Major banks are planning to make debit cards free for spending abroad
A major bank is planning to make its UK debit cards free for customers who use their plastic abroad.
HSBC plans to ease the pain of spending abroad after the bank confirmed its ambition to make all UK debit cards free for holidaymakers, The Sun can reveal.
This move would mark a significant departure from traditional banking practices and underlines HSBC’s commitment to improving customer experience globally.
Currently, most major banks charge fees when customers use their debit cards for spending and cash withdrawals abroad.
First Direct 1st account and Virgin only Money M customers benefit from free spending and withdrawals when using their bank card abroad.
Fees usually vary from provider to provider and card to card, but they can add up quickly.
These costs usually fall into two categories:
But if you stop on the way to the beach and spend €5 on a drink and a snack, you could pay €1.15 extra in costs.
While it may not seem like much at first, multiple small daily transactions can quickly add up to significant fees.
However, customers with an HSBC current account can avoid paying fees abroad if they sign up for the bank’s Global Money Account.
Customers receive a separate Global Money payment card for use abroad.
The Global Money Account in the HSBC app allows customers to deposit and convert British Pounds into a range of currencies, including Euros, US Dollars and Australian Dollars, with transactions paid in local currency.
They can also withdraw up to £1,000 per day from overseas ATMs without incurring any fees.
However, this setup has its drawbacks, including the fact that it is only accessible to those who have signed up for mobile banking.
But The Sun can now reveal that the bank plans to eventually waive all charges on its UK debit cards to ensure no one pays more in fees than others when traveling abroad.
Sources told The Sun that the change will start with Premier current account customers, before moving to HSBC Advance and Standard Bank Account customers.
They stressed that while the plans are still in their early stages, there is no confirmation that the change will happen anytime soon.
In the meantime, HSBC current account customers without a Global Money Account will continue to be charged a 2.75% non-sterling transaction fee and a 2% cash withdrawal fee (excluding Premier Account customers).
What are the alternatives to spending abroad?
THERE are other specialist cards that can offer you a great exchange rate and free spending and withdrawals abroad.
These cards include travel credit cards and prepaid cards that allow you to pay abroad without fees or at a fixed exchange rate.
Travel credit cards
Travel credit cards allow you to spend money abroad without incurring fees or hidden charges.
But they may still charge you for withdrawing cash.
We recommend the Barclaycard Rewards Visa because there are no fees for using it abroad, and there are no fees for withdrawing cash if you pay your bill in full each month.
With these cards, you should always pay off your balance before the end of the month to ensure that the money you save isn’t wiped out by paying interest.
Prepaid card
An alternative to carrying cash or your debit card is to purchase a prepaid card.
Brands like Revolut, Wise and EasyFX all offer prepaid travel cards.
HSBC launched its Zing subsidiary in January 2024, giving existing and non-HSBC customers access to a prepaid debit card at no cost.
The card can hold up to 10 currencies and can be used in more than 200 countries.
These cards allow you to put a fixed amount of cash on the card at a fixed exchange rate.
So if the rate is right now, you can put money on your card, and it will remain that rate when you’re on vacation.
But these cards can sometimes have hidden fees, so make sure you read the fine print.
Which other debit cards allow you to spend for free abroad?
A number of smaller online banks offer free spending abroad when current account customers use their debit card abroad.
But First Direct, a subsidiary of HSBC, is the latest major brand to scrap fees for processing foreign currency debit card payments and withdrawing cash.
It has been added to a growing list of other names.
Pursuit
Anyone with a Chase debit card can make payments or withdraw money outside the UK without being charged any fees.
However, there is a cash withdrawal limit of £1,500 per month.
For purchases abroad, the current Mastercard exchange rate will be applied.
Meanwhile, local banks may charge additional fees for using their ATMs.
You can sign up for a Chase bank account by visiting www.chase.co.uk/gb/en/.
Starling
Challenger bank Starling offers free debit card withdrawals and local currency payments abroad.
It also reports Mastercard’s real exchange rate and adds nothing else to it.
But you can withdraw a maximum of €300 each day.
You can sign up for a Starling checking account by visiting www.starlingbank.com/current-account/.
Monzo
Another challenger bank, Monzo, also lets customers use their debit cards abroad in certain countries without charging extra fees.
It also provides Mastercard’s exchange rate directly.
You can withdraw money unlimitedly and free of charge if you are in the European Economic Area (EEA).
However, outside this area you can withdraw up to €200 for free every 30 days. If you exceed this amount, you will pay 3%.
Again, you can sign up for a Monzo bank account by visiting monzo.com.
Kroo Bank
Challenger bank Kroo offers free debit card withdrawals and local currency payments abroad.
ATM withdrawals abroad are only free up to £200 per month, after which you will have to pay a 3% fee.
For more information, visit kroo.com/current-account.