There is no way of making the transfer without any charges - Banks are not in business to be benevolent! However, some charge very much more than others. I was first put wise to the pit-falls in this particular jungle by an excellent Which? Magazine report I read some 4 years ago. It has saved me Ł100’s of pounds!

When you take cash out of an ATM abroad there are four factors that can affect how much is debited from your UK a/c for a given amount of foreign cash in your wallet:

1. The exchange rate used on the day by Visa or MasterCard or which ever other credit exchange company is used by your card issuer.

2. The ‘exchange rate loading’ added to the above by your card issuer.

3. The ‘handling charge’ made for using the ATM machine.

4. If you are using a Credit card, the Interest charged – both how much and from when.

It is extremely hard to find out some of this information as many banks keep it hidden away in the small print and I have not come across one yet that shows a full breakdown of the charges they have made on your statement. The most illusive is the ‘exchange rate loading’. All banks charge it, but it is often hidden within the exchange rate quoted and not shown as a separate charge. This practice is unsatisfactory at best and downright dishonest at worst.

To give an example: Let us suppose that you and I queue up at the same ATM in France and that, within minutes of one another, we both take out 200 Euros in cash. Let us also suppose that we both use a Visa Debit Card, but from different banks. Will we both have the same amount deducted from our account? Almost certainly not. The exchange rate used by Visa will be the same for both of us and it will be the ‘commercial inter-bank rate’ for the day, not the much less favourable ‘tourist rate’ quoted in the Newspapers. However, the ‘exchange rate loading’ applied by our respective banks could be very different. Most of the ‘High Street’ banks apply a loading of around 2.7% whereas more competitive banks can charge as little as 1.25%. On top of this will come the ‘ATM handling charge’, which is fairly typically 1.5% with a minimum of Ł1.50 but can be as much as 2%. Thus, the total charge could be as little as 2.75% or as much as 4.7%. On a typical two-week holiday this may not matter, but for those of us living abroad for much of the year it is very significant.

If we were using Credit Cards we would also have to worry about interest. Some issuers charge interest from the day you take the cash out, others from the date of your next statement. Some charge interest whether or not you pay your account in full, others only if you don’t. The best advice here is never, never take cash out with a credit card – it is much too expensive.

So what do I do? Having spent many hours researching the issue I have opened an account with the Internet Bank ‘Cahoot’. They pay one of the highest interest rates available on current account balances, charge an exchange rate loading of only 1.25% and an ATM fee of 1.5%. Their card is a Visa Debit card that makes keeping track of expenditure whilst abroad very simple – everything is done through one account. Their Internet access is also fairly fast and easy to use. I also have a Credit Card to make purchases at, for example, the London Boat Show as purchasing on a credit card gives some protection if there is a problem with delivery – debit cards give none.

I hope this helps,

David