Banks know they make too much money, and South African banks could learn a thing or two from this. Five of the UK’s biggest banks, including Lloyds, Barclays and RBS, as well as other credit card companies, have agreed to scrap the charges associated with buying currency with a card while abroad.

The dangers of walking around with large wads of cash and travellers cheques need no mention, and as banks and other institutions continually push the use of debit and other forms of plastic card use, so too should the benefits of using such technology be passed onto the consumer that already pays too much for such services.

The charges for buying foreign currency with a card can range from one-and-a-half per cent, to two per cent of the amount converted, equating into rather large amounts when a person makes a purchase, or performs another transaction, where they’re already paying a commission on the amount of currency purchased.

The move therefore eliminates what is effectively a double charge for the consumer in some cases.

The ruling follows pressure from consumer lobbyist groups and the British Office of Fair Trading, which had been conducting an on-going investigation following numerous consumer watchdog complaints, including a “super” complaint from Consumer Focus.

OFT chief executive, John Fingleton:

Companies should be earning profits by competing to provide the best value products and services, not through charges that are hard for customers to identify or interpret.

[We] hope they will allow holidaymakers to be far better informed when making choices about how they spend abroad. This should drive greater competition in the UK travel money market.

Chief Executive of Consumer Focus, Mike O’Connor, told Sky News earlier that the move to scrap debit card charges was a “great victory” for the organisation, and the consumer.

The move is only due to kick in early next year however, allowing the banks one last holiday pillaging season.

[Source: SkyNews]