave that credit card at home, or at least only ever use in emergencies or to pay big things such as your hotel bill, as that way you'll be charged but it'll only be a one-off payment.

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