With thousands of winter holidaymakers heading off to ski slopes in the coming weeks here’s a timely reminder of the charges you could face when using your plastic abroad.

Debit and credit cards offer a cheap and convenient way to pay in the UK, but the fees and charges can be expensive when used overseas, so it’s worth finding a cheaper alternative before you travel.

Prepaid currency cards from Centtrip, Cash Passport, Caxton FX and myTravelCash are amongst the most competitive according to my recent research and the cost savings make it worth packing a specialist travel card with your passport whenever you go abroad.

Most banks add on a foreign usage fee to all credit card cash and purchase transactions. In the majority cases it’s around 2.75% to 2.99%.

But that’s only half the story, as on top of the usage fee, a typical credit card cash transaction will cost you around an extra 3%, so an ATM withdrawal of £100 currency equivalent can easily set you back a total of £6, thus best avoided unless an emergency.

If you’re going to take a credit card when you travel abroad, consider the MBNA Everyday Plus or Halifax Clarity cards as neither charges an overseas mark up or ATM fees.

Debit cards can also be expensive when used abroad and it’s something that holidaymakers sometimes overlook, until the charges are debited from their account and then it’s too late.

As with credit cards there is a debit card usage fee for cash withdrawals (2.75% to 2.99%) plus an ATM withdrawal charge typically between £1.50 and £5.00.

However, the card charges that catch most people out are those levied for debit card purchases which are subject to the usage fee above, plus up to an additional £1.50 per transaction regardless of the amount.

The most expensive debit cards are Halifax (£1.50 per purchase transaction), Santander (£1.25), Lloyds Bank and TSB both £1. If you’re looking for a fee free debit card for using overseas, you’ll need to open a current account with Norwich & Peterborough Building Society or Metro Bank.

It’s worth spending a couple of minutes to check with your bank what the charges are for your particular plastic before you set off, rather than getting a nasty shock when you check your account on your return.

At least if you understand the overseas charges, you can adapt your spending pattern accordingly – for example, you don’t want to be making cash withdrawals or purchases of £10 or £20 if you’re going to be hit with charges of £1.50 plus each time.

Looking at a scenario where you spend £1,500 currency equivalent including three £200 value ATM withdrawals and 9 purchase transactions, it would set you back less than £19 with a Prepaid Currency Card from Cash Passport or MyTravel Cash whereas using a debit card from TSB or Lloyds Bank would cost you £62.85 .

Prepaid currency cards are chip and PIN secure, accepted wherever you see the MasterCard symbol and are way cheaper than most debit and credit cards.

A sterling prepaid currency card can be loaded from your debit card and as such the exchange rate is locked in at the time the cash is transferred to the card, so you’ll know exactly what you’ll be paying for all your holiday transactions.

A final warning, whatever type of plastic you use overseas beware of an increasingly common custom (particularly in Europe) where the foreign retailer or ATM gives you the option to pay in pounds sterling, known as Dynamic Currency Conversion (DCC).

Although you know exactly how much you’ll be debited, the downside is that it gives the retailer the opportunity to use an uncompetitive and costly exchange rate – the golden rule is never pay in British pounds.

Research from Equifax reveals that 42% of people in the UK have experienced stress or anxiety due to financial difficulties and the majority of consumers (58%) are unaware that financial organisations and utility providers have a responsibility to help consumers if they encounter financial difficulty.

The online survey, conducted by YouGov, highlights that when faced with financial difficulties people are most likely to confide in a partner (48%), while 46% said they would turn to a family member. In terms of financial organisations, 29% of people would talk to their mortgage provider about being in financial difficulty, 45% would talk to their utility providers.

People would, however, be willing to have open discussions with companies they owe money to if they found themselves struggling to make payments. 62% of UK adults said they would be willing to provide additional information, for example about their income or monthly spending, to help that company provide support in times of financial difficulty. Only 4% would be annoyed if organisations asked about personal circumstances if they had missed a payment, while 33% would understand why they asked.

Jake Ranson, Banking & Financial Institutions Director, Equifax UK and Ireland says: “It’s concerning that such a high proportion of the UK experience stress or anxiety because of financial difficulty. People are often embarrassed about struggling with money and the actual number of individuals affected could be substantially higher than the survey indicates.

“Many things can cause a person to experience financial difficulty, from falling ill and missing work to losing their job. Our research suggests that there’s a reluctance to discuss issues with lenders, and highlights a lack of awareness about the support available to help if you fall behind with repayments.

“It is important that people notify the relevant organisation at the first sign of trouble so they can provide the necessary support. All organisations lending money have a regulatory obligation to identify customers that are financially vulnerable and treat them fairly. When someone is genuinely struggling to make payments companies can employ a range of tools to help, for example providing more time for payments to be made.”

As many British households feel the squeeze ahead of the January pay day and look to review their finances for the year ahead, new research from Santander Current Accounts1 reveals bill payers underestimated their main expenses – council tax, utilities and TV, phone and broadband – by an average of £1,459 last year. That’s equivalent to almost £39 billion across the UK as a whole.

The findings show that whilst bill payers estimated their annual household bill costs to be £2,528, in reality, they spent an average of £3,987. Of all the bills, TV, phone and broadband outgoings were the most significantly underestimated with households estimating annual spend to be 53% lower than actual costs.

The research also highlights that many households are struggling to cover the cost of their household bills. 34% say they can only just make ends meet, one in four (25%) admit to borrowing money or raiding their savings in order to pay their bills and 6% claim they often do not have enough or never have enough to pay their bills.

A spokesman for Santander, said: “It can be difficult to keep track of bills and price changes. In winter months, when bills may rise, it’s even more important to make your money go further.

“At a time when many households are reviewing their annual expenditure and trying to cut costs, it’s worth remembering that it’s often cheaper to pay your household bills by direct debit.

Santander’s research does suggest that households are taking proactive steps to monitor energy consumption and reduce costs, as one in eight (12%) have a smart meter or plan to install one.

One reason why estimated and actual bill spend differs may be a lack of attention to bill statements. Almost a third (30%) of bill payers admit they do not read their statements thoroughly, while 5% do not even open their statements.

We may only be a couple of weeks into the New Year, but it’s clear that the desire from the banks to win a bigger share of the current account market is stronger than ever.

Whilst Santander increased the monthly fee on its 123 account from £2 to £5 last Monday, its rivals have been pulling out all the stops to attract new customers.

M&S Bank was first out of the blocks with a £100 M&S gift card up for grabs if you switched your banking, plus the offer of a further £10 per month credited to the gift card each month for the first 12 months as long as you pay in at least £1,000 per month and set up at least two direct debits.

This move has been followed by The Co-operative Bank offering its customers new monthly reward payments of £5.50 whilst Barclays is doubling its ‘Blue Rewards’ for switchers in January.

On the golden hello front, Halifax and TSB are offering £100, HSBC £120, First Direct £125 and Yorkshire and Clydesdale Bank £150, so there are plenty of options to choose from.

Whilst a financial sweetener may seem too good to turn down, it shouldn’t be the sole reason for choosing your next bank account.

Look at how you run your banking on a month to month basis and find an account that fits.

Current accounts offering high rates of credit interest are often most expensive for overdrafts, so be sure to understand the full picture before taking your custom elsewhere.

People who bought certain card security products have eight weeks left to make a claim under a compensation scheme set up with the agreement of the Financial Conduct Authority. Anyone who received an AI Scheme Limited compensation claim pack in the post in August or September last year and who wishes to claim compensation must return their completed form before the deadline of 18 March 2016.

The scheme, AI Scheme Limited, was voluntarily set up by Affinion International Limited and 11 card issuers to provide redress to those who bought the products, which included insurance to cover fraudulent use if a card was lost or stolen. This was in certain respects unnecessary because the customer’s bank or card issuer was typically responsible for any transactions after the cards were reported as lost or stolen and, before reporting the matter, customers were only liable for unauthorised transactions in limited circumstances.

Commenting on the approaching closure of the AI Scheme,a spokesman from the regulator (FCA), said:

“The FCA has worked closely with Affinion International Limited, and banks and card providers, to set up this consumer redress scheme. This is a straightforward process.  Those with concerns about these products can make a compensation claim and receive redress by simply completing and returning the short form that was sent out to them last summer. Any such compensation claims must however be made by 18 March 2016 so customers should not delay.

“This simple and transparent compensation scheme  applies whether customers bought the card security product from a bank, card provider, or from Affinion International Limited.

“If you think you bought one of these products and don’t have a form or you’ve mislaid it, you should contact the AI Scheme helpline on 0800 678 1930 to check whether you’re eligible to claim and to request a replacement pack.”

People with the following card security products, who were contacted by AI Scheme Ltd, have eight weeks to submit their compensation claim forms:

  • Card Protection
  • Sentinel
  • Sentinel Gold
  • Sentinel Protection
  • Sentinel Excel
  • Safe and Secure Plus

Compensation claim forms must be received no later than 18 March 2016. Forms received after this date will not be considered so it is important that people who wish to seek compensation do so without delay. The FCA recommends that completed claim forms are posted well before the deadline.

What product holders should do next

Eligible product holders have until 18 March 2016 under the AI Scheme to return their completed compensation claim forms. They must use the original form they were sent by AI Scheme Limited; photocopies will not be accepted. A freepost envelope is provided.

Approximately 173,000 people who voted for the AI Scheme had not returned a completed compensation claim form in the first four months of this compensation scheme, so they are being sent reminder letters.

Current policyholders who are yet to act will need to think carefully about whether they want to retain the card security product as any compensation payment will result in cancellation of their existing policy.

Further information for affected customers and detailed answers to frequently asked questions are available on a website set up by AI Scheme Limited.

Individual compensation payments will depend on the length of time the customer had the card security product. The card security product cost about £25 a year. The average compensation payment per customer is £180.

More than four in every five people in the UK are looking to get away this winter and leave behind the wettest December on record, according to a new study by credit card company MBNA.

With December 2015 being hailed as Britain’s wettest month in more than a century 83 per cent of people surveyed by MBNA said they have booked, or are planning to book, a winter getaway.

Of 2,050 people surveyed, 39 per cent said they would look to chase the winter sun with a beach holiday abroad. Overseas city breaks came second in the MBNA poll (35 per cent of those surveyed) closely followed by UK ‘staycations’ in third (34 per cent).

The study shows the average costs of travel and accommodation for winter holidays is £1,215 this year with most opting to fund the cost through savings, income and/or credit cards. Spending on essentials in advance of winter holidays (e.g. clothes, parking, tours/trips) averages at around £286.

Credit cards – such as MBNA’s award-winning Everyday Plus American Express Credit Card – and foreign currency are the most popular ways for holidaymakers to spend money whilst on their winter holidays, preferred by 31 per cent and 64 per cent respectively.

“This study shows an incredible number of people are planning to leave behind the stormy weather we saw in December and take a much-needed trip away this winter”, said Richard Whatmough, director of Marketing and Digital at MBNA. “At MBNA we create financial products that help people spread the costs of their trips. The simple, long-term low rate of our award-winning Everyday Plus Credit Card – combined with no handing or transaction fees for using it in Britain or abroad – is a great example of how we’re doing just that. This is why it’s attracting such strong demand from UK holidaymakers.”

MBNA asked Hannah Maundrell,  editor-in-chief at one of t money.co.uk, to compare the card to other typical financial products for holiday spending.

“Five years ago currency and travellers’ cheques would have been the first port of call for holidaymakers looking to splash the cash on their travels”, said Maundrell. “However, we’re seeing increasingly compelling new products – in particular credit cards – that are giving these traditional options serious competition.”

She added: “The Everyday Plus Credit Card is a stand-out card not only because of its simplicity and long-term low rate, but because it has no handling fees and no foreign exchange transaction fees whether you use it in the UK or abroad.

“Using a debit card to withdraw £100 of currency from an ATM abroad can cost as much as £4.99 a pop with some of the major banks. Although some debit cards do allow you free transactions abroad they’re few and far between.

“The good thing about the MBNA Everyday Plus Credit Card is that it allows you to make fee-free withdrawals while you’re on holiday without having to go through the hassle of switching your bank account. Add to this the protection that comes with spending on a credit card, and the Everyday Plus really is worth serious consideration as part of your holiday wallet when you’re looking for the best way to spend abroad.”

 

We may only be a couple of weeks into the New Year, but it’s clear that the desire from the banks to win a bigger share of the current account market is stronger than ever.

Whilst Santander increased the monthly fee on its 123 account from £2 to £5 last Monday, its rivals have been pulling out all the stops to attract new customers.

M&S Bank was first out of the blocks with a £100 M&S gift card up for grabs if you switched your banking, plus the offer of a further £10 per month credited to the gift card each month for the first 12 months as long as you pay in at least £1,000 per month and set up at least two direct debits.

This move has been followed by The Co-operative Bank offering its customers new monthly reward payments of £5.50 whilst Barclays is doubling its ‘Blue Rewards’ for switchers in January.

On the golden hello front, Halifax and TSB are offering £100, HSBC £120, First Direct £125 and Yorkshire and Clydesdale Bank £150, so there are plenty of options to choose from.

Whilst a financial sweetener may seem too good to turn down, it shouldn’t be the sole reason for choosing your next bank account.

Look at how you run your banking on a month to month basis and find an account that fits.

Current accounts offering high rates of credit interest are often most expensive for overdrafts, so be sure to understand the full picture before taking your custom elsewhere.

More than two out of five motor and home insurance customers have suffered delays and problems when making claims, new research from insurance experts Consumer Intelligence shows.

Its study found nearly one in five suffered delays in processing claims while one in seven had to go back with extra information after making a claim.

However the research – which comes as insurers brace themselves for payouts of up to £1.3 billion following the winter floods devastation from Storms Desmond, Eva and Frank – shows 84% of customers say their claims were handled fairly.

Even customers who have had claims turned down do not necessarily blame the insurer – just 30% switch to a new provider after a claim is rejected, the study found.

Consumer Intelligence’s study of how satisfied customers are with claims handling shows on average they rates insurers 6.9 out of 10 with just 12% dissatisfied.

The company’s Claims Satisfaction research2 over the past two years tracking the experience of 50,000 drivers of which 11,000 have made claims reveals the top 10 firms achieve scores of up to 9.3 out of 10 for home insurance and 8.8 for motor.

Top-rated home insurance firms include M&S, NFU Mutual, RIAS, Hiscox, Co-Op, Saga, John Lewis, Lloyds, LV and Barclays.

The best performers for motor included More Than, Saga, LV, Co-Op, Aviva, Esure, M&S, Direct Line, Churchill and NFU Mutual

Ian Hughes, Chief Executive of Consumer Intelligence said: “Customers tend to only see the value of insurance when they make a claim and firms clearly need to do more to ensure the experience is better.

“However they can take comfort from the fact that the vast majority of customers believe their claims are handled fairly and that satisfaction is generally high considering the criticism companies routinely face.

“Even when claims are turned down customers do not instantly leave their insurer as the research shows.”

People planning to retire in the coming 12 months expect to receive an annual income of £17,700 – the third annual increase in a row – according to the latest research by Prudential.

Each year Prudential conducts unique research into the financial plans and aspirations of people planning to retire in the year ahead. This year’s retirees – the Class of 2016 – expect to be four per cent better off than those who retired in 2015 and who expected on average to receive £17,000 a year.

The study is now in its ninth year and this year’s results are the first based on interviews exclusively with people who will retire under the new pension freedoms regime which came into force in April 2015. The research results suggest that the rule changes have resulted in an increase in confidence about the future among many retirees.

Prudential found that more than half (56 per cent) of the Class of 2016 feel financially well-prepared for retirement – up slightly on the 54 per cent from last year’s research.

However, despite the increases in retirement expectations over recent years, average expected annual retirement incomes have still not returned to pre financial crisis levels. The Class of 2016 expect to live on £1,000 a year less than their counterparts who planned to retire in 2008.

Vince Smith-Hughes, a retirement expert at Prudential, said: “The third consecutive year of growth in expected retirement incomes is very welcome and underlines increasing confidence among retirees, possibly driven by the introduction of pension freedoms. It is also good to see that more of the Class of 2016 feel financially well prepared for retirement.

“The pension freedoms have increased the options open to people approaching retirement and the greater choice makes professional financial advice even more valuable. People should make the most of the Government’s free and impartial Pension Wise service and many who are considering their retirement options should also be seeking professional advice.”

We’re barely a week into the new year yet the battle for 0% credit card business is already well underway with MBNA throwing down the gauntlet to its rivals with its longest ever 39 month Platinum Card 0% balance transfer offer (with BT fee 2.98%).

This move has been swiftly followed by Halifax upping its 0% balance transfer term to 38 months (with BT fee 2.75%) and Lloyds Bank subsequently pitching in with a 30 month card with just a 1% balance transfer fee.

It’s not surprising to see this level of activity this early as there is plenty of new business to be had.

January is traditionally the busiest month for switching card balances as people look to rejig their borrowing following the Christmas excesses and put into action their New Year resolutions to knock their finances into shape.

The level of balance transfer business in January has grown steadily in recent years, with British Bankers association figures showing 412,000 transactions totalling £0.82 billion in the first month of 2010 rising to 592,000 switches with a combined value of £1.34 billion in 2015.

If the increased card activity seen in late 2015 has continued over the festive period, we could see £1.4 to £1.5 billion pounds of credit card switching taking place this month.

To give you an idea of the scale of plastic related debt in the UK, at the end of November 2015 there was £60.2 billion worth of credit card balances with a staggering £25.5 billion of this sitting on an interest free promotional deal – and theses number don’t take account of the pre and post-Christmas spending splurge.

The push for longer and longer 0% durations shows no signs of letting up with the average 0% term now at 22.5 months – up from 17.3 months at this time in 2013 and 11.9 months in December 2011.

The potential interest savings are huge , but the fact that card companies still seem to be able to make these 0% deals work is no doubt due in part to the number of people who ‘fall off the wagon’ by missing a payment or exceeding their limit and suddenly find themselves paying interest at 18.9% APR or more.

If you’ve got a balance of £2,000 on your card at the market average rate of 18.9% APR you’ll pay around £32 per month in interest charges, on £5,000 it works out at £80 and on £12,000 it will set you back £193 per month.

Switching to a 0% card makes good financial sense as long as you are disciplined. Without the interest charges you have the opportunity to reduce your balance far more quickly, just make sure you don’t fall into the trap of spending on the card again, otherwise you could soon find yourself back at square one – or worse.

The key to getting the cheapest 0% deal is not to focus on the longest deal – unless you need that length of time to clear your card debt. As a rule of thumb, the longer the 0% term, the higher the one off balance transfer fee, so if you think you can repay in 30 months take a look at the new Lloyds Bank balance transfer card where the fee is just 1% of the amount transferred.

If you are happy you can repay within 23 months then Halifax is offering this term without any BT fee, so you really could clear your balance without it costing you a penny.

ENDS