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New ban on all hidden debit and credit card fees means new transparency

POSTED ON 03 NOVEMBER 2017

They were hiding from consumers, but now all those rip-off subcharges on card payments have been found and banned. But what do we do until the ban takes effect?

Sub-charges, hidden charges or, as many of us refer to them simply as, rip-off charges, are something that we are all often involuntarily subjected to when choosing to pay by debit or credit card, either online or in-store. Such hidden charges added onto your bill at the checkout, particularly online, have meant that the cost of the goods and/or services you’re paying for get driven up.

Airliners and holiday companies are said to be among the worst of these offenders, levying fees up to 3% when conducting transactions via credit cards or debit cards. The new law will be implemented on 13th January 2018, with immediate effect, and will mean firms caught breaking the new law thereafter will be forced to reimburse customers, and even face fines. The rules will apply to any UK company which is selling to UK consumers.

Cashing in on the ban

Due to this banning of hidden card fees, it is to be expected that some companies will generally raise their prices to compensate for what will be a significant cut to their overall revenue. Other companies, however, won’t want to risk losing their customers. Nevertheless, it is expected that not all companies will raise their prices, so there will be some substantial savings to be had, particularly with expensive purchases. A 2% or 3% saving on certain car purchases, for example, or on wedding venue bookings, will mean thousands of pounds being saved.

Since the Red Card for Card Charges campaign has started, launched by James Daley, Monarch, Virgin Atlantic and EasyJet have all reduced their fees, the cuts of which span up to as much as 3%. These companies therefore might be worth looking out for, but shopping around in general is always a great thing to do.

How to avoid these hidden fees until January

Paying with cash instead is always a great answer, of course, but shopping around is so important these days, especially with regard to hidden fees found in conveyancing companies’ costs, which are among some of the most deceiving. Many conveyancing firms invent disbursements, adding tasks and charges to the bill that should be covered by the conveyancing solicitors’ basic fee, and requiring a substantial price for them, even though they will probably be in small print or hidden away. If the offer on the internet initially looks too cheap and good to be true, it probably is.

While on holiday, you should insist on being charged in local currency, so to avoid the ‘dynamic currency conversion,’ which is a system that allows retailers and foreign banks to set their own conversion levels, sometimes adding up to 10% on bills.

Banks also charge holidaymakers to use cards abroad, with average fees of 2.8% for debit card payments and 3.5% for credit cards, whilst for ATM usage specifically, the charges are on average 2.9% for debit cards and 4.9% for credit cards. So, when asked what currency you want to pay in, always opt for local currency.

And why not use a prepaid currency card with only local currency? It’s a great alternative to card payments as it locks in your exchange rate when you buy.

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