One personal and business bank account provider in the UK has finally buckled under to pressure to normalise its overseas credit card charges in relation to other financial services providers.
Banking giant RBS has been under fire for months due to unfair costs passed along to its customers when using their credit cards abroad. Along with supermarket bank Tesco, Royal Bank of Scotland and its NatWest division had begun using their own private exchange rates to convert currency denominations overseas when making purchases, and their rates were much less attractive when compared to the standard rates used by their competitors.
However the bank – which is taxpayer-owned – has decided to change the system from 1 July of this year after receiving countless customer feedback reports. The decision could result in lower customer bills when using their cards this coming summer whilst they are overseas.
The banking giant’s decision to scrap its controversial policy comes on the heels of Tesco’s decision to do the same. The supermarket bank stated that the motivation behind its own decision was to improve transparency and to respond to customer feedback.
For the overwhelming majority of credit card providers in the UK, one standardised exchange rate is currently used. This exchange rate is tied closely to the rates of the wholesale market, making them quite favourable to consumers, even after the commission fee the card company or bank tacks on to the end. However RBS/Natwest changed the terms on its cards in early 2008 that permitted it to use an exchange rate determined independently of the standardised one.
When the change was implemented, consumers found it hard to find any clear information on the new rates on the websites for both banks. In fact one investigation discovered that the only way rates could be revealed was by ringing up either bank.