How to avoid non-sterling transaction fees when travelling abroad and paying online

TransferWise content team
02.11.18
7 minute read

You might have noticed a non-sterling transaction fee on your bank's statement and wonder what it is. Basically, your bank can charge you for any transactions you make that are not made in pounds and the fees they levy can soon mount up if you use your debit or credit card on multiple occasions when abroad.

Equally, you can receive them when purchasing items online from websites which are geared up for currencies other than sterling. Here you’ll find what constitutes a non-sterling transaction fee, the sort of costs involved, how much different banks charge and what you can do to avoid them.

What is a non-sterling transaction fee?

Banks used to call a non-sterling transaction fee an exchange rate adjustment. When you use your card to purchase goods and services overseas, your card issuer needs to convert the transaction from euros or dollars, for example, into sterling.

This calculation is made every time that you use your card abroad because the exchange rate alters all the time due to the fluctuations in the international currency markets. The cost involved in performing this task is supposedly covered by applying a non-sterling transaction fee. However, many card-issuing financial institutions charge more than you might expect for what is a relatively simple service. In short, it is often seen as a way of driving up profits.

You can check your bank's non-sterling transaction fees by reading the small print in your account's terms and conditions or contacting the customer service. Alternatively, look at the tables below for some of the UK's major debit and credit card issuers.

Finally, it is worth bearing in mind that non-sterling transaction fees can occur when you withdraw foreign currency from a cash machine, when you use your card in a shop or restaurant abroad and also when you are shopping online on a non-UK website.

How much does it cost?

A non-sterling transaction fee could cost you up to 3% of the amount of each transaction you make. In addition, you are sometimes liable for extra charges, particularly if you use your card to withdraw cash from an ATM. The tables, below, offer an indication of some of the most well-known card providers' charges, as of the writing of this article.

Have in mind, though, that these fees could vary depending on the type of bank account and card you have. Also, in addition to non-sterling transaction, purchase and cash fees, the ATM provider may charge you as well.

Non-sterling transaction fees: credit cards

Purchases Withdrawals
HSBC (all credit cards) 2.99% 2.99% + 2.99% cash fee (min £3)
Natwest (Visa and Mastercard credit cards) 2.75% 0% + 3% cash fee (min £3)
Nationwide (Nationwide Credit Card)¹ 2%² 0% + 2.5% cash fee (min £3)
Lloyds (except Avios Reward and Premier Avios Reward)³ 2.95% 2.95% + 3% cash fee (min £3)
Santander (Everyday Credit Card) 2.95% 2.95% + 3% cash fee (min £3)
Halifax (except Clarity credit card) 2.95% 2.95% + 3% cash fee (min £3)
Barclays (except Platinum travel credit card) 2.99% 2.99%

¹ Outside the UK only.
² On top of the transaction amount not covered by any commission-free allowance you may have.
³ Includes all other credit cards, including Avios Rewards Mastercard.

Sources: HSBC, Natwest, Nationwide, Lloyds, Santander, Halifax, Barclays.

Non-sterling transaction fees: debit cards

Purchases Withdrawals
HSBC (except Premier and Advance debit cards) 2.75% 2.75% + 2% cash fee (min £1.75, max £5)
Natwest (Visa debit cards) 0% + 2.75% purchase fee (min £1) 2.75% + 2% cash fee (min £2, max £5)
Nationwide (FlexAccount debit card)¹ 2.75% 2.75% + £1.00 cash fee
Lloyds (all debit cards) 2.99% + £0.50 purchase fee 2.99% + £1.50 cash fee
Santander (except Zero debit card) 2.75% + £1.25 purchase fee 2.75% + 1.5% cash fee (min £1.99)²
Halifax (all debit cards) 2.99% + £0.50 purchase fee 2.99% + £1.50 cash fee
Barclays (all debit cards) 2.75% 2.75% + £1.50 cash fee³

¹ Outside the UK only.
² No fees for withdrawals at Santander cash machines in Spain.
³ No cash fee for withdrawals at cash machines from Barclays or Global Alliance member banks.

Sources: HSBC, Natwest, Nationwide, Lloyds, Santander, Halifax, Barclays.

How to avoid non-sterling transaction fees

The best way of avoiding non-sterling transaction fees is simply to make no transactions in foreign currencies at all. If you are online and want to purchase something from an overseas website, then have a good look at whether you can alter the currency you will be paying in to sterling. If not, then look for an online retailer who sells the same item from a UK-based website.

Of course, avoiding non-sterling transactions when you are on holiday or travelling for business is not always practical. True, you could take more cash with you but this has a security implication and not all places you might go to will accept cash. If you need to use a cash machine abroad, then you should never allow the ATM to convert the currency for you since this will cost more. Try to make just one withdrawal rather than keep topping up your wallet, as well, because this way you will receive fewer non-sterling transaction fees.

If you know that you will want to use your card multiple times to pay for things like restaurant bills, shopping trips and travel arrangements, then a multi-currency card could be a great option.

With a TransferWise multi-currency debit card, for example, it’s free to pay for things abroad with the currencies you hold in your borderless account. What's more, you can use it anywhere in the world that accepts Mastercard meaning you don't have to wander around with large amounts of cash on you, nor pay through the nose for a non-sterling transaction fee every time you pay for something. Plus, you can also withdraw up to £200 per month with zero cash fee, then there’s only a 2% charge after that.

Advice while travelling abroad

Using cash machines to make withdrawals, swiping your card in a shop and even using your card to do something as simple as pay for a toll road can mean your charges shoot up. Every time a card is used in a foreign currency, you can expect a new non-sterling transaction fee to be applied. When planning your next overseas holiday, consider all of the options you have to take and spend money abroad.

Paying online in a different currency

Always try to pay for items in your home currency when online. Sometimes websites will offer you the chance to pay with either euros or pounds, so opt for the latter. If this is not possible, then use a prepaid multi-currency debit card to avoid a non-sterling transaction fee. Another good tip is to watch out for dynamic currency conversion – sometimes called cardholder preference currency, or CPC – since this is usually a way for the seller to charge you more for the privilege of converting your currency for you.

FAQ

Here you can find the answers to some of the most commonly asked questions about non-sterling transaction fees and how they are applied.

How do I how much I've been charged?

When you are charged a non-sterling transaction fee, it is worked out as a proportion of the sum that is involved with each purchase or withdrawal you make. Since the currency rates change, it is impossible to get an accurate idea of your charges until it has been applied even if you are able to estimate them. In other words, you won’t see all of the exact charges until your statement arrives detailing them all.

When will the charge be taken from my account?

Generally speaking, a non-sterling transaction fee is applied by your bank on the day that you make the transaction. If you swipe your card at a bar on holiday, for example, then the transaction may actually go through that day or, maybe, the following one. Debit card non-sterling transaction fees should appear on your statement on the corresponding date. When they are applied to a credit card, you will have until your next monthly bill is due to clear the balance or interest charges will also apply.

In summary

Non-sterling transaction fees are applied to UK holidaymakers, business travellers and even people who are not overseas and simply buying something from abroad. Banks charge differently for them but you can expect a fee to apply every time you make a transaction which can mean you spend more than you expect when overseas.

However, the good news is that you can take charge of the situation by opting for something as simple as a prepaid currency card which you can use virtually anywhere abroad. Indeed, you can even use them to make purchases online as well.


This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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