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Banks and Airlines To Drop Travel Surcharges

Friday December 30, 2011

Banks and Airlines To Drop Travel Surcharges

Good news for financially stretched British travellers came this week in the form of two announcements. As the Treasury ruled that airlines would no longer be allowed to impose additional booking charges on passengers (effective from the end of 2012) and leading banks agreed to stop charging consumers for the purchase of foreign currency by debit card.

British tourists should find that Travelling abroad should become cheaper by 2013, as two charges that are levied against holiday makers are soon to disappear. The first relates to charges made by airlines when customers book their flights online with a debit or credit card. And the second pertains to the charges made by the larger banks for foreign currency purchases.

The charges levied by airlines for using a debit or credit card tend to vary depending on the company, but Ryanair, for instance, adds £6 per journey booked by card, whilst Easyjet puts another £8 on bookings made with a card. As a result, consumers often find that the cheap deals offered by budget airlines are quickly offset by additional amounts charged for extra leg room, additional baggage charges, meals and the final surcharge that is added for use of a credit card, usually just prior to confirming the booking.

The Treasury has looked into this practice and ruled that companies will no longer be able to apply this additional levy to customers from the end of 2012. New legislation to enforce this rule will be brought in during 2012 and will cover a range of retail sectors, including airline companies, hotels and accommodation websites as well as fees for booking cinema tickets.

The other area in which holidaymakers stand to save money will be in purchasing foreign currency for their trips abroad. Five banks including Lloyds, Barclays, Royal Bank of Scotland, the Co-op and Banco Santander will stop charging their customers between one and two percent on purchases of currency by debit card. This measure will also be brought into effect before the end of 2012.

The charges that are being scrapped will only apply to currency purchased in the UK and will not make it cheaper to use a debit card when purchasing goods or taking out money abroad. This particular charge is being removed as a result of a complaint to the Office of Fair Trading which pointed out the banks only incur 9p in charges for transactions carried out on debit cards, whilst customers were being charged approximately 1.5 to 2 percent of the total currency purchased by this method.

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