Consumer watchdog Which? found that the fees are too high and too complicated, after it examined charges by the country’s seven-biggest banks and building societies.
Researchers went to Calais in northern France in December 2011 and compared the amount charged by each bank for the same €5.95 debit card purchase and a €20 ATM withdrawal.
The results showed a huge difference in charges between the best and worst banks. The Norwich and Peterborough (N&P) Gold Light current account came out top. Account holders are not charged any fees for overseas use.
In comparison, Halifax charged 33% more than N&P for the supermarket purchase. Even when compared with its high street rivals, Halifax’s fees for overseas purchases were much higher, charging 29% more than both HSBC and Barclays.
Lloyds TSB charged 15% more than N&P for the ATM withdrawal.
The research also found that additional fees can make card purchases expensive. For example, ten transactions of £50 made with a Halifax debit card would cost the cardholder £28.75. The same 10 transactions made with N&P would be free.
Which? is calling for all banks to be clearer about the fees they charge so that customers can easily compare whether they are getting a good deal. For example, researchers found it difficult to calculate how the foreign loading fees had been calculated using the bank statements alone.
HSBC, Halifax and Lloyds TSB included their foreign loading fee as part of the exchange rate. Santander showed only the exchange rate with no mention of the foreign loading fee, even though it had charged one.
“Banks are charging exorbitant fees for the most straightforward overseas transactions, pushing up the price of even the most basic purchases," said Which? executive director Richard Lloyd.
"The industry needs to improve the way it displays charges online and in statements. We want to see overseas bank charges made clear to consumers when they sign up for their current account or credit card.
"Consumers must be able to easily see whether they are getting a good deal or not.”
