Banks never cease to irritate.
In his latest UK200Group blog post, Jonathan Russell of member firm ReesRussell, discusses the lack of transparency offered by banks to those holidaying abroad.
I’m writing this whilst I am away on a family holiday in the Algarve and using the 10 day break to relax and consider how things have changed since our last break in April 2015 when we also came to the same resort. The major difference would be that in the intervening period the UK has voted to leave the UK and the rate for the Euro against Sterling has fallen from 1.36 to 1.17.
Portugal has been reported as one of the more fragile economies in the EU but here in the Algarve there is extensive evidence of infrastructure spending in the last 17 months since we were last here and whilst inflation in Portugal has only been slightly higher than the UK as a tourist prices seem to have moved significantly on those things the visitor tend to buy. Whilst not being in the slightest scientific about it the impression is that restaurant prices have gone up about 10% which as that will account for probably 75% of our local spend whilst here means a sterling increase of some 25%.
But I’m on holiday and we tend to enjoy and then add up the cost afterwards except this time I’m not. Why is that? It’s the banks and their systems. Normally I would have used ATMs to extract cash and often used debit or credit cards to pay for things but knowing that the exchange rate had moved so much since our last visit I thought I should be more sensible. I had decided before travelling that I would bring more cash with me because I had found in 2015 the cash withdrawals from ATMs were limited to much smaller daily amounts than the UK and did manage to secure a rate of over 1.16.
But it was this exercise that made me look at the smokescreen that banks put up to hide the money they charge for paying a bill in a foreign currency. I have cause to pay bills in foreign currency by bank transfer and have long since ceased using the normal clearing banks but use one of the foreign payment companies, Transferwise, who give me the money market rate at the time, usually charge about £2 and funds are usually with the recipient the next day. But I can’t do that while I am away.
Instead the banks will charge a host of little fees, transaction charges and give you a rotten exchange rate so your meal out which cost you 50 euros could easily cost you £50. Yes I know there are some cards which are cheaper than others, yes we can have preloaded cash card and take other steps to get better rates. But why should I? I don’t want yet more cards, I don’t want to have to think twice all the time about which card to use. In this electronic age there is no reason for the exchange rate not to be the actual rate at the time (there is after all a margin in the buying and selling rates), no reason for extra charges for complexity as the computers should do it all. Yes I know banks need to make money but can we please have transparency.
I shall however enjoy my holiday but mostly I will be paying in cash.
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